Port Louis: The Reserve Bank of India (RBI) needs greater independence before it can adopt a monetary policy committee structure, Governor Duvvuri Subbarao said on Monday. The RBI is one of the few major central banks where monetary policy decisions rest in the hands of the governor, as opposed to a committee. While the RBI is not statutorily independent, in practice it has wide latitude in setting monetary policy...........
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Tuesday, March 26, 2013
RBI wearing too many hats: Ex-Sebi chief Damodaran
.........Let us take this as two separate issues. Let us look at the RBI issue. One of the problems with our financial sector at a conceptual level has always been the multiple hats that RBI has been wearing. Often because of that there is unavoidable conflict. If you try to play two roles where there is conflict built into those roles, no matter what your intentions are there will be some element of conflict. There will at least be a perception of conflict and perception is as important as reality.........
Leveraging the debt office
.........in the Indian context, there is also a potential conflict of interest in the government managing the debt function (even if it is housed in a notionally independent organisation). Since the majority of the banking system in volume terms is owned by the government, which consistently runs a fiscal deficit, what is to stop it from asking the banks that it owns to buy up more and more of its debt, so that yields can be kept artificially low? That could happen even under the current arrangement, but there are some checks by way of the RBI ensuring that yields are not out of line with market conditions. The transition could simply result in a monetary conflict of interest being converted into a fiscal conflict of interest...........
Read | Business Standard
Turf war in the offing
........In almost every country where regulators have been unified as the financial system has become more complex and as regulatory walls have become hurdles to better regulation, existing regulators have fought back. The past and present staff of various regulatory bodies are amongst the biggest opponents of regulatory institutional change. No doubt, in India too, turf war will take place. The commission, in recommending a non-sectoral law, will no doubt make regulators and many regulated entities, happy in the present set up, quite unhappy. .................
Proposed unified regulator good start
.......The proof of the pudding, as they say, is in the eating, and one would know the efficacy of the Srikrishna panel recommendations only after they are implemented. One hopes that the road map suggested is a purely Indian one within an Indian environment because, if it has been borrowed from the West, it would be problematic as the West has seen total failure in oversight of its financial sector.............
FSLRC says deposit-taking NBFCs must obtain license to operate as a bank
......The WG headed by Kishori Udeshi, former Deputy Governor of the Reserve Bank of India (RBI), said, “...deposit taking NBFCs, and functionally provides the same service as a bank. Yet there is neither a level playing field nor equal treatment between banks and NBFCs. A deposit taking NBFC is not subject to the same prudential regulations (such as branch licensing) as is applicable to a bank. This gives NBFCs a competitive advantage over traditional banks.".......
No story
.................Reporters rushed to the briefing in anticipation of the "big story" of the day, only to find that the report would be made public in the "next few days". The finance minister asked everyone not to share the details of the report. In fact, he made sure that "no papers are left behind" by FSLRC members who were carrying printed copies of the report.............
RBI offices, banks to work through March 29-31
........“With a view to providing greater convenience to the tax payers, it has been decided that all designated branches of agency banks and RBI offices conducting Government business will keep their counters open on March 29, 30 and 31, 2013 to accept Government taxes,”..........
Financial inclusion: New Post Bank of India is an excellent idea
.....It can bring vast unbanked sections of the population under the formal
banking network. It already does virtually everything a bank does,
except granting loans. Most post offices are already
computerised and interest rates on small savings have been partly
deregulated, so there is no reason why it cannot upgrade its operations
and take up the full gamut of banking operations. There are enough examples all over the world, notably in Japan and Germany, of post offices successfully offering banking services. What about the strict norms laid down by the RBI for grant of new bank licences? Will India Post be able to make the grade?......
“Take service to doorstep of villagers”
Deputy Governor of Reserve Bank of India K.C. Chakrabarty has urged banks to render technology enabled service at the doorstep of villagers. Speaking at a function organised here on Sunday to celebrate Pandyan Grama Bank’s 37th year of service in rural development, he said that the bank, which has been ranked fifth among regional rural banks (RRBs) in the country should betters its own record and emerge as the number one RRB...........
Banks start crackdown on wilful defaulters
...........In a communication to the chief executive of public sector banks, the finance ministry has asked them to take their board’s approval to start proceedings regarding penal measures. The ministry has also also asked banks to lodge formal complaints against the auditors of the borrowers with the Institute of Chartered Accountants of India (ICAI), in case it is observed that the auditors were negligent or deficient in conducting the audit...............
Risks & opportunities for upcoming banks
............. It is perhaps a good time to think of a new bank because it is one of the worst times for the industry - a period of learning and correcting..............
Are banks spending enough on employees?
Reserve Bank of India (RBI) Governor D. Subbarao says banking is not attracting the best talent. But are banks paying enough to be able to do that? Leaving aside qualitative factors such as job satisfaction and employee fulfilment, do banks in India pay enough to attract talent?.........
ICICI Bank, HSBC starts expanding credit card base
After a gap of almost four years, ICICI Bank and Hongkong and Shanghai Banking Corp (HSBC) have started expanding their credit card base. The duo, once the most aggressive credit card players in the country, have not been growing this business since 2008-09 as uncertain economic environment increased the risk of delinquencies. It appears that the two banks are now convinced that increasing their credit card portfolios will not lead to significant erosion in asset quality........
Micro and macro pain from reduction in interest rate on small savings
....It is bad news from the macro perspective because the need of the hour is to increase investment in financial instruments of which small savings is an important component. Instead by making small savings less attractive than before, investment in such savings is likely to decline even as investment in assets like gold and real estate increases.............
Interest rate on small savings, PPF lowered by 0.1%
..........Based on the decisions taken by the government on the recommendations of the Shyamala Gopinath Committee for Comprehensive Review of National Small Savings Fund (NSSF), the interest rates for small saving schemes are to be notified every financial year, before April 1 of that year.............
What does RBI’s 25 bps repo rate cut mean to you and me?
.....We may therefore, have to wait till RBI makes known its monetary policy stance for 2013-14 sometime in April-May, 2013. Till then interest rates may continue at the present level, as no bank has committed to lower the base rate even after a week of the announcement of the mid-quarter monetary policy review last week......
Cobrapost counters RBI's attempt to defend banks in money laundering charge
.........“For the RBI to say that there is no offence as there was ‘no transaction’ is a very novice reading of the law and a wilful ignorance of rules and regulations supposed to be crafted and implemented by the RBI itself,” .........
India's need for a credit line
This refers to Subir Gokarn's column "Capital flow conundrums" (Muddy Waters, March 25). The article was excellent and comprehensive; however, there was one important omission. The author did not mention the role of an international credit line as a safeguard against sudden outflow of capital from an economy. Such a credit line is an option - not an obligation - to borrow internationally in the event of a crisis when the usual credit market tends to dry up.........
PMO’S WAYS
Between October 2012 and March 2013 I have written five letters to the Prime Minister’s Office about harassment and extra recovery of money by bankers on Kisan Credit Card from my father, a farmer in Buxar district of Bihar. To this day I have not received any word from the PMO but one day around a month ago I got a call from Indian Overseas Bank asking me against which bank I had complained to the PMO because the letter mentions the problem is with a branch of the Bank of India but the PMO has forwarded my letter to them. I replied that I had complained against the Bank of India only but by mistake the PMO seemed to have sent it to IOB so could they please return it to the PMO? Again after a few days I got a call from NABARD and the question was the same! In this way my problem, pertaining to the much talked abut loan waiver scheme of 2008, is moving from one office to another but not getting solved. I now have more than ten letters from NABARD and RBI but the only thing mentioned in all of them is that my letter is being forwarded to this office or that!
- Rakesh Kumar, Village Pokharaha Tola, District Buxar (Bihar) - The Hindu
Colour-coding of mutual fund schemes is a childish move
..............investment success is significantly based on when you buy and when you sell. The problem of the first is taken care of somewhat by rupee cost averaging which is one of the best-known ways of dealing with risk.
Deposit-taking companies make hay in West Bengal
............Reserve Bank of India (RBI) Governor D. Subbarao and Deputy Governor K.C. Chakrabarty have said several times in the recent past that these companies, though receiving public deposits, do not come under the banking regulator’s jurisdiction. The products these firms mostly sell to raise money from the public are so designed that under the current legal framework, neither Sebi nor RBI can regulate them. Indeed, CIS falls within Sebi’s jurisdiction, but most of these companies take money selling products that cannot be classified under such schemes.............
India to circulate plastic currency
......Until the mid-1990s, retracted banknotes were burnt. Today, as in many other countries, soiled paper notes are shredded. "But then the question becomes: what do we do with the shreds?" R Gandhi, Executive Director of the RBI, said. "So far, we haven't succeeded in figuring out any successful commercial takers for that." The RBI has tried to recycle shredded notes into novelty paperweights, bricks or cardboard. But Mr Gandhi said they discovered the paper was so finely shredded that they could not even give it away. The shredded notes now make their way to landfills and land reclamations................
DON’T ALTER SIZE OF COINS
This is regarding the report “RBI to issue new currency notes” which appeared in The Hindu on March 19, 2013. It is hard to differentiate between coins of various denominations since their shape and size are almost similar. Ideally, each denomination must have a unique size. Even if inscription is altered, the shape and size of the coin must not be changed.
- Subhash S., Valiyaveli - The Hindu
AP Grameena Vikas Bank opens 50 branches
...........Of the 50 new branches, 34 are in rural centres, 15 in semi-urban while one is an urban branch. All the new branches are integrated with core banking solution through V-sat installation.........
ED questions Kalmadi in CWG case
New Delhi: Sacked CWG organising committee chief Suresh Kalmadi was on Monday quizzed for nearly six hours by the Enforcement Directorate (ED) in connection with its probe into alleged forex violations in the run up to the 2010 sporting extravaganza. During the questioning, the Pune MP was asked about other clearances that the Organising Committee (OC) of the CWG obtained from RBI to conduct overseas transactions, they said........
A few questions Sinha should ask Sahara
...........Even a small hike of, say, 25 basis points by the Reserve Bank of India, scuttles the share prices of banks and rate-sensitive sectors because investors feel the hike would hit investors. How is Sahara not affected by the interest rate hikes and cuts in the economy as it is able to keep rates constant?..............
Muthoot Fincorp launches mobile phone app to store jewellery virtually
......Muthoot Fincorp, the flagship and also a diversified financial services company of The Muthoot Pappachan Group, has developed the innovative mobile application 'My Jewel Box', Thomas George Muthoot, Director at Muthoot Pappachan Group said. The application is a a tech-savvy option to store gold jewellery on a virtual platform and enable customers to assess its value just within a few seconds..........
Bankers now Enjoy the Necessity of a Luxury Run
.....Bhatia is not the only one who has laughed all the way away from the bank.
More than half-a-dozen luxury entrepreneurs in the country now are
former bankers. Experts say their wide contacts and inside-out knowledge
of lifestyles, preferences and tastes of the uber rich make bankers a
perfect fit for luxury business...........
Guide to financing your education
......Thanks to the recent reforms and initiatives, it has never been easier
to finance one's own education. For instance, under the revised model education loan
scheme designed by the Indian Banks' Association, merit students taking
admission in recognised private institutions under the management quota
will also be eligible for study loans...........
PSU banks look attractive near current valuations: Analysts
The rate sensitive banking sector has been under intense pressure recently following a sting operation alleging a money laundering scam and a hawkish commentary by the Reserve Bank of India. The S&P BSE Bankex has fallen 5.15 per cent in the past one week and 7.50 per cent in the last one month. Investors with long-term perspective can look for buying opportunities
in some of the banking counters near current and lower levels as
valuations look attractive, say analysts......
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