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.
Wednesday, May 15, 2013
RBI eases overseas borrowing rules in housing, aviation sector
Keep that genie in the bottle
..........The larger question, however, is on what it would take to keep the inflation genie firmly bottled up. There are a few signals that the government would do well to keep a constant vigil on. Economists have rightly underlined the role of global commodity costs in India’s domestic prices. The value of the rupee, among other things, provides an early peek into future price movements....................
Subbarao’s RBI to ’Take Note’ as Inflation Eases to 41-Month Low
....“We certainly will take note of the softening of inflation and the external payments situation in the next mid-quarter policy statement on June 17,” ...........
Easing inflation - a mirage
.....What is more important is that the fast pace of easing may actually be a mirage given that the final inflation number generally tends to be revised upward. There was a sharp upward revision (by 0.44 per cent) in the February inflation data.....
Inflation back in RBI's 'comfort zone'
...............Meanwhile, RBI Governor D Subbarao, when asked about potential interest rate cuts in light of falling inflation, was quoted by Reuters as saying that they would be taken into account and in future central bankers "will take note of softening inflation". Subbarao had earlier said that he was "very happy" about the fall.
Finance Ministry sees room for easing of rate by RBI to push growth
Encouraged by the declining trend in inflation, the Finance Ministry today made a case for further rate cut by the Reserve Bank to boost sagging growth. "I think we need to look at statement made by RBI Governor during the last policy review where he had stated that RBI is closely monitoring inflation figures and if there is dramatic change in inflation figures then RBI will take that in to consideration during its next review," ................
With sticky inflation, RBI has to go carefully: Ashima Goyal
.............RBI has to go carefully because inflation has been sticky for so long. It is necessary to anchor inflation expectations. It is not so much about creating an output gap, already so large. In terms of declining WPI and core inflation, RBI has room for rate cuts. There is no excess demand but because of CPI and inflationary expectations, RBI has to be cautious.............
Behind the curve
.....While RBI is, at a macro level, right when it talks of demand-supply imbalances, the larger point is that the slowing of the Indian economy over so many quarters made it obvious it was just a matter of time before WPI began following suit. Indeed, with services GDP also slowing, even CPI will start slowing at a faster pace in the months ahead. Even when RBI’s policy came out on May 3, it was not quite clear what the central bank’s concerns were since, apart from depressed local conditions, there was little in the global economy to suggest any sudden reversal of commodity prices either. Hopefully, RBI will get enough time to study inflation trends and ...............
Systemic moral hazard
.................It's high time the regulators looked into this systemic moral hazard that is plaguing the Indian financial services industry through such predatory practices.
The key lies in reducing inflationary expectations
....In their paper, “Inflation threshold in India: An empirical investigation”, published by RBI, authors Deepak Mohanty, A.B. Chakraborty, Abhiman Das and Joice John concluded: “For WPI-inflation up to 5.5%, there is positive impact on growth, which is statistically significant. The relationship reverses when WPI inflation is beyond 5.5% and inflation effect on growth turns negative. This study provides evidence of a shift in regime indicating possible adverse impact of inflation on growth beyond 5.5% WPI inflation.”..........
Worse than sleeping at the wheel
.......... They recommend expensive muscle enhancers instead of multi-vitamin to economically weaker patients suffering from poor nutrition, not very different from selling sector funds to fisherfolk who come looking for a bank deposit. What would you say if the regulatory authority that oversees hospitals said this: “If there was negligence in the medical care, we are responsible, but correct drugs are the responsibility of the drug makers – it is not our problem. Go to the drug regulator.” Well, Reserve Bank of India (RBI) Deputy Governor K.C. Chakrabarty seems to be saying exactly this..........
RBI takes banks to laundry over money
The (RBI) Reserve Bank of India has directed banks to do away with stapling of money packets and issue only clean currency notes to the public. "...banks should do away with stapling of any note packet and instead secure note packets with paper bands and should sort notes into re-issuables and non-issuables, and issue only clean notes to public," it said in a notification.........
My View on "Writing Reserve Bank’s obituary....."
The finance ministry and FSLRC, it is by now clear that, in a hurry to resolve minor issues, ignored the evolution of the role of RBI and the care with which RBI has nurtured the financial sector. Various observations since made by present RBI Governor and the dissenting notes appended to the FSLRC Report itself are adequate proof (if proof was necessary!) to show that the report written by the Chairman of the FSLRC to satisfy some mysterious interests did not care to understand the Indian situation or the strength of RBI while doing the ‘cut and paste’ from the abundance of material placed before him. FSLRC depended on the experience of small countries whose history and geography are different or listened to experts from developed countries where central banking needs are totally different from those in India. Suffice to say that time is not right for dismantling or truncating the RBI which is doing creditably well as is being admitted in several international forums.
- M.G.Warrier
This approach of the Govt is typical of its lack of responsibility. A coalition govt that totters on the brink and appeases opposition cares little for the welfare of the country or its institutions. An alcoholic sells all he can lay hands on to buy his next drink. So too, our current govt has little responsibility towards anyone. It has to live till tomorrow and would stop at nothing, with an ever burgeoning rag-bag of corruption it carries on its back.
- Anonymus
My View on "Glare on ex-RBI official's Ponzi links"
How an assistant manager of RBI be accused of shielding Shraddha? This NBFC company is not accepting public deposits and is not under our comprehensive regulatory purview.At the most, it submits a few Qtly, Half Yearly and Annual Returns to us.It's functioning is not transparent and the Asst Manager at th most might have made a wrong noting regarding it's activities. It's Ponzy Schemes should have been investigated by IT Department as several transactions which were suspicious in nature were forwarded by FIU-IND to them.
- Sitendra Kumar, EXRBITES Group
My View on "If bank boards aren't capable, nothing much can be done....."
In the given situation, the Deputy Governor may not have ready answers to all the questions posed. But the positions taken on the following issues are not professional and a layman’s view is not what one expects from the regulator:
• ‘If bank boards are not capable, nothing much can be done: If Dr Chakrabarty is meaning what he says, RBI and GOI should take responsibility and take immediate steps to put in place ‘boards which are capable’.
• ‘Banks might have indulged in “traffic rule violations” but “no accident has taken place”: Cobrapost allegations hover around allegations that bank officials were liberal in offering to violate traffic rules. The position that ‘no accident has taken place’ is a ‘legal denial’. ‘Accidents’ are taking place and it is for the regulator, supervisor and other authorities including Finance Ministry to find out how many of them are ‘caused’ by ‘traffic rule violations’.
• ‘Reputation will be hampered if one or two banks do it. If everyone indulges in this, where is the issue of reputation? My question is why banks should take so much commission in selling insurance/mutual fund products.’ If the regulator starts asking questions like this, where does the customer go when he has a grievance? The position that ‘If everyone indulges in this, where is the question of reputation?’, though goes well with the stand political parties take these days, brings down the image of the institution (RBI) Dr Chakrabarty serves today.
• ‘Restructuring is a perfect commercial phenomenon, practiced across the world. It is like a medicine but it has to be used judiciously. If you don’t use it properly, it will not give you the result. If banks are taking undue advantage, then banks are going to suffer’: Very true. But when banks ‘suffer’, the real loss is passed on to the depositor and the tax-payer. The government and RBI are duty-bound to protect public interest, in such situations.
- M G Warrier, Thiruvananthapuram
Banks Board should be made accountable - Dr.T.V.Gopalakrishnan
........The findings of RBI indicate that banks do not have any corporate Governance system in vogue and the boards do not care to adhere to the minimum ethics expected of them in carrying out operations. Unless and until the banks particularly the new generation banks are disciplined, the banking system can take the RBI and the Govt for a ride and the economy will get into serious problems.
Cobrapost | RBI issues showcause notices
The Reserve Bank of India (RBI) has sent show cause notices to three private banks--HDFC Bank, Axis Bank and ICICI Bank—in the Cobrapost sting operation case. A confidential report prepared by the central bank on the allegations of money laundering by these bank employees in the Cobrapost expose showed violations of regulatory norms............
Investigative website Cobrapost demands resignation of top RBI officials
....."The satraps running the banking regulator viz Governor D Subbarao and Deputy Governor K C Chakrabarty need to resign on moral grounds. For a full month after the report was prepared they gave statements to national media that there were "no transactions" when the report prepared by their own officers would have told them to the contrary," ...........
Cobrapost impact: bank audits set to get tougher
The Reserve Bank of India (RBI) and the government could look at reinstating audit system even in “smaller” branches with advances below Rs. 20 crore following rampant violation of know your customer (KYC) norms by banks revealed by investigative website Cobrapost.............
Cobrapost: What worries & why incentive culture be revised?
.....Of late, the FinMin is believed to have written to RBI asking the reason for not taking action so far. "RBI will not spare anybody if proved guilty," a senior RBI official told moneycontrol.com on condition of anonymity. "However, it will not act on other's diktat. It will take its own decision based on its internal scrutiny and investigation. Banks have committed some procedural mistakes. It is very difficult to identify the element of criminality. It is the incentive culture, which lures bank managers to go any extent. Incentives, be it in private or public sector banks, should not be given for deposit collections only but for managing non performing assets and expanding credit as well," he said.......
Banks yet to raise credit flow in northeast: Tripura minister
.........."RBI Governor D. Subbarao during his recent visit to Tripura had asked the banks to introduce bankable schemes and open financial literacy and credit counselling centres in the northeast to improve the credit flows to the region. But the banks are yet to take suitable steps in this regard,"..............
IBM to help Indian Co-operative Banks enhance customer services
.......India is home to a large number of urban and rural co-operative banks. These banks are facing challenges in many aspects and are trying to transform themselves in a complex business environment. For example, regulatory requirements are not only leading to data proliferation but the banks also need more secure management of data. With the growth of mobile computing and Internet services, customers are becoming increasingly technology savvy and looking for improved and expanded service options...........
Read...........
Gold buying muted after RBI measure
Gold buying in India, the world's biggest buyer of the metal, came to a halt on Tuesday, a day after the central bank restricted gold imports on consignment basis and jewellery sellers saw a sharp rise in festival sales. Yesterday, the Reserve Bank of India (RBI) banned gold imports through consignment, and traders awaited for more clarity from the central bank...........
Gold duty may go up; banks slow coin sales
.......For nearly a week now, domestic banks have cut down on orders for gold coins to international bullion banks. Traders from the physical market said banks had stopped placing fresh orders for Swiss coins after the Reserve Bank of India (RBI) restricted imports on a consignment basis. The RBI notified the change in policy on Monday after making the announcement in its annual policy statement on May 3,2013.” Even as they are looking to get rid of the backlog of gold coins they hold, banks have more or less stopped placing fresh orders,” said a trader...........
Govt, RBI are again getting it all wrong on Gold
.........All this takes gumption and a farsighted vision of what gold can really do for the economy. Instead, GoI and RBI are treating us like addicts. They are hoping that giving us the cold turkey will set things right. But you can never fight human nature. Clampdown on gold will be like the prohibition on liquor in Gujarat. Consumers and smugglers will have the last laugh.
Results can wait: SBI chief wants to be with Sonia
.......Sure, bank chairmen do make it a point to turn up for ribbon cutting ceremonies by politicians at branch openings, etc. But Chaudhuri apparently went one further. The Expressreport says that the bank actually cancelled a board meeting scheduled for 15 May – about which the stock exchanges had already been notified – because Chaudhuri had to show up in Rae Bareli for Sonia’s inauguration of 12 branches of the bank...........
SBI chairman flags NPA as area of concern
State Bank of India (SBI) Chairman Pratip Chaudhuri today said Non Performing Assets (NPA) remained an area of concern for the Indian banks. He attributed the build up of NPAs in the banking sector to the general slowdown in the domestic economy over the last couple of years, which had seriously impaired the repayment capacity of borrowers...........
Tried to warn against chits: Minister
........"There was an indication of the things to come. It was not unknown. I have done my duty. I tried to make everybody aware. I spoke with Sebi and RBI on the matter in the last two years and they asked me to report the matter to the state government. I have been conducting this awareness campaign for one year," ................
In Villages, Credit is Still All About Moneylenders
...........The
Reserve Bank of India’s argument that new banking licences are needed
to achieve financial inclusion, mainly in rural areas, has new research
supporting it, thanks to banks’ falling share in rural credit. Policy
makers’ push to increase institutional credit to rural areas has had
reasonable progress since independence, but only at a snail’s pace. The
performance of banks, which have been assigned targets by the regulator
to increase their rural credit, has been dismal as their share of total
credit fell to less than a quarter in 2002, from over 29% a decade ago, a
research paper from the Reserve Bank of India’s economists show...............
Moneylenders rule the roost in rural India, says Reserve Bank of India study
....While the paper uses a decade old data from the last round of All-India Debt and Investment Survey, it points out to a persisting problem of banks not being able to cover un-banked areas. In March, Deputy Governor KC Chakrabarty said in a speech that banking has not been made accessible and reliable to people. Indeed, the key reason for informal sources of credit to thrive has been the ease at which loans can be accessed and the absence of a regular repayment............
Sebi starts repayment to investors in Sahara case
......Sebi has already written to Enforcement Directorate, RBI, and other government agencies to look into possible violations of rules by Sahara in this matter, including any money laundering activities through fictitious entities. However, the regulator is going ahead with the process of refunding the money to genuine individual investors, sources said.............
Adnan Sami not likely to get Indian citizenship
.......Sami had allegedly purchased eight immovable properties in Mumbai in blatant violation of FEMA, without Reserve Bank of India (RBI) permission. He also opened a savings bank account without RBI permission. A probe was conducted by the Enforcement Directorate in all these cases. "In view of the specific report of the special branch, it was decided to submit a special report to the Centre. It submitted that his application for citizenship should be rejected and accordingly, it should be communicated to him,''..........
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