Tuesday, December 18, 2012

Up close with Reddy

In September, an Indian newspaper ran a report, titled “If you go by their ad, YV Reddy could become the next governor of Bank of England”. How do you feel after reading the report? Dr Reddy grinned. "Well, the report was actually to describe the process of recruiting the central bank chief in the United Kingdom," said Reddy, the former governor of the Reserve Bank of India. "I think this is important. They make an advance succession plan for important positions.”........

Duo cheated of Rs 60,000 on promise of RBI job offer

AURANGABAD: An unidentified man duped a man and his sister-in-law of Rs 60,000 on the pretext of getting them employment with the Reserve Bank of India (RBI). The duo had deposited the amount in the suspect's bank account after a monk allegedly recommended the duo to do so. A complaint was lodged by the victim on Saturday with the detection branch of the Cantonment police station..........

The ‘new normal’ is abnormal - A.Seshan

.....There is thus not much difference in the economic situation between now and the last occasion, or even earlier, when the Reserve Bank of India (RBI) undertook a review of its monetary policy. There is, however, one significant and dramatic difference in the thinking of the central bank to reveal that times are indeed changing. Due perhaps to frustration, the central bank seems to be throwing in the towel instead of the gauntlet in its battle against inflation. Speaking at a panel discussion recently, the RBI Governor is reported to have said that he was ready to revisit the ‘ideal’ inflation target of 4-5 per cent, which many feel is too low to attain in the current circumstances. He said: “I am not saying that we would definitely change the number, but we will certainly revisit our strategy.” The psychological danger flowing from the change in the official view on inflation is the consequent damaging effect on the price expectations of the public.......

RBI holds Financial Literacy Campaign


As a part of our ongoing financial literacy campaign, Reserve Bank of India, Bhopal put up a financial lietracy stall at Bhopal Haat in Handloom Expo Fair for four days from December 7 to December 10, 2012 to educate the public about RBIs role and functions, basic banking, security features of bank notes, banking Ombudsman scheme etc.........


Kolkata win All India RBI Sports Meet


Bhubaneswar: Soccer lover State Kolkata edged out Delhi by 3-1 goals and emerged champion in the 30th All India Reserve Bank Sports Meet at Kalinga Stadium here on Saturday. Altogether 17 football teams participated. After 16 years Bhubaneswar successful hosted the national meet from December 9 to 15. In which more than 750 players from across 22 branches were participated in four different events in the seven-day-long meet. In which 36 players and three officials of the host team were took part. 
Final Results:
Football: Kolkata (champion), New Delhi (runners-up), Carrom: Men’s; Mumbai, Nagpur, Women’s; Chennai, Patna, Table Tennis: Men’s; Kolkata, Guwahati, Women’s; Mumbai, Belapur, Badminton: Men’s Singles; Rudra Kaushik (N. Delhi), Sanjay Das (Kolkata), Men’s Double’s; Supriya Banerjee & Sanjoy Das (Kolkata), Rahul Sharma & Gurvinder Singh (Jammu).
The Pioneer

Come new year, RBI may shut down counters for exchange of notes, coins

......The United Forum of Reserve Bank Officers and Employees is up in arms against the proposal on the grounds that it would cause inconvenience to the public as there has always been a shortage of coins and the move also works against the staff interests. “This will have a deleterious impact on the staff strength of the banks and their morale as a good-number of employees of all cadres are engaged in this customer-friendly activity…,’’ the union said in a representation submitted to the RBI Governor last week. The union had also slapped a strike notice in this regard, it is learnt. The RBI’s Citizen Charter mentions that it would ensure ‘prompt and courteous service’ in exchange of notes and coins in the denominations of the customers’ choice......

My View on "RBI may shut down counters for exchange of notes, coins"


Height of customer service in RBI is elimination of customers itself. RBI preaches customer service to banks but in practice does not allow customers inside its premises.

- S.G.Shivashankar, Ex-Manager, Bangalore (via e-mail)

I do not know what is the compulsion of the move to close the public counters. This is perhaps the only function of RBI, where direct contact with public takes place and their requirements are satisfied in the minimum of time. In Kochi office of RBI, the main function of the office is to cater to the needs of members of public through the public counters for exchange of notes and issue of coins. Kochi being the prominent and number city of Kerala state, the requirements of fresh notes and coins is quite large. As compared to the main office in Thiruvananthapuram, Kochi office public counters attend to, on an average, about 1000 to 1100 customers every day. When our Governor, Dr.Subbarao had visited Kochi office in March 2011 (just to before my retirement), he was visibly surprised at the serpentine queues at the Banking Hall for notes and coins. In fact, Kochi Office attends to customers nearly 3 times the number of customers turning at TVM office counters.  Promptly,  the Hon. Governor  had agreed with Kochi office proposal to expand the Currency Chest and asked RD, TVM office to follow up the matter closely. I do not, therefore, able to comprehend as to what relief will RBI get from disassociating itself from servicing Public Counters. It is also an established fact that commercial banks seldom extend the service of 'issue of fresh notes and coins' through their banking counters. This has been repeatedly emphasized in the 'incognito visit reports' by RBI officers to bank branches. I am pretty certain that ill-advised move will definitely evoke a huge public outcry not only here but all over India. Common people always look upon RBI public counters as the ultimate place to meet their requirements of fresh notes and coins
- S. SrinivasanKochi (via e-mail)

Syndicate Bank opens special counter for exchange of coins


Syndicate Bank has opened a dedicated counter for exchange of coins and small notes on retail basis at its branch located on Mehdipatnam-Mallepally road..............

My View on “Cartelising savings bank rate?”


“Cartelising savings bank rate?” (Business Line, December 14) is disappointing when we consider the customer’s approach to savings bank accounts. All that has been stated by the author is purely from the banker’s viewpoint and not from the angle of customers. Most customers of PSBs use savings bank accounts for transactions or for withdrawals to meet personal expenses. Although there are restrictions (number of withdrawals in a month), PSBs never penalise savings bank customers. Secondly, with most of the PSBs offering automatic conversion of surplus funds in savings bank accounts into fixed deposits, the residual amount is insignificant. Private sector banks that have jacked up savings bank interest rates have not been able to significantly improve their market share of low-cost deposits. As banks have been paying low rates on savings accounts for more than 100 years, individuals have not been attracted to these accounts.
- K. V. Rao (HBL)

Axis Bank offers ‘e-Gift Card’


Axis Bank, India’s third largest private sector bank, will now allow its domestic customers to send an online card with the launch of ‘e-Gift Card’. The card offers customers an alternative channel facility through which they can buy a gift card on www.gogiftacard.com where a customer can buy and send a card of his choice by either e-mailing it or sending it via SMS to their loved ones, the bank said in a statement..........

Won’t Monitor Retail Dollars: RBI to Finmin

The RBI has told finance ministry that it would not be able to monitor the end use of funds brought in to set up foreign-funded stores, according to a person privy to the development..............


RBI ban on border trade restricts growth

...........Confiding that the State Government has been kept in the dark about the circular issued by the RBI, the source revealed that the RBI circular also restricted the barter trade to land route wherein transactions of the trade should take place by way of head load or non-motorised transport system. It has also been reportedly stated in the circular that there would be no monetary transaction under the barter trade agreement while also adding that consignments of imports and exports should be invoiced in USD......

‘RBI norms on foreign banks entry soon’


The Reserve Bank of India (RBI) is soon expected to relax norms for entry of foreign banks into the country, a top government official today said. “RBI is very soon, I believe, is going to announce a very progressive policy for permitting opening of more foreign banks...” Commerce Secretary S R Rao said. He was speaking at a CII function on ‘Driving South Asia Economic Integration’.........

Govt plans gold-linked schemes to curb imports

Attributing the surge in gold imports to high current account deficit, the Government today said it is considering schemes such as gold deposits, accumulation plans, gold-linked accounts and pension products to curb demand for the precious metal. In its Mid-Year Economic Analysis tabled in Parliament today, the government said gold-backed products will help the investor enjoy benefits of investment in the metal without investing in the physical commodity........

Saving for a rainy day

.....Earlier, in March 2012, the RBI issued a discussion paper on the introduction of dynamic provisioning in India. But first, let’s understand what a provision is. In accounting terms, it is an amount set aside from profits to cover a future liability. As the exact amount of the liability is unknown, it is estimated. Now, how do banks make provision for loan impairments globally and in India, and why is the RBI discussing dynamic provisioning?.......

Old habits die hard

The finance ministry may have come up with the idea of a National Investment Board to kickstart stalled projects. But while the Cabinet rechristened the NIB to the Cabinet Committee on Investment (CCI), the finance ministry’s mid-term review of the economy continues to call it the NIB. Perhaps the mid-term review was written before the Cabinet decision or perhaps the finance ministry still yearns for the days when the NIB was a stronger body unlike the watered-down CCI.

FE

My View on "Growth: Lost between RBI and North Block"


The observation, “Continuing with unquestioned faith on the part of the RBI on central bank autonomy, which is illusory; and of the Central Government on austerity and fiscal discipline as a panacea for growth (leave alone distribution) can no longer be trusted as a solution for a revival of the ailing economy” says much more than what has actually been said, leaves a lot of scope for interpretation. It would appear, the writer believes that the present unhappy bickering around North Block and Mint Road is about real differences in policy perception. One wishes, it was so. The fact is that the attempt by Finance Ministry to act as a super regulator over all regulatory bodies in the financial sector is getting more and more exposed in the recent past. This will destabilize the equilibrium deftly built up by eminent persons who headed Finance Ministry and RBI in the formative years of financial regulation in India and consciously maintained by their successors till the recent past.


-  M G WARRIER (HBL)

Five reasons why RBI should cut interest rates



A majority of analysts expect the Reserve Bank of India (RBI) to keep the repo rate on hold on Tuesday. Of 41 analysts polled by Reuters, 37 expect the RBI to keep the policy repo rate unchanged at 8 per cent in December. However, some analysts and investors, though in a minority, have not discounted the possibility of the central bank cutting interest rates for the first time since April on Tuesday........


No-action policy ahead of January rate cut?

....In fact, in the October policy statement, the central bank made it clear that rates may be eased only in the fourth quarter of the fiscal, beginning January. Since the next policy meeting after the 18 December review is in January, RBI is expected to cut rates then, given the fact that wholesale price inflation in Asia’s third largest economy is easing and the government, despite political resistance, is serious about pushing economic reforms—two necessary preconditions for cutting rates......

Nurturing growth


This is with reference to “RBI will likely wait again’’ (Business Line, December 17). The need of the hour is growth. All the sectors have been showing moderate growth or declining growth rates during the last many quarters. It is time for the RBI to take measures like reducing policy rates to provide a positive stimulus to investors. The private investing community and entrepreneurs should come forward for making investment in productive ventures. This will be possible, provided the RBI Governor reduces the policy rates and the CRR by at least 50 basis points. Hence, the RBI need not wait for the Budget to get a clear picture on fiscal consolidation. Once the growth improves, prices will start falling automatically and inflation will be reined in. However, one should remember that there are various reasons for inflation, apart from increase in money supply.
- Nisha Narayanan (HBL)

RBI likely to use CRR tool again


 Faltering deposit growth and an uncomfortable liquidity situation could prompt the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR) by at least 25 basis points at its mid-quarter policy review on Tuesday. Notwithstanding the better-than-expected inflation and industrial production numbers of late, most economists, however, feel that central bank will wait until January to cut interest rates............

Govt Thumbs RBI for a Lift on Road to Growth

 Declaring that the economic slowdown had “bottomed out” and inflation was “moderating”, the government has predicted growth rebounding in the second half and made a pitch to the Reserve Bank of India (RBI), which reviews its monetary policy on Tuesday, for “supportive” steps to keep up the spirits...........

Read - ET

Wrong time for jugaad

.....Prudence, therefore, demands the Governor keep his powder dry. For now ! Indeed, the popular assumption that a rate cut alone is enough to lead to faster economic growth reminds me of the old joke on the uncanny parallels between two years, 1981 and 2005. 1981: Prince Charles got married. Liverpool was crowned soccer champion of Europe. Australia lost the Ashes. The Pope died. 2005: Prince Charles got married. Liverpool was crowned soccer Champion of Europe. Australia lost the Ashes. The Pope died. What’s the lesson to be learned? The next time Charles gets married, someone should warn the Pope! Likewise, don’t jump to hasty conclusions. Quick-fixes don’t lead to quick results !

Read - ET

Inflation and the rate cut conundrum

.....Rising inflation expectations are one indication that people expect high inflation to continue despite what policymakers may say. So RBI needs to win a decisive battle against inflation if it has to maintain its credibility; premature rate cuts could be damaging in the long run. But how can we know if such a victory is round the corner? ......

Which rate to cut?

..... as Bank of America-Merill Lynch points out, a cut in the cash reserve ratio and open-market operations are far more essential than a repo rate cut. That’s because a policy rate cut by the Reserve Bank of India may not translate into a decline in lending rates until liquidity improves.....

Goldman, SBI bet on rate cut; others expect drop in CRR

The Reserve Bank of India (RBI) will spring a surprise on Tuesday by cutting its key lending rate, factoring in easing inflation and slowing growth in Asia’s third largest economy, economists at Goldman Sachs and the nation’s largest lender State Bank of India (SBI), said on Monday...........

Diesel vs inflation

Apart from the headlines of the finance ministry’s mid-year economic analysis (MYEA) lowering its GDP target for FY13 from the budget’s amazing 7.6% estimate to a more sober 5.7-5.9%, there are several interesting points for a larger discussion. On the eve of RBI’s credit policy meeting, apart from talking of the slowing core inflation numbers, the MYEA points to the role of interest rates in cutting corporate profitability..........

Taming Inflation

.......There is no clarity or uniformity in perspective on such things among those who are responsible to prescribe corrective measures. The ‘Inflation elephant’ is perceived as a different monster by scholars from different schools of economics.

Adjudicating NBFC claims


Apropos the report “Provisioning norms to hit profitability of NBFCs” (December 14), the Reserve Bank of India has, at different points in time, promised a level playing field between banks and non-banking financial companies (NBFCs). But it has made no effort to recommend to the government that the recovery mechanism of the Debt Recovery Tribunal, for faster adjudication of NBFC claims against borrowers, be extended to all registered NBFCs. At present, the mechanism covers only notified NBFCs.

Ramakanth Inani Hyderabad (BS)

Cops plan film on chit funds companies

........Besides sensitizing public, police have decided to train their own personnel about the legal aspects and investigation procedures while dealing with such complaints. The Crime Branch, in association with the Reserve Bank of India(RBI), will organize a training programme here on December 21 to teach nearly 40 police officers on prevention and detection of financial frauds. The EOW has also decided to bring two bankers on deputation to assist investigating officers crack cases relating to banking fraud. "We recently hired a chartered accountant for the EOW. Now we will urge the RBI to get two bankers (group-B and C) on deputation for effective investigation," ........

SBI Business Facilitators fight to survive

As per RBI’s Financial Inclusion Plan we were working as Business Facilitator in State Bank of India since 2007 or later. SBI had engaged us on experience basis. SBI’s performance in rural areas was very good with the help of Business Facilitator. We in fact, put our everything to promote and reciprocation.  After joining in SBI all the Business Facilitator’s left their previous job. On the 11th April 2012, SBI has terminated all the Business Facilitator in India without any proper reason..........



Bankers Need To Strike At the Root Cause of Sickness

.... Bankers prefer to  blame interest rate for worsening asset quality or blaming global recession for rise in bad debts or requesting RBI to reduce Repo rate , reduce CRR or  pay interest on CRR to earn profit. It is important to say that even if CRR is removed or government permits payment of interest on CRR or reduce repo rate, corrupt , unskilled officers and incompetent officers cannot ensure safety of their assets.   These banks have already earned huge profit by reduction in CRR rate.  After all, liquidity generated by release of CRR or payment of interest on CRR  provides  relief for few months and for few quarters only.    Even if   CRR is  abolished, bankers will have to accept the bitter truth and will necessarily need to cure the  ills in the  system to keep the asset in good condition. .........