....The Commission envisages a 12-member RBI Board with not more than one half being executive members; this by itself is reasonable but one has to dwell a little further into the Commission's proposal. There is an insidious proposal, in that the post of 'Governor' should be abolished and the head of RBI should be named as 'Chairperson'. The Commission's ready defence would be that, after all, the head of the US Fed is called 'Chairman'; the Commission would conveniently forget that members of the 'US Fed are called Governors and the head is known as Chairman of the Board of Governors. Furthermore, the Deputy Governors are to be brought down a peg and called members and one of the members would be called an 'administrative law member'. The whole ploy seems to be to downgrade the RBI to the level of any other financial regulators. The Commission needs to appreciate that central banks are unique. .............
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.
Saturday, May 4, 2013
New Bank Licences to Come Under New Guv
.........New
bank licences will not be distributed during the governorship of
Duvvuri Subbarao at the Reserve Bank of India as the ground work and due
diligence will not be completed by September when he completes his
term. His successor will have the privilege of granting those long
awaited licences to commence banking operations. “I doubt,’’ said
Subbarao on the possibility of his handing out new bank licences. “It is
not possible. It will take longer than that. It is not practical. I
have only four months to go.’’ Subbarao’s admission that new licences
would move well into a new Governor’s term could disappoint aspirants............
Activist Subba: RBI curbs on bank charges
..........RBI’s
activism is in line with the move by some central banks worldwide to
treat banks as utilities – providing them protection and rationing their number but regulating them intensely. In
another customerfriendly move, RBI said banks must have a policy where
pricing of loans is transparent, realistic and related to the risk
perception of the borrower...........
Do we need a regulator for ‘unclaimed’ deposits? - M.G.Warrier
.....Ironically, the position will only aggravate with compulsory opening of more accounts to promote financial inclusion, insistence on Aadhaar-enabled accounts even before Aadhaar is yet to reach and crediting of government scheme benefits through bank accounts. The GOI and RBI may look at the issue from a social security angle, lest people lose faith in government-sponsored savings schemes and social security measures and even in the financial sector regulator........
Now, stamps with personalised touch
 |
| FIRST CUSTOMER RBI Regional Director (Chennai), J. Sadakkadulla takes a look at the personalised stamps with his image on it at Anna Road HPO on Friday. |
Seminar on Indian banking at Moodbidri
....Deepali Pant Joshi, Executive Director of Reserve Bank of India, will inaugurate the seminar. N.K. Thingalaya, economist and former Chairman of Syndicate Bank, will deliver the presidential address,.........
CBI willing to probe Saradha scam if court asks
......The state was allowed to file a supplementary affidavit if it wished on the points raised in the applications pitching for a CBI probe.Counsel representing the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) - which monitor companies seeking deposits - also furnished documents to the court on their stand on the issue..........
No clean-chit to ICICI,HDFC,Axis;show-cause notices on way: RBI
....."No we have not. And we are saying that we are (going) to issue show-cause notices. So, the inquiry is still in progress," RBI Governor D Subabrao told reporters when asked whether the apex bank had given clean chit to the three banks. ...........
Focus on bank consolidation
....."It's a no-brainer as it makes a lot of sense. But practically, we have miles to go. I don't think it's in the hands of RBI and the government needs to step in. How will you tackle the trade unions? State Bank of India is struggling to merge its associates. Consolidation has its own advantage, but I don't think it will happen any time soon,"......
Duncan Lawrie eyes private banking space in India
Duncan Lawrie, a part of the UK-based Camellia Group, is eyeing the private banking business from Indian high-networth individuals, an official of the company said.........
Murugappa Group to take a call on foray into banking sector
Diversified business conglomerate Murugappa Group would take a call on its foray into banking services sector over the next couple of months, a top company official said today. "After the guidelines came from RBI, there were some issues relating to NOHC (Non-Operative Holding Company) and other regulations. We have actually sought some clarifications (from RBI),"............
Banks not carrying out customer due diligence: RBI
.........The investigation, according to the RBI annual policy statement, has underscored the need for better regulatory compliance by banks as well. The central bank will issue draft guidelines on wealth management services offered by banks by end-June, 2013. Wealth management services (WMS) generally include referral services, investment advisory services (IAS) and portfolio management services (PMS). Detailed guidelines will be issued by end-June 2013........
Does RBI really want rates to fall?
......So, RBI's repo rate cut needs to be seen in the light of tight liquidity conditions and lower transmission. Possibly the central bank is sending out a message to banks that it isn't supportive of a lower interest rates regime just yet.........
Bank draws flak for refusing to open salary accounts
Following a refusal by Vasco-based Axis Bank to open salary accounts for their employees on the basis of a letter issued by the employer/company as identity and address proof, the Vasco-based Swift Wash, a rehabilitation unit, has written to the bank again. It has also sent copies to the Governor of the Reserve Bank of India (RBI) and the Union Finance Minister..........
2 lakh villages get banking outlets
.....The RBI’s monetary policy statement for 2013-14 said that the banks have been advised to draw up the next FIP for 2013-16 to take financial inclusion to the next stage of providing universal coverage and facilitating electronic benefit transfer........
Lead Bank Scheme to cover metros to ensure smooth delivery of cash transfer benefits
........RBI has admitted that financial exclusion is not merely a rural phenomenon and it is in fact widespread in metros. The latest move aims at facilitating doorstep banking to the excluded segment of urban poor and to implement direct benefit transfer under social welfare plans. Lead bank scheme is an integrated mechanism to extend banking facilities to consumers, especially the economically weaker ones.............
KYC norms: Showcause notices to be issued for violation
.....This move comes after three private sector banks — ICICI Bank, HDFC Bank and Axis Bank — employees were allegedly caught in a sting operation by online magazine cobrapost.com offering to convert tax evaded money into legitimate money. “First we will show the audit report to all the banks and ask them to explain. If we feel that their explanation is unsatisfactory, we will issue a show-cause notice and based on that we will take some action,” K.C. Chakrabarty, Deputy Governor, RBI, said.......
Tighter corporate debt recast norms soon, says RBI
........The move comes even as the monetary authority had last October increased the provisioning for standard restructured loans to 2.75 per cent from 2 per cent and had said it would gradually go up to 5 per cent of the recast amount. The latest step comes following the recommendations of a RBI working group, headed by B Mahapatra, to review the existing prudential norms on restructuring of advances by banks/financial institutions. Following this, the RBI had issued the draft norms on January 31......
Reserve Bank of India concerned over dependence on ECBs
......India's strong dependence on external and short-term debts for financing current account deficit remains a key concern for the Reserve Bank, although the deficit may ease in the fourth quarter due to the fall in global commodity prices...........
‘We are close to the end of the easing cycle’
overnorship of the Reserve Bank of India (RBI) has been a roller coaster ride for Duvvuri Subbarao. In a short span of over four years, he has eased, hiked and again eased interest rates. Soon after presenting his last annual monetary and credit policy on Friday – his five-year term ends in September this year – Subbarao revealed his mind on all things macroeconomic to Parnika Sokhi and Megha Mandavia. Excerpt from the interview:.........
No loan against gold coins weighing above 50 grams, proposes RBI
..........."While there may not be any objection to grant of advances against specially minted gold coins sold by banks, there is a risk that some of these coins would be weighing much more, thereby circumventing the Reserve Bank's guidelines regarding restrictions on grant of advance against gold bullion,"...........
RBI got 3 complaints on black marketing of coins: Government
........"The RBI has received three complains regarding trading/ black marketing of coins during the twelve months, one each at Rajkot, Mumbai and New Delhi,".......
RBI's 5.7% growth forecast for 2013-14 pessimistic: Montek
........"Reserve Bank is clearly more pessimistic than the government is. I think that the government forecast as of now is feasible. Critically what matters is, how effective we are in restoring the momentum of investment in the large projects", .......
Read.........
Read.........
Seven take-aways for common-man from RBI's monetary statement
NEW DELHI: The Reserve Bank of India (RBI) in its Monetary Policy Statement for 2013-14 has highlighted several measures that will help in financial inclusion and also help common man with day-to-day banking transactions..........
The Subbarao magic: How the Sensex see-sawed
For those watching the stock price movements before, during and after the RBI Governor’s announcement of the repo rate cut by 25 basis points today leaving the cash reserve ratio (CRR) untouched, it was a revelation to see how much the market dances to his tune, particularly when he is about to make key policy announcements.............
C Rangarajan supports 'hawkish' RBI rate cut
............"It is a measured response to the current economic situation. WPI inflation has shown signs of decline and the retail inflation still remains at a high level, CAD is also high,"........
We said ‘little’, not ‘no space’ for monetary easing
Reserve Bank of India (RBI) Governor D.Subbarao sees very little space for further rate cuts. But if the current account deficit shrinks and inflation moderates faster than RBI expects, then there will be space for rate cuts. In an interview, he spoke on issues ranging from gold import to banks’ refusal to pare rates and deposit-taking firms in Kolkata going bust. Subbarao is set to retire in September after having taken over as governor in September 2008. Edited excerpts:.............
More rate cuts coming, says P. Chidambaram
......Accepting Reserve Bank's stance on policy rate for what it is, Finance Minister P. Chidambaram today expressed hope that declining inflation would increase the scope for rate cut by the central bank. "Let's accept what has been done today and let us see what the future holds", ...........
Raghuram Rajan welcomes RBI’s rate cut decision
........“Going forward, if inflation stays low and we can bring food prices down, hopefully they (RBI) will have more room to bring down rates.”...........
Rate cuts by RBI and ECB reverberate at ADB meet
.....In India, automatic financing of fiscal deficit has been discontinued since 1990s. However, still many analysts believe RBI indirectly does finance the deficit through its expansionary tools. Whether there could be similar or coordinated monetary actions worldwide? In former RBI Deputy Governor Subir Gokarn’s view, the objectives of monetary actions are different in different parts of the world.......
RBI Governor D Subbarao defends holding CRR, says system has Rs 5 tn excess money
......"The view that the Reserve Bank can improve liquidity only by cutting the CRR is mistaken. We can understand banks saying it, but all of us should understand that liquidity is more than reducing CRR," ............
Read - ET
RBI’s mother-in-law syndrome
...........RBI is expected to take steps to ensure that the economy is firmly on a growth path even though it cannot afford to lose sight of the inflation threat. In this context, once again, the RBI policy document has expressed the central bank’s helplessness—it alone cannot do anything unless the government takes care of supply-side constraints, particularly in the food and infrastructure sectors, and addresses critical governance issues, besides reining in the fiscal deficit. Subbarao has been saying this for years now, like a nagging mother-in-law. The government has been pretending to listen, but unless it seriously addresses these issues, inflation will once again raise its hydra head and growth will be stymied.........
Going halfway
Monetary transmission is a problem: D Subbarao
......If communication is seen as an instrument of policy, our communication through the document should be seen as a part of the action. So, we reduced rate today but communicated about what we might or might not do in the future. I don’t think you should see that as a disconnect. Rather, you should see it as our endeavour to use communication to guide the market.......
Balancing act amid challenging times: V R Iyer
....It has also warned about policy reversals in case of worsening current account deficit scenario. RBI has shown concern over inflation, especially retail inflation, and has tried to maintain a fine balance between growth-inflation dynamics by not going overboard on cuts.......
It's back to the government: R Shankar Raman
....Given the complex and myriad challenges faced by India, it is clear that monetary action alone cannot revive growth. It needs to be complemented by rapid and purposeful action by the government in reviving investment and de-bottlenecking growth impediments. On the ground, evidence suggests the recent reform push is not translating into meaningful activity as yet.......
'I'm not a great storyteller but have a good story to tell'
.....“I’m not a great storyteller, but have a good story to tell...I expect India’s growth to be robust and sustainable. I am confident it would gather further momentum in the coming years...The FDI (foreign direct investment) regime in areas such as multi/single-brand retail and aviation have been further liberalised and I am confident there would be forward-movement in areas such as insurance and pension,”............
Sorry Chidu, rate cut doesn’t often mean cheaper mone
...........But here’s an eye-opener. The RBI may cut rates, but banks are not buying the idea. An interesting bit of statistic from Subbarao’s Monetary Policy Statement for 2013-14, announced today, shows that banks are playing Scrooge. They have held on to most of the gains coming to them from monetary easing during the whole of 2012-13............
Why be so glum, Guv Subbarao? Investment is picking, not falling in India
The remarkable thing about the Reserve Bank of India's (RBI) Monetary Policy Statement for 2013-14 is its excessively pessimistic prognosis about India's short-term economic prospects. The RBI is not a neutral observer — its pronouncements can have a self-fulfilling momentum. It has to be more circumspect about forecasts that dampen sentiment...........
India cbank deputy: Difficult to say if rate cut will revive investment
The Reserve Bank of India's (RBI) third straight rate cut so far in 2013 may not be a surefire tool to revive investment unless supply constraints are eased, Deputy Governor Urjit Patel told reporters in a post-policy talk on Friday.............
RBI does its bit
......The RBI took comfort in the reduction in the wholesale inflation to six per cent in March, but the retail inflation still ruled high in double- digits. In small doses, the RBI had cut the prime lending rate by 100 basis points in the last fiscal, while it had reduced the cash reserve ratio by 75 basis points. This failed to boost growth because it was not dependent entirely on monetary policy.........
RBI plays safe
As a central banker, RBI needs to be cautious, but its inflationary fears appear a bit heightened
..........The central bank’s monetary policy stance continues to baffle, and not just because it is not clear how RBI expects to see rate cuts by banks in a liquidity-constrained situation. In earlier policies, the RBI’s talk has been different from its walk. This time around, including in Thursday’s pre-policy macro statement, a hawkish RBI has talked of limited room for cutting rates. Friday’s monetary policy statement talks of upside risks to inflation being significant in the near-term and .............
Ghost of inflation continues to haunt Mint Road
.......Despite average inflation in 2012-13 falling to 7.3 per cent from 8.9 per cent a year ago, and the central bank's own projection for March 2014 inflation at five per cent, RBI Governor D Subbarao seems to be in no mood to lower the guard.........
The interest rate-growth disconnect
.........RBI, on the other hand, has always argued that the link between interest rates and investment is tenuous, and there is evidence to show that low interest rates by themselves cannot bring about growth. This argument sounds right because nobody borrows money merely because it is cheap—like merely because interest rates come down, one does not buy a house as other conditions also matter such as own income and price of property........
Mayaram says sentiment improving, Montek says RBI too pessimistic
In
a strong signal that the government does not agree with RBI’s
assessment of the economy, the finance ministry on Friday said India
would grow at least 6% in the current financial year, citing a pickup in
investment and rising investor confidence. RBI has projected the Indian
economy to grow at 5.7%, which is lower than even some private forecasts............
Read - ET
Read - ET
RBI can Take Only Singles, Govt has to Play Big Shots
We
are in the thick of IPL season and, unsurprisingly, there haven’t been
too many orthodox, straight bat (riskaverse) shots. But we certainly got one from the Reserve Bank yesterday.............
Read - ET
Read - ET
Rate is Cut, Cut Red Tape
.........And you thought that Subbarao could make all these hurdles vanish with one rate cut?............‘Chit funds are a regulated sector
..........Chit funds are a traditional business, strongly regulated by the State Government and Central laws and the Reserve Bank of India, clarified the Tamil Nadu Chit Fund Companies Association. Addressing a press conference organised by it, T. S. Sivaramakrishnan, General Secretary, All India Association of Chit Funds, said the public should not confuse chit funds with the unorganised, unregulated companies that take deposits promising unrealistic rates of return or operate Ponzi schemes............
We can’t yet declare victory in war on inflation: D Subbarao
.....That is because even as inflation has come closer to the threshold level, the risks are present. First, there is this consumer price inflation, which is still in double digits. That's the inflation that people experience in the market. That shapes inflation expectations. Then there is the current account deficit, commodity prices, especially oil price, imported inflation, food prices. Then rural wages, minimum support prices and so on... So, there are several upside risks to inflation. We cannot declare victory as yet.
Read - ET......
Lower inflation can bring down deposit rates: Urjit Patel
......."You may get deeper (monetary) transmission as inflation comes down....banks will get confidence so that they can reduce their deposit rates without deposits leaving the banking system,".........
‘End non-home branch fees, fairly price retail loan’
..........The Reserve Bank has asked banks to stop differentiating between home-branch and non-home branch for customers, and ensure rates of interest for auto and home loans must not vary between customers without a clear reason. RBI told banks that variation in pricing for services makes no sense when all of them are connected by a common network..........
Get a fix on deposits
........For senior citizen deposits, most public sector banks have started cutting the additional interest (or premium) they pay on fixed deposits of these citizens. The move comes after after the finance minister's observation at a meeting with heads of public sector banks in November last year that the additional interest for senior citizens may be reasonable, but not excessive. SBI reduced the premium on senior citizens' fixed deposits from 50 bps to 25 bps last month and a week later PNB followed suit...........
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