FSLRC’s recommendations are a serious blow to the independence of the Reserve Bank of India
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.
Monday, April 8, 2013
FSLRC’s monetary policy myopia
Slimming Package - A regulator for the regulators? Where does that leave RBI?
.....Brewing between Mumbai’s Mint Street (the Reserve Bank headquarters) and Delhi’s North Block (the finance ministry) is a turf war of mammoth importance. That’s not just because this finance ministry has been at odds with the central bank over its decision to keep interest rates high to fight inflation. Earlier battles too have gone down in history. For instance, former RBI governor Y.V. Reddy’s steadfast stance against the finance ministry push on capital account convertibility saved India from a worse fate in the 2008 global financial crisis.......
RBI has better credibility than government
.....One problem with the seven-member committee, which will replace the RBI in deciding bank rates, is that it will be the government’s hand-picked body. Five members will be representing the government and the rest the RBI. It will not be difficult for the government to fill it with people who will be at its beck and call. As an institution, the RBI commands considerable respect among the people, certainly more than the government.
“A Telephone Call Can Change Things”
........Here we have suggested the monetary policy committee. Please understand the country is being run by politicians -- in a democracy it is the job of the people elected to run the country. Now whether capital inflows should be there or not is a political decision. All we are saying is give the remit to the RBI at the beginning, quantify the objectives and do it in consultation with the RBI if needed. And if in the end, the RBI cannot do it, it has to explain its actions. Today RBI does not tell you how its mid-term policy is decided........
A matter of clarity
Exporters seeking to write off unrealised export bills will have to first surrender proportionate export incentives and then approach the banks. The Reserve Bank of India (RBI) has issued revised instructions to this effect through a circular dated March 12, 2013. The circular - A P (DIR series) circular No. 88 - further liberalises certain provisions and gives greater flexibility to exporters.............
New bank licences: RBI Governor to brief panel on April 9
.....Reserve Bank of India Governor D. Subbarao will appear before the Parliamentary Standing Committee on Finance on Tuesday. He is likely to inform the panel about the final guidelines for award of new licences in the banking sector.......
Finance Ministry relaxes govt banks' staff promotion norms
.............The Reserve Bank of India (RBI) has termed the present decade as retirement decade. In the next ten years, government-run banks have to hire in lakhs to fill up retirements and natural attrition, to keep their branches and other operations running. In addition, with Reserve Bank of India’s is set to allow new banks in the country, the public sector banks is likely to be favourite haunting ground for private sector players........................
Govt may Regulate Incentives to Banking Staff
............RBI has a say on the salaries and bonuses of bank CEOs of private and foreign banks, but does not tinker with staff salaries. It may ban banks from selling third-party products though their branches. If banks do not get their act together, they may even be asked to float a 100 per cent subsidiary to sell financial products, said the RBI official. Staff at private and foreign banks are incentivised to sell insurance products and mutual funds, mobilising deposits and trading in bonds and currencies.
VITALINFO's systematic coverage - Dr.T.V.Gopalakrishnan
Dear Tarambale,
Thank you very much for picking up one of my comments and highlighting in your blog. I have been forwarding your blog to many of my friends and they have all the appreciation for your efforts and systematically covering up most of the issues on banking and finance. I have forwarded your blog to Mr TCA Srinivasa Raghavan, who has written in the Hindu regarding the Glimpses of oral History of RBI. He has met you also in CAB when I brought him to introduce Ms Kamala Rajan, then principal. He was part of our team engaged in the writing of Vol IV of RBI History.
Thank you very much for picking up one of my comments and highlighting in your blog. I have been forwarding your blog to many of my friends and they have all the appreciation for your efforts and systematically covering up most of the issues on banking and finance. I have forwarded your blog to Mr TCA Srinivasa Raghavan, who has written in the Hindu regarding the Glimpses of oral History of RBI. He has met you also in CAB when I brought him to introduce Ms Kamala Rajan, then principal. He was part of our team engaged in the writing of Vol IV of RBI History.
With regards,
Dr.T.V.Gopalakrishnan
Banking on Financial Inclusion
............The RBI also seems to be exploring the possibility of enshrining financial inclusion in the Code of Bank’s Commitments to Customers, according to a recent statement by its Deputy Governor KC Chakrabarty. The voluntary code sets minimum standards of banking practices for banks in their public dealings. However, banks have been tentative about expanding operations to previously-unbanked or under-served rural and semi-urban areas so far, due to the low rates of return on investment in personnel and infrastructure. In response to such fears, the recently-released report of the Financial Sector Legislative Reforms Commission (FSLRC) acknowledges that there may be costs incurred by financial service providers in implementing such directions, and recommends that the Central Government reimburse the cost of granting such access to the financial service providers............
Tension as RBI does a Cyprus on Amanath Cooperative Bank
....Chaos prevailed as hundreds of customers thronged the bank’s head office in Shivajinagar and roughed up the employees to vent their anger. The employees initially tried to pacify them citing a technical snag but the account holders created a ruckus after they came to know about the RBI directive restricting transactions and blocking deposits. The Shivajinagar police rushed to the spot and managed to bring some order. Later, police officials convened a meeting with the senior bank executives and the account holders, who were assured that the matter would be resolved by Monday.......
Customers needn't fear: Amanath Bank
.........."The RCS told us the RBI rider followed the scrutiny of an old balance sheet of the bank which had a huge amount of NPAs (non-performing assets). But the bank has brought down the NPAs phenomenally. The latest balance sheet reflects this. We'll approach the RBI on Monday with the new balance sheet to convince the central bank about the reduction of NPAs in the current financial year,".............
Despair, denial, drama, divestments = discount sale
The market has taken a leg down post the Union Budget as investors despair about "nothing happening on the ground". Political drama with the DMK withdrawing support to the government and SP raising political rhetoric made investors distrustful about continuation of reforms. As if that wasn't enough, the Reserve Bank of India's (RBI) denial to cut interest rates aggressively, despite, by its own admission, companies losing pricing power and growth plummeting, added to the fire.....
Anatomy of a probe: Too many suspicious bank accounts not reported
........Apart from these, banks have also let themselves be used by India’s cooperative banks for high-value cash transactions. Many such transactions have come to the regulator’s notice. These executives may or may not be aiding and abetting money laundering, as it is still not clear whether the source of money is criminal activities and some of it is aimed at funding terrorist groups. It is also unlikely that the money will flow out of the country. Still, the transactions are very suspicious, and even if they slip through the first line of defence, the front desk of a bank, they must be classified as suspicious accounts and investigated thoroughly. The banks have not done that...........
Probe initiated against persons named in expose: Chidambaram
............n the sting operations carried out by Cobrapost alleging money laundering by some officials of ICICI Bank, Axis Bank and HDFC Bank, Mr. Chidambaram said the Reserve Bank is seriously looking into the issue and stern action will be taken by the government if any violation of tax law was found. “RBI is seriously looking into the matter,” he said, adding, “my officers have taken a look at ... sting. They have drawn some conclusions, we are looking into it. If violation is found (with regard to tax laws), stern action will be taken”.
3rd International Summit on Skill Development
Welcome Address & Opening Remarks: Mr. Kishor Kher – President & Trustee, KSWA
Setting the Context: Dr. Subir Gokarn – Ex- Deputy Governor RBI
Event Date:
17 April 2013 - 10:00am - 6:00pm
CAD: the danger is real
.....Such comforting words notwithstanding, it has to be realised that the CAD is unacceptably high, far higher than what the Reserve Bank of India (RBI) and other official forecasters say it should ideally be in the present circumstances (between 2.5 per cent and 3 per cent of GDP). Besides, the official explanations do not in any way minimise the structural risks arising out of a grim trade scenario and dependence on short-term capital inflows to bridge the deficit......
How the CAD impacts ordinary Indians - S.S.Tarapore
.....To contain the CAD, multi- pronged measures are required: ( a) The RBI should be allowed to sharply reverse monetary policy by increasing interest rates and reserve requirements and curtail RBI accommodation. This will entail increases in interest rates on deposits, lending and securities......
New fiscal, new VARIABLES
......ow these policy decisions play out at the micro and macro levels in the realty sector will be seen in the coming months. The RBI will announce its Monetary Policy Statement for 2013-14 in May amid demands for a further reduction in rates. Though the repo rate was cut by 2.5 basis points in March, the banks have not reduced the interest rates on housing loans.......
1991-type economic crisis unlikely: RBI
"..........it's unlikely that we will have a crisis of 1991-type simply because we have moved on. India is a much more liberalised economy, we integrated into the world, our exchange rate is largely market-determined, our financial markets are deeper", Subbarao said in an address, organised by the Federation of Karnataka Chambers of Commerce and Industry............
Rise in rural income fuelling food inflation: RBI Governor D Subbarao
.........Subbarao said here the poor segments of the population are seeing an increase in income, leading to shift in their dietary habits. People are shifting from cereals to protein and eating more of egg, meat, milk, vegetables, pulses and fruits and "that's causing food inflation"..........
Read - ET
Read - ET
6% growth not enough given India's poverty level: Subbarao
......"For a country, which by whatever estimates, has at least 300 million people below poverty line, a six per cent growth is just not enough."..........
Slipping up on reforms front will prove costly, says Subbarao
..........The Government has raised customs duty to restrain gold imports. He pointed out that India can accelerate growth and improve welfare only if we effectively implement wide ranging economic and governance reforms. Subbarao said “slipping up on this will amount to a costly and potentially irreversible squandering away of opportunities. The Government has to take the lead in the process of economic revival. As the central bank and as the regulator of large segments of the financial sector, the RBI too has an important role to play.”........
P Chidambaram for reviewing FDI ceiling in different sectors
......Presently two committees -- one under Department of Economic Affairs Secretary Arvind Mayaram and the other formed by RBI -- are looking into different aspects of the foreign investment. He said RBI was likely to come out with its paper on FDI in two weeks time. "We will take it forward as soon as we have RBI paper and the committee's report. I don't think either the PM or I have any pre-conceived opinion on a particular cap", he said........
Consolidate to be competitive
......Ultimately, we need to ensure that our products are competitive in order to increase the market share of our exports and to curb imports. Rising domestic inflation has made India a high-cost economy even as weaknesses in our infrastructure remain a constraint on our competitiveness. The RBI’s indices of real effective exchange rate indicate that the rupee has appreciated on an inflation-adjusted basis against a basket of currencies. This needs to be corrected through some moderation in inflation................
A tough job on hand for central banker
.....As analysts across the globe break their heads over the fall-out of BOJ action on other economies, nearer home, it is bound to have demonstration effect. For rate cut protagonists in India, BOJ has given them fresh fodder to take on the Reserve Bank of India (RBI) which has come under intense criticism from across the canvass for its strident stance. With the apex bank slated to announce its annual monetary policy on May 3, pro-rate cut voices are bound to reach a crescendo......
Economic stress and political outcomes - Dr.Subir Gokarn
.........The Indian experience suggests that while crisis can lead to reform, it is not very clear that this is the result of a decisive political mandate. In fact, the other two instances that I referred to suggest that incumbents are not necessarily rewarded for what may be perceived as good economic performance during their terms. This may imply, purely from the perspective of symmetry, that they are not penalised for adverse economic conditions during their term........
Soon, trade in G-sec, corp bond on bourses
........: “Once the debt exchanges are launched, the rates will be visible and the securities will be visible. Now, market participants do not know which securities are on sale and what rates are being quoted. We will certainly be a member of the exchange. To start with, RBI allows banks to undertake only proprietary trade, but soon business is likely to happen on behalf of clients too.” ........
FD rates will dip from May, IDBI chief says
IDBI Bank has made a successful transformation from a staid development financial institution to a full-fledged commercial bank. The financial conglomerate has emerged as one of the largest tax collectors for the government. While business has been hit by the economic slowdown, IDBI Bank CMD R M Malla tells TOI in an interview that he is spotting green shoots and rates will fall from next month. Excerpts: ............
Facebook won’t Remain a Closed Book for Sebi
Capital market regulator Sebi could issue guidelines to companies on use of Twitter, Facebook and other social media for disseminating information to clients and shareholders, following the lead of its American counterpart, the Securities Exchange Commission (SEC). Further, the Indian regulator will soon hire staff to sift through social media sites and blogs to unearth tips that could impact stock price before they have been disclosed through official channels........
Read - ET
Read - ET
Court makes life less taxing
..........The Court has directed that the Department must take suitable remedial steps to avoid unnecessary burden or harassment caused to tax payers. The claim for TDS should not be rejected on the ground that the amounts do not tally with the Form 26AS. It should fix a time limit within which the unmatched challans shall be verified and corrected. The taxpayers as deductees, should not be made to suffer because of faults made by the deductors, as it causes unwarranted harassment and inconvenience to tax payers. Once the payment for the TDS is received by the Department, credit should be given to the tax payer.......
Now, get Aadhaar to obtain PAN
.........“Once Aadhaar is accepted as a valid proof for obtaining PAN, the I-T Department would be able to weed out the menace of faking, forging or duplication of PAN cards. The amalgamation of the databases is in full swing and the ministry would soon notify the rules,” ..............
Documents in hand for hassle-free filing
....With the tax department focusing more on all investments made and the expenditure incurred by taxpayers, it is essential to maintain proper documentation for all financial transactions. Though the tax return forms are annexure-less, the tax department may seek supporting documents at a later stage........
New financial code to be Ponzi-killer
.....Many of these are Ponzi schemes, which work on the principle of paying off old investors from the money brought in by new ones, without any real economic activity. Several such schemes, including those based on plantations, emus and Nidhi companies have imploded in the past, leading to serious losses to investors. A Ponzi typically unravels when the flow of new money is cut off. The new code proposes to end this menace.......
Demand for office space to reach 30 mn sq ft this year: DTZ
The demand for office space is likely to increase to 30.5 million sq ft this year, global real estate advisor DTZ said. "Fears of downside risks for the global economy have started to fade, which combined with local economic policy amendments including the opening of 51 percent FDI in multi- brand retail, climb-down of repo rates by the Reserve Bank of India (RBI) and stronger economic outlook, have resulted in improved market sentiment,"..........
SBH to open 50 branches
The State Bank of Hyderabad has decided to open 50 branches and 15 ultra small branches in Visakhapatnam zone, comprising six coastal districts, during 2013-14. The new branches include a specialised personal banking branch in the city at Pandurangapuram and an exclusive branch for gold loans. For the gold loan branch, the bank is awaiting clearance from the RBI.................
BRICs must realign their economies
.....In many ways, Brazil’s economic imbalance is similar to that of India’s. Both countries need to rebalance their economies from consumption to investment. The Reserve Bank of India has been struggling to combat inflation, despite high policy rates. Although India’s investment rate is relatively higher at 35 per cent of GDP, growth in private corporate investment has fallen sharply over the past few quarters due to lack of policy reforms, supply-side bottlenecks and high interest rates........
Diageo won’t rejig USL brass for 12 months
......The Reserve Bank of India (RBI) cleared Diageo's 27.4% stake buy in USL more than a week ago following earlier clearances from Competition Commission of India and market regulator SEBI. Integrating a strong USL executive team, which manages a local business larger than Diageo's global volume, and managing a portfolio of mass brands in a regulated industry are key challenges in the $2.1-billion takeover deal. ........
Srei, Vakrangee Software get approval to set up ATMs
.....The RBI’s licence would allow Srei to set up 9,000 ATMs in rural pockets of the country, said Rajiv Aggarwal, Chief Executive Officer of Bharat Technical Solutions, a group company. Aggarwal says that Srei is well placed to roll out the service, thanks to the network of over 7,000 common service centres (which facilitate the delivery of e-governance services) established by one of its subsidiaries in rural parts of the country. Similarly, Vakrangee has been given the approval to set up a minimum of 5,000 ATMs per year........
Indian Bank bags excellence award
Chennai-headquartered Indian Bank has been conferred with the National Excellence Award in Micro Enterprises lending by the Union Ministry of Micro, Small and Medium Enterprises for 2012........
Bank told to pay consumer 1.15L for lost cheque
The
Maharshtra State Consumer Disputes Redressal Commission has directed
Dena Bank to pay Rs 1.15 lakh compensation to a Borivli man, Lalit
Bothra, for losing his cheque and trying to absolve itself of blame.
“Bothra was fighting out of his own pocket while the bank used public
fund and harassed him,” the panel said, while directing the bank to pay
an additional compensation of Rs 5,000..........
Read - TOI
Read - TOI
PSBs under lens for offshore cash transfers
......Public sector banks including Bank of Baroda may come under the scanner of the Reserve Bank of India (RBI) and the finance ministry in the wake of a recent report by CNN-IBN and Firstpost.com suggesting violation of know your customer (KYC) norms by BoB while dealing with offshore cash transfers. BoB is said to have been involved in transferring Dawood Ibrahim's funds as well. The RBI is likely to seek a report from banks on the issue........
FM to meet bankers today
Finance Minister P Chidambaram is scheduled to meet select bankers in Mumbai today (Monday) to impress upon them to step up lending to productive sectors including infrastructure projects to boost economic growth.............
SBI to expand branch network in AP
The State Bank of India is planning to expand its branch network in Andhra Pradeh by 80-100 during the current financial year in addition to the existing 1,326 in the State, according to Rakesh Sharma, Chief General Manager.........
Read - HBLNet profit of nationalised banks drops 22% in third quarter of FY13
.....How have the individual banks fared in the challenging macro environment? We attempt to decipher the relative performance of different banks in the nationalised bank category by ranking their performance across five dimensions — business growth, asset quality, efficiency, pricing power and above all profitability.......
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