Brace For A Blowout

..............The irony is that Thorat feels the RBI has diluted her committee’s views in its draft! BW learned from sources that Thorat wrote to RBI Governor Duvvuri Subbarao last month that the idea behind exemption from a certificate of registration (CoR) was to ensure these NBFCs were not robbed of their legitimacy, but would not have a CoR to misuse. If you are on RBI’s radar, play off the reputation it confers you. The RBI’s draft says NBFCs will have the option to surrender the CoR on a voluntary basis and also be out of its regulatory radar (RBI Act 1934, except Section 45N).  She raised the existential with Subbarao: “Is it legally possible to say that the law dealing with NBFCs is not applicable to such companies? Maybe this needs to be clarified.” ................

Read............

RBI, heal thyself

........it is encouraging to note that other analysts have also picked up on this theme, that the signature of the present RBI is that it not only indulges in obfuscation (which is good for a central bank) but also bundles itself into contradictions, and the changing of policy goalposts, which is a real bad. And bad because it severely erodes the RBI's credibility. We have a new addition to the ever-increasing set of goalposts of the RBI............

Read - IE

Why aren’t banks taking RBI’s cues?

.........Although RBI has flagged the lack of monetary transmission as an area of concern, it has done little to ensure that consumers benefit from the steps taken by it. Even the finance ministry, which has trained its gun on RBI to cut rates, has also failed to convince state-run banks to ease rates and help borrowers access cheaper loans. Obviously, banks have their own reasoning. For instance, they say that the repo rate cut is only a signal as most of them make only limited use of RBI's overnight borrowing window...........

Read - TOI

Subbarao throws water on next cuts

....A day after announcing a 25 basis point cut each in the repo rate and the cash reserve ratio, RBI governor D Subbarao threw water on hopes that with inflation trending down, there would be more policy cuts in the months to come...........

Read - DNA

RBI rate cut is a washout

....... The Reserve Bank of India (RBI’s) policy response has been based on the assumption that inflation has moderated. Or, should we say the banking regulator has finally succumbed to the pressures of New Delhi? The cornered RBI has had to acquiesce during one quarter or another. To be fair to the monetary authority, how long can it hold on to the government’s pressures? ................

Read - BS

Chidambaram welcomes RBI rate cut, promises more government action

..........."They (RBI) have taken the call now, they have given the reasons...and I welcome the decision. But interest rates (are)... one issue that India faces. There are many other issues that have to be addressed and I hope we can address them in the days ahead,"................

Read...........

My View on "Vaz was..............."

I, too, am grieved at the sad demise of Madam I.T.Vaz. As I had heard, she had a meteoric rise in the Bank's hierarchy.  She had appeared for selection before a Board (perhaps, for Probationary Asstt's post) and the Board was so pleased with her performance that she was selected for the next higher grade!  Later, in the early 1990s, she was elevated to the position of ED, the first lady officer to have broken the glass ceiling to reach the top position. After the combined seniority was implemented, many ex-ACD officers had excelled in various positions in different departments.  Since managerial experience was a pre-condition for elevation to ED's post, she was posted to Ahmedabad as Manager. 

When the book project "Mint Road Milestones: RBI At 75" was under way, as part of the Platinum Jubilee celebrations, we had called on her at her residence for getting any photos / material concerning any landmark events in the Bank's history.  She had allowed us free access to her rich and valuable collection of photos etc. and also shared her memoirs and offered us help and guidance.  Some of these photos adorn the pages of the book. We were moved by the kind courtesies and hospitality extended by her to us despite her indisposition. I fondly cherish those delightful moments.  She did compliment to us on release of the book.  Her demise is a tragic loss to us. Her memories will abide with us. May the departed soul rest in peace!

- S.M.Khot 

My View on "Missed u so much............"

Dear Mangesh

While we should appreciate the sentiments of those who have become addict to VITALINFO, I would suggest, when it comes to priorities, this kind of ‘extra work’ should not be allowed to interrupt your normal life and you should put the interests of self and family always first. Whenever VITALINFO disappears for a day or two, you are more than making up by taking trouble to update us even about the happenings on ‘holidays’. Many thanks. Enjoy the day and take care. 

- M G Warrier

Shri warrier is so right. Dear Mangesh should have some respite when he is occupied by some personal work. The anxious enquiries about the Newsletter from his readers show that they consider that the day has not begun all right without the Newsletter! I would take this opportunity to say that Mangesh should not hesitate to publish views critical of the RBI as those who air such views found, while in service, that such views fell on deaf ears! 

- A.Chandramouliswaran

Manmohan to release coins on J&K shrine board silver jubilee

The Prime Minister will release two commemorative coins specially designed by the Reserve Bank of India — and which have great significance for Jammu and Kashmir — to mark the silver jubilee of the Shri Mata Vaishno Devi Shrine Board (SMVDSB) in New Delhi on Thursday. According to highly placed government sources, Dr. Manmohan Singh will release two coins, of Rs. 5 and Rs 10 denominations, which will have the embossing of the form of the revered Mata Vaishno Devi, who is believed to be the eldest deity among the six other Devi shrines between the Yamuna and the Chinab rivers in north India........

Read - The Hindu

Fake notes get into liquor shops

Chennai: With Tasmac liquor outlets being flooded with counterfeit currency,  the RBI has joined the CB-CID in training their staff to  detect fake notes. “Tipplers throng the Tasmac outlets at  all times of the day, keeping the staff  on their toes and leaving them with little time to check on the notes given. This makes it easy for customers to use them here,” say sources in the counterfeit currency wing of the CB-CID. ...............

Read - Deccan Chronicle

Banks detect fake currency in collections

INDORE: Large number of fake currency notes recovered by various branches of ICICI bank in the Malwa region during the past quarter has pointed to the operation of a organised racket circulating fake currency in the region. Police have also confirmed the fact and are investigating the matter........

Read - TOI

' Risk averse banking' must give way to ' responsible banking'

.... Risk averse banking' in credit deployment has to give way to ' responsible banking' complying with the twelfth plan vision. The global risks are transmitted to the financial market mainly by volatile capital flows and crude oil price through the exchange rateinterest rate channel. To minimise this risk, the action of monetary policy has to be complemented by a relevant fiscal and external sector policy. The way forward Assuming that the above mentioned risk factors have been managed by stakeholders, the following three monetary policy objectives, viz., to encourage investment, anchor medium term inflation expectations and improve liquidity conditions to support growth, have to be achieved. In this context, can we envision an 8% growth, 6% inflation, 6.5% policy repo rate and 3% CRR by 2014- 15? To conclude, frontloading of monetary policy through rate reduction should be avoided and the ' baby steps' approach may be considered......

Read - FPJ

Reddy charts five-pronged strategy to revive growth

...............Reddy hinted that the government may hand over the financial sector control to the RBI. In this context, he cited the case of the UK, where financial sector regulation has been handed over to the Bank of England. “In England, there was a separate regulator for banks. Now, they all (financial sector regulators) were brought under Bank of England by law.” In fact, a single financial sector regulator was contemplated by the Indian government some time ago, he said. “If you were to reform the financial sector in India, there were lessons to be learnt from global experiences. Earlier, the concentration was inflation targeting and independent monetary policy. Now, somebody should be in charge of the nation’s financial stability. The central bank should be in charge of that,” he said.............

Read..........

In conversation with Dr Y.V. Reddy

Former RBI Governor Y.V. Reddy talks about the issues raised in his new book "Economic Policies & India's Reform Agenda - A New Thinking."

Watch the video........

Nizams' jewellery need conservation: Australian writer

HYDERABAD: Australian writer John Zubrzycki, who penned the biography of the 'original owner' of the Jacob Diamond expressed concern at thefabulous jewellery of the Nizams being locked up in the vaults of the Reserve Bank of India and said the unique pearls in that collection could get damaged if they are not treated for conservation.............

Read - TOI

State electricity boards' second debt recast to get provisioning benefit

..............According to the newly appointed Deputy Governor of RBI Urjit Patel, monetary policy and fiscal policy both impact aggregate demand and therefore both have implications on the current account deficit.  The CAD has widened primarily due to worsening of trade deficit. “In a slowing economic growth high trade deficit is a matter of concern and shows some imbalance. So partly this could be that lot of domestic production is getting substituted by imports,” said Deepak Mohanty, Executive Director, RBI............

Read - BS

India repo window won't turn surplus even if govt spends all balance: cbank

The Reserve Bank of India's daily liquidity adjustment facility will not turn into surplus even if the government spends all its surplus cash balance, Executive Director Deepak Mohanty said on Wednesday..........

Read - ET

Corporates meeting norms to get banking licence: FM

......."The RBI has drawn up draft guidelines, guidelines say that more licences will be given to the private sector... the governor told me he will give out guidelines in two weeks," Chidambaram told Reuters Television in an interview in London on Tuesday: "Whether any corporate or any kind of corporate will be excluded I cannot say." "But if the guidelines are made out and transparently spelt out and if a corporate satisfies those guidelines, I don't see any reason why a corporate should not be given a licence."......

Read - IE

NABARD launches ‘Credit plan 2012-17’

..............Besides the credit outlay in the priority sector, the State Focus Paper  also discusses the sectoral issues for development, replicable practices, success stories and suggests action plants for state government and bankers. R Amalorpavanathan, chief general manager, NABARD, Kerala, in his presidential address, urged the bankers and government  officials to expedite the completion of electronic benefit transfer by March 2014. K R Rao, general manager, NABARD, welcomed the participants. V S Senthil, Principal Secretary, LSGD; V S Sudheep, DGM, RBI; G Sreeram, GM and convenor, SLBC and other senior executives representing banks and government departments attended. G Janaki, DGM, NABARD, proposed the vote of thanks.

Read............

A cornered RBI acquiesces

Efforts to revive growth have to come from the govt, as modest attempts like this one by RBI remain insufficient............

Read - Mint

It’s not govt vs RBI, but a difference of opinion: Reddy

.......................“There are different perspectives. Just because there are differences of opinion, it does not mean that either of them is right or wrong. Nor does it mean there is no coordination either. There are institutional dynamics and one should not jump to conclusions,” ..............

Read - Hindustan Times

Risks are real, benefits not certain: Y V Reddy

...............It isn’t bad news if successive governors think alike. In fact, (C) Rangarajan, (Bimal) Jalan, me and Subbarao all think alike and it is good for the country. For 20 years, governors of the central bank, by and large, have thought the same way. So, we will have good financial stability and a good financial sector. You should be happy. You should always have a mutual admiration among successors and predecessors and not a mutual hate society............

Read - BS

RBI cuts interest rates for first time in 9 months

Shedding its 9-month long hawkish monetary policy stance, the Reserve Bank of India on Tuesday slashed its key interest rates by 0.25 per cent and released Rs 18,000 crore additional liquidity into the system to perk up growth through reduced cost of borrowing. RBI Governor D. Subbarao in the third quarter monetary policy review surprised the market by cutting repo rate by 0.25 per cent to 7.75 per cent and cash reserve ratio (CRR) by similar margin to 4 per cent.........

Read - The Hindu

Vaz was................

In the golden light'ning 

Of the sunken sun, 

O'er which clouds are bright'ning, 

Thou dost float and run, 

Like an unbodied joy whose race is just begun.

Goodbye Blithe Spirit

- Sanjeev Sharma

She was once to Patna office in 1993 if I recollect fine. On her way to the Patna airport she wanted if we have packed a lot of food and beverages as she expected the flight will be delayed. She turned around the other ED (Kumari Vishwanathan and said she does not need any eatable for she had never seen her eating anything. That is I T Vaz. Great character she was.

- Manas Mohanty

I am very much grieved to learn about the sad demise of Miss Vaz. I knew her since my BTC days i.e. mid-sixties, when I was a tutor there and she used to visit as a guest speaker. My real association with her  can be said to be  since 1992, when we used to work as E Ds and occupy the same 17th floor cabins. She was intelligent, no doubt, but had the guts to put across boldly what exactly she failed on issues. This is a sign of intellectual honesty. After retirement, whenever she visited Pune, she used to call on me and I used to at least ring her up during my short visits to Mumbai.  Every Diwali, she used to send me greetings unfailingly, which I used to reciprocate at X’mas. Last time I wrote to her was in December 2012. I did not however get any reply and was indeed worried. The worst has come true. I have lost a good colleague. May God rest her soul in Peace.

- P.B.Kulkarni [Pune]

“May her soul rest in peace” won’t be acceptable to Madam I T Vaz ! She never tolerated injustice… But she found injustice around, above and below. I am sure, she will continue her fight and that trust will help those who knew her to carry on the fight! 

- M.G.Warrier

Sad to learn about Ms Vaz's death. May her soul rest in peace. In 1968 she was my ACO in ACD where Iwas posted as JO Gr II as part of my training. Thereafter in 1995 she was my ED when I was CGM in-charge of Financial Institutions Cell. I found her to be clear headed and bold in her work. I remember once I had gone to discuss some matter with her in her room on the 17th Floor. She had just returned from DG (D.R.Mehta)'s room and was furious after having a tiff with DG. She said that what did he think about himself that he is an IAS and can get rough shod over ED. Such was her demeanour.

- Man mohan Singh Rekhrao

Extremely sad to know about her sad demise. I had seen her several times in Garment House where ACD was located. She was ED during the tenure of Dr I.G. Patel. Graduated from Sydenhem College, interviewed for the post of Economic Asst, she was offered the post of Officer because of her brilliant knowledge. She was an epitome of grace and etiquette.

- Sitendra Kumar

Obituary

Mr. P. Arumugam, Retd. Gr. ‘B’ Officer, RBI, Chennai passed away on 15.01.2013. Mobile: 91768-96036

Missed u so much............

VITALINFO could not be updated for 5 days since I was on family vacation.  I received several calls, e-mails and sms asking reasons for the missing VITAINFO.  I am short of words to thank all the avid readers of VITALINFO................... 

‘Central Banks’ Autonomy is an Overrated Fiction’

....I believe the autonomy of central banks is a fiction. I also believe it is much overrated. The question in the political economy of central banking is “independent of whom?” central banks are deeply political institutions and it is disingenuous to pretend otherwise. The struggle to determine how they should allocate credit and to whom is very emotion-charged and important to examine closely. Should central banks be independent of humans in the name of some abstract notion called price stability? If so then what is the value of price stability in bettering the lives of the citizens? .......

Read - ET

RBI wants to issue new licences as soon as possible: Subbarao

......It’s in the final stage. We had consulted the government. They have made certain points to which we have responded, and I don’t know how many reiterations it might go through; but now we are awaiting the government’s response to that. Both the government and RBI will want to launch this as soon as possible.

Read - Mint

RBI: Urgent need for new investments

.......Subbaro has clearly passed the buck to the government to create an environment which encourages investment, both from within the country and from outside. Government’s focus currently is more on attracting global capital rather than improving domestic sentiment. Here the governor points out to the precarious Current Account Deficit (CAD) scenario which has touched an all-time high and is unlikely to come down soon. In fact he has warned that ability to attract foreign exchange will be hit if the economy slows down further..........

Read - BS

RBI pushes for inflation-linked bonds, buyback of gold by banks

..... “We had a discussion with banks today on introducing inflation-indexed bonds. We had introduced these bonds some years ago, but this time we would be redesigning them. We consulted banks if these would be successful. Banks asked us to which inflation index the bonds would be linked, say consumer price index or wholesale price index or any other index, and what interest rate will be offered. They asked us if these bonds would attract retail investors or bulk investors.”......

Read.........

RBI wants banks to raise lending to exporters; sets up panel

 Worried over the low share of export credit in the books of banks, Reserve Bank Governor D Subbarao today constituted a technical advisory group to look for solutions to help the sector. The announcement of the committee, to be headed by RBI Executive Director G Padmanabhan, comes on the same day when Subbarao declared the burgeoning current account deficit as "biggest risk for inflation and macroeconomic management"..................

Read - ET

CRR cut to perk up investments, affect interest rates: Montek Singh Ahluwalia

"The Cash Reserve Ratio (CRR) cut will be welcomed by the markets because it will essentially create more resources for the banks to lend. I think this is the right thing to do at this point given that we feel that economy is beginning to bottom out,".........

Read - ET

RBI rate cut to stimulate growth: C Rangarajan

"RBI has taken a very balanced view. This will ensure that stimulus is provided to growth while continuing efforts to contain inflation. The RBI will cut rates if inflation behaves as per its projection,"........

Read - ET

New director on SBH board

Hyderabad: The Government has nominated social activist Syed Mazher Hussain as Director on the Board of Directors of State Bank of Hyderabad. He would be on the board for a period of three years with effect from January 16, according to a release.

Read - HBL

Financial literacy including populating Electronic Payment Products – visit to Mumbai Marathon and staff colonies

Mumbai Regional Office of Reserve Bank of India took the opportunity of spreading awareness on electronic payment products during the event of 10^th Mumbai Marathon on January 20, 2013, which witnessed participation of more than 35,000 persons of about 165 companies. The awareness was done through distribution of leaflets related to electronic products (NEFT/RTGS) in various languages to the participants of marathon and general public. This was well appreciated by Hon’ble Governor of RBI and Regional Director for Maharashtra and Goa of RBI.  Mumbai Regional Office of RBI also took the awareness campaign at the resident colonies of RBI employees at Mahim and Malad, on 64^th Republic Day by distributing leaflets in regional language on NEFT/RTGS. The residents were also explained the benefits of using electronic methods of payments in terms of ease, low cost, fast and security

Over to government now

With RBI doing its bit by cutting repo rate 25 bps, indeed more if you keep in mind no one expected the 25 bps CRR cut, the focus is once again back to the government and what it plans to do to fix India’s growth prospects. RBI’s rate cuts, needless to say, were along expected lines given the slowing in core inflation and in economic growth............

Read - FE

Subba’s Big Bang Theory

I thought the world will end on December 21, 2012 as the Mayans had said - and as the physicists say we go into a Big Bang collapse - and RBI will disappear with a high inflation record. That did not happen so we are in a relentless pursuit of higher growth and lower inflation.................

Read - TOI

Central bank’s risky bet

..............RBI underscored this concern both in its macroeconomic review and policy statement. With such a large external vulnerability weighing on the economy, making it cheaper for exporters, importers, and companies with foreign exchange obligations to short the currency isn’t what any central bank would prescribe, regardless of the growth-inflation dynamics. But RBI chose to do so. And in doing so it added to the very risks that it exhorted us to guard against.

Read - Mint

Timing it right

At the customary press conference after the monetary policy announcement, RBI Governor Duvvuri Subbarao was asked whether he cut the policy rate this time around because he might have missed the bus with inflation expected to head up again next fiscal. “I may have missed many buses,” Subbarao said laughing, and much to the amusement of those present.

FE

Inflation still an issue, so’s CAD: D Subbarao

... By far, the biggest risk for inflation and macroeconomic management is current account deficit (CAD) – not just high CAD, but high CAD amidst slowing growth and high fiscal deficit. If inflation eases more than we expect it to and if CAD moderates further, there will be more room for monetary policy easing. However, if inflation rate and CAD move along currently expected lines, then the scope for further easing will be limited. We expect CAD to be lower in the fourth quarter – it has to be significantly lower..............

Read - DNA

Challenge for banks to pass on RBI rate cut: Indian Overseas Bank Chief

................Stating that RBI has "guardedly" cut policy rates, public sector Indian Overseas Bank today said it would be a challenge for banks to pass on the benefit of the rate cut to push growth.............

Read - FE

The dilemma remains

......Monetary policy’s traditional dilemma of supporting growth versus countering inflation can perhaps never be fully reconciled but the compact and lucid third quarter review has done a very good job of articulating an inherently complex stance.

Read - The Hindu

RBI delivers twin cuts, stays cautious

Shedding its nine- month long hawkish monetary policy stance, the Reserve Bank of India ( RBI) reduced its key interest rate by 0.25 per cent and decided to inject Rs 18,000 crore liquidity into the system to perk up sagging growth.....

Read - FPJ

RBI could have cut rates a bit more

.....The 25 bps cut in Repo and CRR was expected, given the movement in macro parameters. But perhaps the RBI could have gone in for a bigger 50 bps cut as the sentiment needs a big boost and investment also needs to pick up significantly, going forward. Overall, however, this is a step in the right direction and marks the start of a rate-cutting cycle...............

Read - HBL

A symbolic rate cut

.........Now, nobody in his right mind would dislike higher growth, but, again, no one in his right mind would like to trade higher inflation with higher growth. It is this balance between growth and inflation that the RBI has been mandated to strike while formulating its monetary policy............

Read - FPJ

Cash injection

I t is wrong to believe that the Reserve Bank of India’s (RBI) decision to cut its benchmark interest rates by 0.25 percentage points has been a result of succumbing to pressures from the Finance Ministry or India Inc. The reduction was inevitable even from a technical standpoint...............

Read - HBL

Wrong diagnosis, wrong prescription - A.Seshan

The announcement by the Reserve Bank of India (RBI) of the relaxation in policy rates and the Cash Reserve Ratio by 25 basis points each is the result of the wrong diagnosis of the current situation that is no different materially from what it was on the occasion of the last review. The basic causes are the wrong benchmarks used for measuring inflation and liquidity.........

Read - HBL

A well-calibrated monetary policy: S S Mundra

....At this juncture, the major worry for the Reserve Bank of India (RBI) is the stresses on balance of payments and their implications for the currency and overall macroeconomic stability. Hence, in its economic review, it has said even if inflation recedes further, the wide current account deficit may slow the pace of monetary policy easing. RBI has also sensitised the public about the inflationary risks originating from suppressed inflation, pressure on food prices and high inflation expectations getting entrenched into the wage-price spiral.............

Read - BS

India Inc happy about RBI rate cuts

Reeling under slowdown, India Inc. today hailed the Reserve Bank of India’s move to reduce repo rate and CRR by a quarter per cent, saying it will spur growth and ease the prevailing tight liquidity condition..........

Read - The Hindu

Canara Bank to open 2,000 ATMs by March 2014

.....“In order to increase our delivery channel, we will be opening 2,000 ATMs by March 2014,” Canara Bank’s executive director AK Gupta said while inaugurating the first e-lounge of the bank in the capital.......

Read - Moneylife

Obituary

Former Executive Director I.T.Vaz passed away this afternoon (24th January 2013) in Jaslok Hospital at Mumbai.  She had developed blood clots in brain.  Funeral will be on Saturday morning at Stephen Church, Warden Road.  This was informed by her neighbour Mr. Erick Lobo (9224524003).

May her soul rest in eternal peace. 

Rough, tough and impossible........... 'Her'story is now history.....

Crusty,kind. Tough, soft. Fiery, nurturing. Bitter, sweet. Gumption and guts in equal measure - ITV

I.T.Vaz - When she was there, no one got space. And now that she is no more, the space she left cannot be filled.

She was my first Deputy Chief Officer in the erstwhile Agriculture Credit Department. Many many years ago. I remember our first meeting. " So you are the new wonder boy in the Bank. Just you remember this is ACD. This is the best Department. More we are a family. We take care of our own. Do you follow? Ofcourse, I did'nt. But I nodded. Don't shake your head young man, speak up. That was ITV. Straight. Both barrels at a time at a time in an institution where words were carefully measured and counted.

She was my Principal Inspecting Officer, and I have seen her trudge uphill and down dale visiting Primary Societies, branches in far flung, remote areas - unafraid, giving all the men a run for their money and putting errant Board of Directors to flight. She was my Chief officer. My Executive Director. I have seen her face the Governor and all the Deputy Governors together on an issue where she thought giving in would detract from the stature of the Bank. When it looked as if she was going to lose, she gathered herself and said " Sir in that case I would like to record my dissent. I do not want those who come later to say that no one protested" I was there. I have also had the dubious privilege of being thrown out of her room. I was protesting on a decision which had been taken at a much higher level and telling her to go and articulate her real feelings. She explained things to me twice or thrice and then said " What is your problem.? Go. " I stood my ground. " In that case will you get out of my cabin". I did. So did she. But we headed in different directions. I down. She to the 18th floor.

And now it is too late for me to say Ma'am, i was so proud of you. I could go on and on. She was rough, tough, absolutely impossible at times but she was a great boss, a great. Lady, a great friend.
God, wherever you are, look after her.

- Dr.Y.S.P.Thorat, Former ED, RBI & Former Chairman, NABARD

Chidambaram says no rift with RBI on rate cut

........Terming it as a "healthy debate", the finance minister said that the final call will be made by the central bank which in line with its independent existence. The statement comes days before RBI's quarterly policy review on Tuesday. Over the four months or so, the finance ministry has gone public with its suggestion to shift to a monetary easing stance given the severe moderation in industrial growth and a decline in exports. ...........

Read - TOI

RBI Governor likely to meet Chidambaram tomorrow

NEW DELHI, JAN 23: Ahead of the monetary policy review next week, RBI Governor D. Subbarao is likely to discuss the prevailing domestic macro-economic as well as global situation with Finance Minister P. Chidambaram tomorrow.........

Read - HBL

Fake currency: AP police to have strict checks at airports

..............Andhra Pradesh Police today decided to have more stringent checks at airports by the Customs and Airport Security to curb the flow of fake currency in the state. Last year fake currency of more than Rs 75 lakh were seized from different parts of the state. A decision in this regard was taken today at a meeting of state level committee for detection/ seizures of counterfeit notes/ Fake Indian Currency Notes (FICN), attended by senior officials of RBI, NIA and IB..............

Read - BS

NAFCUB is on the lookout for a suitable person to assume charge as Chief Executive

......The work requires understanding of issues and problems of the urban cooperative banking sector and interacting with RBI and Govt. on regulatory policy, appraising the Board of NAFCUB comprising of members elected from the member institutions, implications of such policy measures, putting up analytical  note for suggesting changes in policy, reviewing the performance of urban cooperative banks and sector as a whole,..........

Read...........

Why RBI needs to RAISE interest rates

On 16^th January 2013, speaking at an outreach programme of the Reserve Bank of India (RBI) at Lalpur Karauta village in the state of Uttar Pradesh, India, Governor Dr. D. Subbarao said this: "If you see the currency note, it is printed on it that 'I promise to pay the bearer the sum of Rs 100' and it has my signature as the RBI Governor. What does the promise and signature mean? It means that the RBI will control inflation and maintain its purchasing power". It is another matter that the stream of journalists present did not report this very important statement (see here, for example) when they filed their reports on the event. Either they did not really understand what the Governor said, or did not like what they heard..............

Read........

Stage set for lowering policy rates

......The market’s difficulty in gauging RBI’s mind and actions has increased of late, with the central bank vacillating between wholesale and retail inflation as its policy anchor. While it makes sense to anchor inflation at the consumer level from the common man’s perspective, the monetary authority has only limited influence on consumer price outcomes...................

Read - HBL

My View on "RBI needs to stimulate growth as containing inflation: FM"

The FM does not manage RBI, but he ensures that his intentions and desires are scrupulously followed. Holding the power even to fix the salaries and pension of RBI staff and making the institution to gradually lose its international image as a well run Central bank, the Finance Minister dictates terms to RBI. Except for the last few months where the Governor has been stubborn, (only in its monetary policy stand) the FM has made RBI to function as the ministry wants. These pronouncements mean nothing but to confuse the public. 

- Dr.T.V.Gopalakrishnan

Banking licences: Corporate honchos rule out conflict of interest

....... “More than the ownership, RBI needs to put greater emphasis on corporate governance, transparency, the business model and long-term commitment. This will ensure organisations, corporate or otherwise, obtaining banking licences engage in fair business practices and operate within the regulatory framework, as prescribed by RBI,”.............

Read - BS

New secretaries named in finance ministry

The government on Wednesday appointed 1979-batch IAS officer Rajiv Takru as secretary in the department of financial services in the finance ministry. In another key appointment...........

Read - TOI

Retirement planning: Why you should avoid the New Pension System

..................More than three years ago, we were excited by the NPS. But continuous tinkering and no PFRDA Act have changed the scenario. Unless the government addresses all the issues we have detailed, stay away from NPS.

Read - Moneylife

RBI bars foreign investors from buying more Pantaloon shares

...."No further purchases of shares of this company would be allowed through stock exchanges in India on behalf of foreign institutional investors," the RBI said in a notification on Wednesday............

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SHG and Obama – What a great combination!

All those associated with the micro-finance movement, both in India and world wide,  know pretty well the expansion of the term ‘SHG’. It stands for ‘Self-Help Group’.  On 23 Jan 2013, while reading a news item in the ‘Firstpost’ on the first ever presidential inaugural ball organised by Indian Americans to welcome Barack Obama’s second coming and loudly register the community’s presence, I stumbled on the term ‘SHG Foundation’ in it. 

Dr S Santhanam PhD (Eco), CAIIB

General Manager (Retd), NABARD &

Consultant - Development Finance

Pune, Maharashtra

M: +91 9850839776

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Banks may miss RBI's deposit, credit growth estimates

............."I think credit growth is going to be much slower this year than what the RBI has projected because of cumulative slowdown in industrial and economic growth and, unless credit picks up, deposit growth is unlikely to grow,"........

Read - ET

Gold seen ruling firm as inflation hedge

....In the global market, gold was holding at one-month high. In India, any rise in the rupee that will make imports of commodities such as gold, crude oil and vegetable oils cheaper and the steep rise in prices after the Government raised the import duty to six per cent from four per cent will come into play..........

Read - HBL

Will the RBI Dy Governor contradict this article which has come out clealy that investments in gold is to hedge against inflation. The economy today is in a precarious condition due to persisting inflation and without controllintg it nothing can be achieved. It has taken away the ethics ,values morale and social harmony in the society and given rise to aggressive pricing of goods and services by all including the govt thereby letting loose a semblance of anarchy in the management of the economy.Pre liberalisation conditions were much better and things were under control.Now the economy seems to have lost its focus and there is neither growth nor equitable distribution of wealth.The system of Governance has been missing every where and the economy is in a mess where the Gold is the only safe way of investment to protect what ever is left.Time the authorities both the RBI and the Govt sit togother and analyse the mistakes and come around to find a lasting solution to contain inflation.

-  Dr.T.V.Gopalakrishnan

Charge prepayment penalty only on fixed rate loan dues: RBI

Home loan borrowers who have opted for fixed rates may have easier terms on their mortgages as the Reserve Bank of India has advised banks to revise the penalty structure on prepayments and charge it only on the outstanding amount. It has also recommended that banks should focus on raising long-term deposits to fund more long-term loans to help reduce the EMI burden on home loan borrowers.........

Read - ET

Is it still too much to expect bonus shares from public sector banks?

The finance ministry and RBI should quickly lay down guidelines for banks to issue bonus shares, and also raise the FII limit to 30% for investment in PSBs, which will not only be another dose of reforms, but greatly assist the PSBs in raising fresh capital from the market............

Read - Moneylife

Indian banks must finance the poor to prevent another subprime loan crisis

....The Reserve Bank of India has published guidelines for micro-financiers and set up a licensing system. Interest rates have been capped at 10-12 percentage points above lenders’ borrowing costs, after the rates they charged customers soared to 28-30% in 2010. And companies are barred from lending to anyone with more than one outstanding loan. The revival looks dangerous, however, as the new rules may not prevent old problems re-occurring......

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Stabilising Indian Banks through coercive rights

....Importantly, selling the rights at a discount to the market value or the book value of the bank does not make the existing shareholders worse off because after they exercise the rights, they retain the same proportional ownership of the banks' assets. This is particularly meaningful in public sector banks, where the government is expected to exercise the rights and, thus, retain its share of control of these banks..........

Read - ET

Reforms to help economy gather pace, shows poll

.......But the poll also showed inflation will remain persistently high, preventing the Reserve Bank of India from cutting rates too aggressively, and that economic growth will not soon return to levels as strong as just few years ago...........

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Welcome signs of greater autonomy for public sector banks

...............Elected governments must work towards fulfilling the mandate for which they are elected. But that must be done using budgetary resources, not by using the banking system to achieve objectives that fall squarely within the government's domain. Hopefully, the holding company and NIF, by distancing PSBs from their ultimate owners (government), will transform PSBs and make them more like banks and less like government arms.

Read - ET

HSBC sees only 25 bps rate cut by RBI on Jan 29

.......A cut in the cash reserve ratio (CRR), the amount of deposits banks park with RBI, "is not a given", HSBC said, adding given the liquidity deficit, RBI may "signal continued efforts to bring this (liquidity deficit) down"............

Read - IE