....“We have been able to soften the inflation rate to some extent in the last two years. Yet, I have to admit it still continues to be high. Controlling inflation is our priority and will always be. Only this could provide succour to the poor,” he underlined. The statement comes just a fortnight ahead of the third quarter monetary policy review. There has been a clamour for reducing key policy rates to boost economic and industrial growth............
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.
Thursday, January 17, 2013
Implement changes in financial services sector
.......The commission is duty-bound to re-examine legislation governing central banking. The RBI Act was enacted in 1934 and is still a 'temporary' piece of legislation. But the real issue seems to be designing the right framework that enhances RBI's independence as a monetary authority, insulated from the executive's short-term outlook and pressures. The commission does promise to "...draft a monetary policy law emphasising the issues of independence, enumerated objectives, enumerated powers, and accountability mechanisms." The RBI Act has to be overhauled since it seems to have been designed to give control to the government, like the power to appoint the Governor and his deputies, power to vary their tenure, power to issue directions (after 'consultation' with the governor), and so on. The challenge, of course, is marrying independence with accountability. The approach paper says that one of the strategies used globally is inflation targeting. However, RBI has rejected this time and again primarily because most of the factors influencing inflation in India are outside the central bank's controls............
The inflation elixir
..........Make no mistake: by fostering inflation, the government enables the transfer of resources from the poor to the rich. The costs of inflation fall heavily on the most vulnerable. This is especially so since food price inflation has been particularly high. And as the poor struggle, the public deficit is used to dole out large subsidies to those with political clout, including to large farmers............
Routing codes for payment system serving purpose: RBI committee
........"The existing routing codes are serving their purpose and may be continued...IFSC suits the new payment systems (RGTS and NEFT) and many continue to be used," said a report of the Technical Committee to examine uniform routing code and account number structure. The Committee chaired by RBI Chief General Manager, Department of Payment and Settlement Systems, Vijay Chugh, was formed to look into feasibility of doing away with branch identifier in the Indian Financial System Code (IFSC).............
RBI panel moots uniform account number structure across banks
............The panel, headed Vijay Chugh, Chief General Manager with RBI, said that both the existing account number and the Iban may co-exist for about three years. Banks can use this time to fully migrate to Iban for all payment and non-payment transactions. The banks should modify their systems (all delivery channels) to accept both the numbers. Under this system, banks can continue to use the existing account numbers, and where necessary, the number will be padded with zeros to reach 18 digits............
More banks to have coin vending machines soon
.....In the last four months, RBI has intensified measures to distribute coins to consumers through market distribution scheme. It distributes coins worth Rs. 50 lakh every month in 12 markets chosen across the city. RBI also plans to extend the scheme to other cities across the State soon. A source said that RBI has been pumping in 70-90 million coins of various denominations worth about Rs. 50 crore every month in the past few months. RBI is also in the process of identifying 18 branches of various banks, including private ones, to set up dedicated counters to exchange soiled notes and for the retail distribution of coins.....
Finger print based ATMs coming soon
.........Unlike the conventional ATMs, where you have to key in your pin number for a debit card, one’s finger print logs him or her into the bank account. “It is after an online authentication of the finger print from a UIDAI centre,” a senior government official said. Once that is done, a person can perform banking transaction like in any other ATM..........
Credit-deposit ratio in UP disappointing: RBI
........"In Uttar Pradesh (UP), credit-deposit ratio is merely 46-47 percent, which is very disappointing. To improve this, RBI has selected 10 districts with lowest credit-deposit ratio and it will be increased by three percent,"...........
Provide banking facilities in each town: RBI Guv Subbarao
....."It is unfortunate that 90 per cent towns of the country did not have banking facilities. The target of RBI is to ensure that every family have a bank account," ...........
Customer service in banking: Long way to go in resolving inadequacies
Customer service is the most cliched phrase at banks and the proof lies in the recent report released by the central bank which lays bare the inadequacies. And the firebrand Reserve Bank of India Deputy Governor KC Chakrabarty, a former career banker himself, is throwing his weight behind addressing many of those. The global banking industry, with possibly the best of the brains, has been at the receiving end for putting its interests ahead of customers.....
Make up your mind—do you want more or fewer banks?
.......... Both, more or less. They are upset with some small weak banks, so they want less of them. They want more for financial inclusion. But less of business houses owning banks to avert conflict of interest, but more of them because who else will put in Rs.500 crore? Less of public sector—they want to avoid avoidable confrontation with the government. More of public sector, for financial stability. Less of...look, I am feeling thirsty, let’s head for the water cooler....................
Read - Mint
Cabinet to propose setup of holding co for PSU banks
......the Law Ministry's opinion has been sought for making legislative changes as various acts will have to be synchronised and amendments will be required in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980. Besides, State Bank of India Act 1955 and SBI Subsidiaries Act 1959 will have to be synchronised with the holding company structure..........
Despite progress India's financial sector vulnerable: IMF
Washington: Despite remarkable progress toward developing a stable financial system, India's financial sector still confronts longstanding impediments to its ability to support growth as well as new challenges to stability, according to a new IMF report...............
It's fine to be a big bank
........In India, the RBI insists on staff accountability
for non-performing assets as well as corrupt practices. The board is
required to be told who has been held accountable and how. Regulators
abroad must do likewise; they cannot take the position that staff
accountability is a 'management' issue. In high-profile cases,
regulators must seek public disclosure of actions taken against bank
executives, including details of claw-back of bonuses paid. If you can't
jail them, at least name and shame them. Secondly, it is worth
reviewing whether the capital set aside for such risks under the current
rules is adequate at all, given the magnitude of fines paid out in
recent cases. Thirdly, we must face up to the fact that the fines that
banks have had to pay are only another aspect of the 'too big to fail'
problem. Banks have the same incentives to take liberties with the law
as they have for taking credit risk or market risk..........
Play your part
This refers to ‘Banking on reform’ (IE, January 15) by Rudra Sensarma. The new banking act is expected to deter small players from entering the banking sector. We should be ready to bear this small cost if the benefits of financial inclusion are to be reaped. Moreover, it is not that the government is abdicating its responsibility by delegating the task of financial inclusion to the RBI. Everybody has a role to play in encouraging growth and the government alone should not be the agent of welfare. It is for the same reason that private entities are increasingly expected to uphold the value of corporate social responsibility.
— Shashi Kant, Mumbai (IE)
RBI disagrees with IMF, says regulators function independently
........The financial sector regulators do not enjoy de jure status in India but their "de facto position too reveals no interference in the functioning of regulators" by the government, Reserve Bank said in its comments on the IMF's Financial Stability Report on India...............
Read - ET
It is really surprising Why RBI Governor should disagree with the assessment of IMF on the independence of regulators of the Financial system. The very setting up of FSDC by the Govt is nothing but to take away the independence of the Reserve Bank in regulating the entire Financial system. Further, the Governor has directly and indirectly expressed his dissatisfaction over the Govts' interference in RBI's functioning and several reports have appeared in the press in the matter. Even the RBI which has independence to fix its own employees salary and pension has to refer to the Govt for clearance of the proposal is the position as on today. The Govt has two of its nominees in RBI Board, the need for that has not been convincingly made public. RBI and the GOVT have not been in agreement with the policies pursued by each other in the matter of controlling inflation and economic growth is a hot topic in the media for quite some time cannot be ignored by the Governor.
Gopalakrishnan (ET)
Why India should heed the IMF warning on corporate banks
“.......…the legal, operational, and regulatory framework for consolidated supervision of both bank led groups and financial conglomerates is still missing some important elements, and it would be prudent to first put in place and gain sufficient experience from implementing a comprehensive framework for this purpose before even considering whether to proceed with the entry of mixed groups and conglomerates.”................
Multiple roles of RBI create conflict: IMF
..........The IMF also is concerned with the multiple roles of RBI which create the potential for conflicting goals. “RBI officers are nominated as directors on the boards of public sector banks while, at the same time, RBI serves as the prudential supervisor of these banks. It would be preferable for the government to focus on policies that ensure the appointment of well qualified, independent board members that are not from the RBI. And while there may be some synergies, RBI’s role as monetary authority, bank regulator, and government debt manager may have led it to require banks to hold larger holdings of government debt than might be needed on prudential grounds.”.............
Be cautious on bank licences: International monetary fund
.....Parliament last month approved the Banking Laws Amendment Bill which is expected to arm the Reserve Bank of India with more powers to regulate the sector. The government has been prodding the central bank to expedite the issue of new bank licences. The IMF said that international experience has supported the prudent policy position of disallowing industrial houses from promoting and owning banks.......
Bank and PSU Employees Tie-up for Booking of Flats in Group
After successful completion of second tie-up the bank and PSU employees have made efforts of 3rd tie-up with builders for getting flats in their apartment in group deal. The group deal is always beneficial and provides better discount and facilities...............
Risks of shadow banking
......The Reserve Bank is simply following the trend of global central banks increasing surveillance on shadow banking. Basel III norms require central banks to tighten supervision on shadow banks across the globe through steps such as defining minimum capital. Deputy governor Anand Sinha has expressed the need to tighten shadow banking rules on various forums. RBI's focus is on regulating the informal lending and borrowing business. Its concern stems from the interconnectedness of financial institutions. ........
‘Amendment good for co-operative movement’
.........“Instead of a people’s movement, the co-operative sector in the state has become a political movement. With even badly managed banks and sugar mills being assured of state funding and subsidies owing to political influence, the burden on the exchequer has been enormous,” said Dr Ratnakar Mahajan, former member of the state planning board..........
It will be a busy term for Sebi's new member
.......A veteran of the banking industry, Raman started his career with Bank of India in 1974, and over the years gained expertise in corporate credit, international banking and human resources. He also has also worked overseas as chief executive of Bank of India’s US operations..........
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