Worrying disconnect

North Block-RBI relations need to get better

.....Of late, the relationship between the government in New Delhi and the RBI has degenerated into a public spat about priorities, which has destabilised the development of this institutional arrangement. Certainly, divergent views can and should be expressed. But they should not be seen as being pushy. In addition, the disconnect seemed to be spreading worryingly into other fields. Consider the government’s reappointment of Deputy Governor Subir Gokarn for an additional two-year term — generally automatic but, according to a report in this newspaper last week, now subject to a search committee and an interview. Mr Gokarn’s three-year tenure is due to end this week and that a decision on the matter is yet to be finalised is a reflection of poor advance planning. Also, at a time when Chief Economic Advisor Raghuram Rajan has been away from New Delhi to fulfil his prior teaching commitments in Chicago and the RBI governor himself is due to move on in less than a year, many would imagine the reappointment of the deputy governor in charge of the monetary policy department would be automatic, given the macro crisis India faces......

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Don't lend for buying gold in any form, RBI tells banks

The Reserve Bank today directed banks not to give loans for purchase of gold in any form, including primary gold, bullion and jewellery, to dissuade people from indulging in speculative activity..........

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To pump up savings, FinMin wants banks to offer ‘gold plan’

The Finance Ministry has sounded out the Reserve Bank of India (RBI) and commercial banks on the possibility of introducing a gold accumulation plan (GAP). The GAP is likely to be pitched as an alternative to direct investment in the yellow metal by gold-obsessed Indian consumers.........

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Finmin urges corporate affairs ministry to notify to keep ailing banks, insurers out of CCI

The finance ministry has urged the corporate affairs ministry to notify that ailing banks and insurance companies will not come under the purview of the Competition Commission, a step that can help speed up issuance of new banking licences. In a letter to the corporate affairs ministry, financial services secretary DK Mittal has requested immediate notification to this effect since banking regulation amendment bill and competition bill are yet to be passed by Parliament.......

Read - ET

Two more lean years

....the Reserve Bank of India (RBI), which hasn’t issued any new banking licences in 10 years, is holding up the finance ministry’s plan, and for good reasons. Before it allows new deposit-taking institutions to be set up, including by non-financial corporate groups, the RBI, which is also the country’s banking supervisor, wants the legal authority to sack rogue bank boards. Amendments to the country’s banking laws that would have accorded the monetary authority such wide-ranging powers were introduced in Parliament seven years ago. They were never passed. The central bank is quite right to be circumspect, even at the cost of annoying the finance minister.......

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FinMin relaxes norms for top jobs in govt banks

With nine public sector bank chiefs set to retire in 2013-14, the finance ministry has relaxed the eligibility criteria for the selection of chairman and managing director’s (CMD) post in these banks. According to bankers, a candidate who has served as an executive director (ED) for six months in public sector banks can now aspire to be a CMD. Earlier, only officials who served two years as ED were considered for the CMD’s post. However, the criterion for residual service — the number of years left for a candidate to serve the bank — has been kept unchanged at two years.............

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The nature and grounds of political obligation in the Hindu State

This is a revised edition of a classic work published in 1935. The author Dr. J. J. Anjaria was a well- known economist who was a student in Bombay University and the London School of Economics. He was Chief Economic Adviser in the Ministry of Finance and Executive Director in I M F and later held the post of Deputy Governor of the Reserve Bank of India.......... 

Click to read book review by P.P.Ramachandran

RBI justified in asking for amendment before final guidelines on new licences: E&Y

The govt continues to push the Reserve Bank of India (RBI) to issue final guidelines on new bank licences and move ahead with the process. At the same time, the RBI continues to seek the passage of the Banking Laws Amendment Bill before it moves forward on the issue. According to Ashvin Parekh of E&Y, the RBI is justified in asking for the amendments to be passed before the guidelines are finalised......

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RBI action improved credit availability in 2012-13

There has been a marked improvement in credit availability in 2012-13 on the back of steps taken by the RBI to put more money into circulation. This can be illustrated in terms of the funds locked up within the RBI and scheduled commercial banks vis-à-vis the total currency in circulation among the public........

Read - HBL

The future of Non Banking Financial Companies in the economy

......However, considering the reluctance and restrictions that RBI has observed in giving banking licences, the feasibility and smoothness of conversion still remains a question mark. In continuation to the Government’s proposal of encouraging penetration in the banking industry, RBI has released a set of norms to ensure stability and growth in the sector. It had observed that non-banking finance companies (NBFCs) who wished to convert into banks should have a minimum net worth of Rs. 200 crores. However, RBI has decided to provide some relief to NBFCs if their net owned funds fall below the below the stipulated Rs 200 crores...........

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Need to monitor 'shadow banking' in India: Financial Stability Board

 An international body of financial authorities today highlighted the urgent need to monitor the "shadow banking" activities in India, given a sharp annual growth of over 20 per cent in such businesses over the recent years. The "shadow banking system" refers to credit intermediation involving entities and activities (fully or partially) outside the regular banking system and is estimated to have reached a size of nearly Rs 37 lakh crore in India. ......

Read - ET

No target or band has been set for rupee: Gokarn

Reserve Bank will intervene in the forex market only to curb excessive volatility in exchange rate but stated there is no target set for rupee, deputy governor Subir Gokarn said here today. "Our approach has been that the exchange rate of the rupee should be market determined and the Reserve Bank should be intervening only to manage excessive volatility... Without targeting any particular level or band," Gokarn told an RBI-ADB conference on 'Managing capital flows' ............

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RBI will intervene to check any excess rupee volatility: Gokarn

....“Therefore, the intervention policy not only aims at quelling the excessive volatility, but also attempts to moderate speculative one-way downward movement of the India rupee,”....

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Corporate Bonds May Soon be Part of SLR

........The ministry has initiated talks with the RBI and the corporate affairs ministry to facilitate these changes that could ignite bank interest in corporate bonds and encourage companies to raise funds through debentures, which accounted for lowly 3.9 per cent of their funds needs in 2010-11.........

Read - ET

RBI concerned about FII debt flows

The Reserve Bank of India (RBI) has raised concern on debt flows by foreign institutional investors (FIIs) in the capital market. RBI Deputy Governor H R Khan said there was a need to reduce debt inflows, which, due to interest rate differentials, had have come at a very quick pace.......

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All efforts to be made to rein in fiscal deficit at 5.3%: C Rangarajan, PMEAC

....On key policy rates cut by the Reserve Bank, Rangarajan said: "We need to watch the behaviour of prices for some more time. Of course, the Reserve Bank will take all factors into account, but there is still some time for Reserve Bank to take a decision." The RBI will come out with the mid-quarter review of monetary policy on December 18. The third quarter will be announced on January 29. .....

Read - ET

Ernakulam to soon be first to achieve 100% banking

.......The press meet was addressed by S Jayamohan Nair, Deputy General Manager, Union Bank of India, C V George, General Manager, RBI, Kochi, K D Joseph, Assistant General Manager, RBI, Thiruvananthapuram and K R Jayaprakash, Lead District Manager.

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SBI to send new cheque books by Dec 15, update your address

After announcing the implementation of cheque truncation system (CTS), the State Bank of India (SBI) has asked its customers to update their mailing address. The lender is preparing to send the new series of CTS compliant cheque books by December 15, 2012.....

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FYI: Banks pay you Rs 100 per day as fine when

Fees and fines are part of our life, especially when it comes to banks. You are slapped with a fee, if you don’t maintain the minimum balance in your savings account. You pay a credit card bill late; there is a late payment fine. If a cheque is bounced for financial or non-financial reasons (forgot to write the date on a cheque) and you have to pay up for that. There are hundreds of reasons as to why you could land up paying a fee to a bank. But, did you know, as per the Reserve Bank of India, banks too have to pay you a fee?...........

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Fixing home loans

.........The Reserve Bank of India (RBI), worried about systemic risks from this skew, constituted a working group to discuss how banks can be made to offer more fixed rate loans to retail borrowers. The committee has suggested that banks flag off this transition with 7-10 year fixed rate loans that carry a reset clause, while augmenting their long-term funds to facilitate such products.........

Read - HBL

2G case: RBI Governor D Subbarao deposes in court

New Delhi: RBI Governor D Subbarao Monday deposed in a Delhi court as a prosecution witness in the 2G case, saying he had questioned in 2007 the spectrum fee of around Rs 1600 crore for pan India licence.....

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Finance Minister P Chidambaram to meet chief ministers of southern states today

......The high-profile meeting with the chief ministers will be held against the backdrop of the half-yearly review of monetary policy by the RBI last month, wherein the key policy rates were left unchanged.

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RBI cancels licence of Ghaziabad Urban Cooperative bank

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he Reserve Bank has cancelled the licence of Ghaziabad Urban Cooperative Bank as it had become insolvent. "In view of the fact that Ghaziabad Urban Cooperative Bank, Ghaziabad (UP), had ceased to be solvent and with all efforts to revive it having failed the Reserve Bank of India delivered the order cancelling its licence to the bank on November 16, 2012," RBI said in a notification today.......

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