MUMBAI: The Reserve Bank of India Governor Duvvuri Subbarao said on Thursday central banks need to be independent to make monetary policy decisions during a speech at a memorial event for the country’s first Indian central bank governor. The remarks come at a time when Subbarao is under immense pressure from the government to cut interest rates.......
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Friday, January 4, 2013
RBI, government need to act in harmony: D Subbarao
.....Welcoming Nobel laureate Joseph Stiglitz at the C D Deshmukh Memorial Lecture here, Subbarao said, the monetary and fiscal policies should "act in harmony" to achieve common goals. The comment comes in the backdrop of growing instances of apparent divergent views between the RBI and the Finance Ministry on a string of issues, including lowering interest rates and issuance of new bank licences...........
Captain Subbarao Finds a Hard-Hitting Batsman
..............Reserve Bank of India Governor Duvvuri Subbarao, who has steadfastly refused to cut high interest rates to ensure price stability, is likely to find intellectual reinforcement from Urjit Patel, the new deputy governor of the central bank. The 49-year-old, a cricket and football fan from The Boston Consultancy Group, will have a two-year term at RBI in policymaking, succeeding Karl Marx lookalike Subir Gokarn.................
Newsmaker: Urjit R Patel
For Patel, this is a re-entry into RBI. Between 1995 and 1997, he had worked as an adviser with the bank on banking sector reforms, debt market, pension fund reforms, real exchange rate targeting and the development of the foreign exchange market. He had also worked as an adviser in the finance ministry during 1998-2001. In his new job, Patel’s experiences with RBI and the finance ministry are likely to be an asset. His appointment comes at a time when RBI and the finance ministry are having deep disagreements on rate cuts. Though the government has been urging RBI to cut the interest rates, RBI has steadfastly refused to do so. It has kept the repo rate at 8 per cent since April 2011. RBI’s doggedness comes despite Finance Minister P Chidambaram announcing a revised fiscal consolidation road map to show the government’s committment to prune the gap between the Centre’s expenditure and receipts.................
Why Urjit Patel is unlikely to be Chidu’s voice in RBI
........If you want to know what Patel may tell RBI Governor D Subbarao when it comes to the next monetary policy on 29 January, the answer will be: look at Patel’s PIGs. If Patel’s Pure Inflation Gauges are still showing an inflationary spike relative to sector-specific gauges like food of fuel, he will recommend that rates be maintained. If not, he may call for a cut. But in either case, it will not be because he has deep sympathy for P Chidambaram’s viewpoint. If he has been selected in order to get North Block’s views to Mint Street, he may be mismatched in that role.
Rangarajan to unveil banking tech expo
......Rangarajan will deliver the keynote address, “Delivering Technologies for Innovative Banking” which will discuss a spectrum of issues across all banking functions. Some of the prominent speakers at the IBEX conference include Saumitra Chaudhuri, Member, Planning Commission; K. C. Chakrabarty, Deputy Governor, RBI; Anand Sinha, Deputy Governor, RBI; M.V. Tanksale, CMD, Central Bank of India; R.M. Malla, CMD, IDBI Bank, and D. Sarkar, CMD, Union Bank of India. IBEX will feature an extensive trade exhibition that will showcase the latest in banking technology from across the world........
Cheque Truncation System: Banks to block circulation of non-CTS cheques by March 31
......The CTS 2010 standard is highly accessible and profitable though it might lead to the wastage of resources as people lack complete knowledge. The old cheques cannot be used for clearing but can still be used for withdrawal purpose. The last date to completely stop the circulation and usage of the old format was earlier decided to be December 31 which is now changed to March 31 and with people becoming more aware, it gives them quite some time to act accordingly for minimal wastage and misuse of resources............
Read - IE
Financial inclusion: A huge challenge
............. “Moving towards universal financial inclusion has been a national commitment,” the RBI has emphasised in its report. The Financial Inclusion Advisory Committee chaired by Dr K C Chakrabarty will explore viable, affordable and sustainable banking service delivery models for unbanked population and suggest appropriate regulatory framework to stabilise financial inclusion............
Bancassurance proposal hits Reserve Bank roadblock
The draft bancassurance guidelines by the Insurance Regulatory and Development Authority (Irda), which proposed that banks could act as brokers and sell multiple insurance products, may be difficult to implement. Insurance industry players said while on one hand some insurers are not comfortable with the idea, on the other hand the Reserve Bank of India (RBI) has raised some concerns about the same................
RBI cancels licence of Swami Samarth Sahakari Bank
......The RBI delivered the order cancelling its licence to the co-operative bank, effective from the close of business as on December 28, 2012. The bank ceased to be solvent as all efforts to revive it in close consultation with the Government of Maharashtra had failed, the RBI said in a statement........
Corporates should not be allowed into banking space: Joseph Stiglitz
........."I think, the real problem in the financial sector are issues of conflict of interests. And when you have corporates opening their own banks, you are opening a venue for conflict of interests," .............
Bandhan, SKS eye banking licence
With the Reserve Bank of India ( RBI) expected to release final guidelines for issuing banking licences soon, two of the country’s largest micro lenders, Bandhan Financial Services Pvt Ltd and SKS Microfinance Ltd, are contemplating applying for banking permits...........
Banking on consolidation
................. As is rightly pointed out, State Bank of India, the “big daddy” of the Indian banking sector, has to become still bigger to funnel the growth story of India — for which the first step would be to merge all its subsidiaries.
India’s gold imports: in for a cut?
........The report is open for comments until January 18 so the markets are moving on suggestion rather than planned action. The fact remains that India contributes a third of global demand for gold, much more than it can satisfy domestically – and the reasons for this are embedded in culture and religion, as well as investment strategy.
RBI defends stance on investing in gold
.........“The argument that a central bank which had diversified its own assets into gold has no moral right to preach against investment/import of gold is missing an important point. A central bank diversifying its dollar reserves into gold is entirely different from private agents in a country having capital controls investing in gold as it has the same effect of allowing such assets to be held in foreign currency,” said G Padmanabhan, Executive Director, RBI in his speech in Thiruvanathapuram on Wednesday............
Gold loan NBFCs’ growth warrants close monitoring: RBI panel
The KUB Rao Working Group has come out with tougher guidelines and asked for better documentation, standardization of interest rates, stricter KYC guidelines and more transparency from gold NBFCs. But the market has interpreted it as being good for gold loan companies.......
Solving the gold riddle
.... the Reserve Bank of India panel’s suggestion seems more rational. While recommending restrictions on gold imports by banks and agencies such as MMTC, which control about 56 per cent of gold imports, it has also acknowledged that the answer to the problem lies not in just curbing the demand but in providing alternatives that give real returns, adjusted for inflation..............
What’s missing in govt’s fight against gold
...........The yellow metal’s status as an investment in India is almost new found. For most Indians, it is just jewellery, which is by and large linked to social status. Gold is also an important part of the dowry (psst!!) in most part of the country. So, how far will the government’s initiatives and the RBI panel’s suggestions be effective in addressing such issues? Very little. As long there are no steps to tackle such traditional and conservative customs still prevalent, gold will remain key for Indians..............
Smuggling to rise on RBI's new plans for gold: Experts
........“Instead of curbing gold imports in India, the governments of China and the United States are encouraging individuals to possess more gold. Hence, the government must understand that gold is not a liability but an asset which makes its holder wealthier,” ...........
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