Distinguished economist of "Brains Trust" no more...................

Dr. P.D. Ojha,  former Deputy Governor, Reserve Bank of India and former Chairman of NABARD passed away on April 22, 2013 in Mumbai.  He was 80 years old. A distinguished economist he was  in charge of various departments dealing with medium and large industrial units, including financing and policy aspects of export activities, urban co-operative banks, non-banking companies, leasing, hire purchase and capital markets. He was an authority on financial markets circles and Economic Adviser to several leading Indian corporations as well as the Government of India and the Securities Exchange Board of India. 

Dr. Punyadeo D. Ojha, M.A. Ph.D. served as a Deputy Governor of Reserve Bank of India from 29.04.1985 to 28.04.1990. He had experience of over 33 years in the field of Banking. He was  Professor and Head of Economics Department in Bombay Colleges and also taught post-graduate students, Bombay University. 

He had contributed several articles in various learned journals both national and international. Among others, his articles on 'Pattern of Income Distribution and Concept of Absolute Level of Poverty' have been acclaimed as 'pioneer' by noted economists and professionals (including Gunnar Myrdal). His article on 'Poverty' has helped clarification of the concept of 'persons below poverty line' - it has now assumed an integral part of economic policy discussions and formulation.  He was considered one of the "Brains Trust" of the Economic Department.

May his soul rest in peace.

- P.P.Ramachandran

Sikkim’s Anil Kumar is World’s third most ‘academic people

Web classy, a web portal and an independent news source site has ranked Sikkim’s Anil Kumar Yadav as the world’s third most ‘academic people’. Yadav, 45, who works as Deputy General Manager in Reserve Bank of India (RBI), Gangtok is a holder of degrees and diplomas of 28 qualifications.....................

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Why RBI is still dragging its feet over polymer currency notes?

.....It is imperative that RBI must make a clear-cut statement on the progress made so far in the trial that was carried out in selected cities. The central bank must clarify whether we have secured the necessary technology and equipment to mint these polymer notes within the country and categorically announce the time-frame within which India will launch this into the financial system........

Read - Moneylife

Case of oversight

.............. The Saradha incident also provides ammunition for policymakers to lean on the State governments to tweak their chit fund laws, to grant SEBI or RBI powers to seek information and inspect the books of chit funds. Financial institutions, as a class, are prone to the risk of ‘contagion’. Not only can the operational failure of an entity be transmitted to others, bad reputation too can fasten on just as well to other entities, to the detriment of the industry as a whole..........

Read - HBL

Will the Dog stop barking in India? - Renu Kohli

...........If global inflation unfolds differently than before in response to changes in the economic cycle, there is a strong case for RBI to take another look at the inflation dynamics and its inferences for monetary policy. IMF’s findings provide it with food for thought in this regard..............

Read - Mint

3-6-3 banking costs the poor money

.........Often protected by local politicians, these MLM schemes have perfected the art of staying in the grey area between the turfs of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi). The first is supposed to regulate deposit-taking companies and the second is supposed to regulate collective investment schemes. These blowouts cause not just economic hardship leading to suicides and push people below the poverty threshold, but in a wider sense put further pressure on the already beleaguered citizen, who has one more reason to get pushed to the brink of anarchy...........

Read - Mint

Focus on intermediaries

..... it is time for the Reserve Bank of India to step in. Bank relationship managers, for quite some time now, have been mis-selling insurance and mutual funds. They even bundle loans with insurance products, something that is not allowed by the regulator, by making customers sign a no-objection certificate. Similarly, for auto loans, there are default documents which a customer is made to sign even before he has defaulted. As Cobrapost investigation has shown, bank managers were proposing to use lapsed policies and others’ bank accounts to launder money. Though the apex bank keeps on insisting that there isn’t any systematic failure, what more evidence does it need?........

Read | Business Standard

On the money

 "It's not money laundering, it's your financial illiteracy."

Read | Business Standard

RBI deputy governor chides 'elite' private banks on low education loans base

............The problem is not that of technique or skill, it is a problem of attitude ... it is a problem of the corporate philosophy, which needs to be changed, and this has to be addressed at the Board level, at the enterprise level," he said, speaking at a seminar on sustainability here...............

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Will Tweak KYC Norms if Required: RBI Dy Guv

.....RBI Deputy Governor K C Chakrabarty today said the central bank may introduce some corrective measures in KYC norms as an when necessary to check any "transaction-level aberrations" in the functioning of banks. "System is good, there is no problem. There are... (at the) transactional level, some aberration will always take place and there is a need to look into those issues and as and when it is necessary, banks will take the corrective measures. And if necessary, from the Reserve Bank, regulator side, we will issue the corrective measures," he said..........

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No evidence of money laundering by ICICI, Axis, HDFC Bank: RBI

..........The Reserve Bank of India has clarified that there is no transactional evidence of money laundering found in the top three private sector banks (ICICI Bank, HDFC Bank and Axis bank) involved in the Cobrapost expose. "In none of their branches there was a case of money laundering... No transaction has taken place," said K.C. Chakrabarty, Deputy Governor, RBI.........

Read - HBL

HDFC Bank yet to find transactions violating anti-money laundering law

........."The issue is being reviewed and investigated from multiple quarters. Clearly, all the investigations have shown that there have been no instances of transactions actually taking place. Our belief is that the existing processes seem to have worked in not allowing these transactions to happen," ..........

Read | Business Standard

RBI asks banks to pay 8% interest for delay in crediting pensions

......The Reserve Bank of India (RBI) has asked all agency banks to compensate all pensioners, including non-state resident pensioners at a fixed rate of 8% for delay in credit of their pension, revised pension or arrears for the delayed period beyond due date. Replying to a complaint filed by Commodore Lokesh Batra, the central bank issued these instructions to agency banks. Commodore Batra has complained about the delay in receiving revised pension of pre-2005 to defence commissioned officers and family pensioners..............

Read - Moneylife

Who’ll watch finance watchdogs?

.....Clearly, the RBI has seriously fallen short of attaining amorphous objectives such as “operating the credit system to the country’s advantage”. As for monetary stability, the less said the better. The RBI’s serious under-performance in generating and preserving monetary stability — which is the same as preserving the purchasing power of the paper currency — is there for all to see. The inflation experience testifies to that. The case for clearly defined and measurable economic objectives for a policy-maker and regulator such as the RBI is very strong. And that is precisely what the FSLRC has recommended......

Read - HBL

HC orders notice to district administration

.........He gave a representation to the Chief General Manager and the General Manager of the Reserve Bank of India, Madurai District Collector and the tahsildar of Melur, he said. No action was taken on his representation and hence, he moved the court,............

Read - The Hindu

No application yet to RBI for setting up new private banks: Govt

............RBI had invited applications two months ago and the last date is July 1, 2013.  "RBI has informed that as on date no applications for licence under the guidelines have been received and no licence has been granted under these new guidelines," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha............

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Cyber squatters bank on domain names to profit from new licences

..........Domain names of banking aspirants are on auction for as low as Rs 7 lakh, but the irony is that the natural owners are not sure whether they would commence a bank with the same name. ltbank.com is available on auction for RS 7 lakh. Websites such as shrirambank.com, tatabank.com, and mahindrabank-. com are all in place, but they are not owned by those seeking to run a bank........

Read - TOI

Set up cells for bad loans in banks, House panel tells RBI

The Standing Committee on Finance has urged the Government and Reserve Bank of India (RBI) to set up a special ‘NPA management cell’ to review write-offs and restructured advances. This cell – which should be set up at the highest level – should also monitor the pace of recovery of non-performing assets (NPAs), the Parliamentary panel said in a report tabled in the Lok Sabha...........

Read - HBL

Can't auction, don't ration either

...........But the idea of auctioning licences isn't appealing, and the governor of the Reserve Bank of India (RBI) rightly rejected the suggestion. We must understand that the key driver for opening up the sector to new players is to encourage new ideas, innovations and capital to enhance financial inclusion or the number of people that have access to banking services and financial products. Today, only a little over half the country's population is covered by existing banks and a much lower slice has access to most of the products, particularly credit and remittances. We have a dual banking need. On the one hand, we need big banks that can service large and growing Indian companies that are expanding globally; on the other, we need small, specialised banks with expertise to service domestic small and medium enterprises and rural requirements.............

Read | Business Standard

Indiabulls Financial Services to bid for banking licence

....."We are in consultation with the RBI. If it will be a prolonged process of issuing a licence, we would change the name immediately. If not, there is no point in changing the name now and changing it again.".........

Read - ET

'Unlike in 1993, new banks will find it tougher now'

There is a word of caution for new banking aspirants from the banking regulator. “With all the priority sector obligations that the new banks have to comply with, it will not be a cakewalk for them,” cautioned Reserve Bank of India Deputy Governor K C Chakrabarty on Tuesday................

Read | Business Standard

'Govt, RBI steps resulted in improvement in NPA recovery

...........Besides, the government advised PSBs to take a number of new initiatives to increase the pace of recovery, to conduct special drives for recovery of loss assets, to put in place early warning system, to replace system of post dated cheques with Electronic Clearance System and to constitute a Board level Committee for monitoring of recovery, he added. "The steps taken by the government and RBI have resulted in year-on-year improvement in recovery of NPAs (non-performing assets) by PSBs," the Minister said..........

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Rules relaxed for PSUs investing abroad

The Reserve Bank of India on Tuesday said Navratna Public Sector Undertakings — ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) — will be allowed to make overseas investments in the incorporated Joint Ventures/Wholly Owned Subsidiaries in the oil sector.....

Read - HBL

High agri growth will help in arresting inflation: Industry

New Delhi: Indian industry Tuesday hoped that the projections given by the PM's economic advisory panel for farm sector growth will help in arresting inflation which would provide room to the RBI to cut interest rates. "We are particularly happy to note that agriculture is projected to grow above its trend rate in the current year, which augurs well for arresting inflationary expectations, providing necessary leg room for RBI to manoeuvre monetary policy in favour of growth"...........

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Inflation vs inflation

...............The WPI and the new CPI have significantly diverged and, consequently, the debate between the pro- and anti-WPI viewpoints has not abated at all. With the RBI's recent and prospective interest rate cuts being very much in the spotlight, the softening in the WPI provides a rationale for these actions, while CPI inflation, still in double digits, cautions against them. The critical question is whether the divergence between the two indices is contributing to significant policy errors....................

Read | Business Standard

Rangarajan says fisc’s done falling

.............. “Investment rate is estimated to be 35.8% of GDP in 2012-13. There has been a sharp decline in the productivity of capital as the incremental capital output ratio has shot up from its historical level of around 4 to much higher levels. It appears that investment capital accumulated in projects is not yielding commensurate output.”...............

Read - DNA

Low inflation gives RBI more space to cut rates: Rangarajan

..........." Inflation at around 6 percent gives scope for rate cut," Rangarajan said. The central bank has been maintaining tight monetary policy for the last three years to contain inflation.However, he admitted that even at 6%, inflation was high and it needed to be reduced further. RBI Governor D Subbarao will announce the Monetary Policy Statement for 2013- 14 on May 3. Earlier this month, even Finance Minister P Chidambaram had favoured further interest rate cut by the Reserve Bank as headline inflation has softened................

Read - FPJ

The missing link in inflation theory

........For instance, to control inflation during economic expansion during 2005 lasting until 2007, RBI followed a contractionary monetary policy. The tighter credit policy of April 2007 was influential in reducing inflation rates from 6.7% to 3.5% within the next four months. But contractionary demand management policy may not be a good idea to control inflation especially when the cause of food price inflation is supply-side factors. What is required is the use of supply management policies like investment in suitable infrastructure, developing new technology to improve agricultural productivity and efficient supply chain management............

Read - FE

Assocham for quick action against rogue finance firms

Industry body Assocham on tuesday made a strong pitch for bringing the rogue finance companies to task for duping investors by promising abnormally high returns. "We want quick action to be taken against the rogue companies which are neither registered with SEBI nor having the RBI permission for collecting money from the public," Assocham National Vice-President Sunil Kanoria said.............

Read | Business Standard

Chit fund scam: RBI, bank alerts in December ignored by WB govt

.............“We had informed the Reserve Bank of India (RBI) that we were not comfortable with the operations of the chit funds which offered above 40 per cent returns to the public, mainly in the rural areas. We have asked the state government to protect depositors’ interest,” said a banker who attended the SLBC meeting in December.............

Read | Business Standard

Chit Funds or Cheating Schemes?

..... The Saradha incident also provides ammunition for policymakers to lean on the State governments to tweak their chit fund laws, to grant SEBI or RBI powers to seek information and inspect the books of chit funds. Financial institutions, as a class, are prone to the risk of ‘contagion’. Not only can the operational failure of an entity be transmitted to others, bad reputation too can fasten on just as well to other entities, to the detriment of the industry as a whole.............

Read - Times of Assam

More safety measures for funds transfer

....Once banks implement the measures that RBI has asked for, it could help curtail frauds. “A normal user will have a small list of beneficiaries, whereas a fraudster will typically try to add a number of beneficiaries to make subsequent tracking and recovery difficult. By capping both the number of beneficiaries and the amount, the extent of fraud can be limited,” ...........

Read - Mint

Money laundering: HDFC Bk sings RBI's tune on systemic risk

........."While we had our own internal audit, we have ordered for a forensic investigation by consultancy firm Deloitte. At the same time, the regulator too is doing its own scrutiny. As of now, there is no transaction of this type (money laundering), which any of these audits receives. There is no systemic risk,".......

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Predictably, the 30% bank does it again

.....HDFC Bank’s secret sauce for the metronomic consistency in profit growth is a tweaking of provisions. The bank maintains a “floating” provision on top of the regular loan-loss provision for specific bad assets. This buffer allows it to maintain net profit growth in its desired range. For the March quarter, the bank set aside a lower sum for bad loans. Despite that, its provision coverage ratio (for bad loans) is not much changed at 80%........

Read - Mint

‘Pvt, foreign banks must say yes to education loans'

..... “Many times, directives of the RBI do not work. It is the inner appreciation and corporate philosophy that must include this. Hence, banks need to finance aggressively to educate people. Society attitude needs to change towards this.”........

Read - HBL

SBI launches prepaid card with relaxed KYC norms

.....The card is an open loop prepaid card and will be available at all SBI branches. It can be used for cash withdrawal at any ATM of SBI and its associate banks free of cost and at other banks' ATMs for a fee. It can also be used at Point-of-sales (POS) terminals at merchant establishments, at any merchant site accepting VISA cards for e-commerce transactions. It can also be used as an add on card for existing account holders on VISA network. SBI already has 75,000 POS terminals and plans to double this number in a year..........

Read | Business Standard

YES Bank launches Sustainability Series

......The Sustainability Series, conceptualized in association with UNEP FI (United Nations Environment Program Finance Initiative), GIZ (Gesellschaft fuer Internationale Zusammenarbeit GmbH) and RIRA (Responsible Investment Research Association), will aim to promote Sustainable Finance in India within the Financial Sector. The Sustainability Series was inaugurated by Reserve Bank of India (RBI) Deputy Governor Dr. K. C. Chakrabarty.  While speaking at the inaugural function, Chakrabarty said, “Environmental viability is not independent from Financial Viability and one needs to innovate to find viability in Sustainability. Indian Banks play an important role and they need to approach sustainability not just from a reporting lens but in a holistic manner.”................

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