News of the death of K S Krishnaswamy, the former Deputy Governor of the Reserve Bank of India (RBI), took my mind back to April 9, 1956 when I joined the central bank's Department of Research and Statistics as an economic assistant. I was posted to be KSK's assistant, who was then a deputy director in the division of rural economics................
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, June 12, 2013
RBI Governor is Wrong on Regulating Risk
.........The
global consensus is that microprudential and systemic risk work should
not be within the same organisation. Hence, there are good reasons why
the RBI should not be the primary systemic risk management agency: (a)
RBI would do microprudential regulation
for banking and payments, and (b) RBI is a sectoral regulator for these
two sectors and would generally favour them. Under the FSLRC proposal,
FSDC does no microprudential regulation, and looks at the full financial
system without sectoral biases................
RBI's actions not fine
............with just 1% of the system alerts thrown up in the sample banks RBI inspected getting reported to the tax authorities, there are yawning gaps in RBI’s inspection system. As for the cooperative banks link that RBI found was a systemic risk—“these banks may be an easier conduit for facilitating substantial amounts of cash in entering the banking system”—it remains true there is nothing that specifically bans this, though it is surprising that the private banks allowed such large sums of cash to be deposited without any alerts getting triggered. With the fines now out of the way, hopefully RBI will put in place a more stringent system to ensure such transactions don’t continue to take place. ...........
Lead Bank of Raichur district launches Credit Plan for 2013-14
..............V. Shrinivas, Assistant General Manager, RBI, RCPD Bangalore, congratulated the bank for its achievements in the previous year. “Without cooperation and coordination with the government departments, no bank can achieve much. All banks in the district should continue to maintain good coordination with the government departments,” he said.
RBI Throws Some Light on New Banking Licences
...........Let’s try and extrapolate a few of the key messages here, with the
benefit of the clarity provided by the RBI in its 165-page document;
each question being quoted and bucketed broadly on themes of ownership,
operating model, business transition and others. The answers are
repetitive, but intelligently so. It’s an assertion of the authority of
the central bank to formulate policies and guidelines and not deviate
from the principles post event, the essential function of a
clarificatory note being to clarify and not to introduce policy change.................
RBI norms may hit cooperative banks
...In addition to the deadline for capital adequacy, the RBI had insisted that the cooperative banks should adopt core banking system, be part of the special business process for retail payments set up by the National Payments Corporation of India, and Real Time Gross Settlement system by September 30. Crossing the first hurdle itself would be quite challenging for the cooperatives,...............
India Inc's excessive reliance on forex borrowing risky: RBI
The Reserve Bank of India (RBI) said that excessive reliance on foreign currency funds could pose balance sheet risk for Indian companies when there are fluctuation in the currency markets. "Heightened volatility makes the debt rollovers difficult or at high interest rates," said RBI's deputy governor H R Khan, who was speaking at the Bankers' Club at Thiruvananthapuram yesterday. A copy of Khan's presentation was uploaded in RBI website today.........
RBI says too early to conclude reversal in asset quality deterioration trend
..............."Recent trends in the asset quality of the banking system have been somewhat disquieting. In 2012-13, the gross non-performing assets of banks increased by 31.8% while restructured standard advances increased by over 40%," HR Khan, deputy governor of RBI, said in his presentation at a function in Thiruvananthapuram on Monday...................
RBI takes steps to bring back export proceeds
...........With an aim to arrest Indian rupee slide by boosting forex inflows, RBI on Tuesday raised the limit for online repatriation of export proceeds by over three-fold to $10,000 and made it mandatory for units in Special Economic Zones to repatriate full value of exports within 12 months. The announcements come at a time the rupee has touched life time low of 58.98 against the US dollar. It has depreciated by 3.5 per cent against dollar in the last two days and by over 8 percent since April 30..............
Read - Business Today
No new steps likely to curb imports: FinMin
.......“Going forward, the government will undertake measures to ensure that CAD is safely financed,” he said. Worried over huge gold demand that is impacting CAD, the government hiked the customs duty to 8 per cent, while RBI has put restrictions on banks to import gold..........
New hot money: Govt is paying a price for its debt fetish
..... The market is used by hedge funds and foreign institutional investors to hedge against currency volatility. For the rupee, the key non-deliverable forwards market functions in Hong Kong, London and Singapore. The RBI has not recognised this market and, according to the ET report, refuses to openly acknowledge the impact of this market on the rupee.......
Revving up the growth engine through financial inclusion - K C Chakrabarty
......While there is greater awareness among policy makers and financial sector participants about the importance of prioritising the goal of universal financial access, there is a need to ensure that progress on the ground is in line with these expectations. The opening of bank accounts is only the first stage and the focus now is not just on improving access but also on better use of the financial infrastructure............
Early monsoon may provide comfort to Reserve Bank
........“For RBI, this year’s monsoons again will be a crucial variable in calibrating monetary policy, as they will have implications for both inflation and growth. Although the central bank’s guidance remains cautious, we believe the flow of macroeconomic data, continued downside surprises in inflation, a more benign current account and weak growth indicators, has created room for larger monetary easing in the coming months,” said Rahul Bajoria and Siddhartha Sanyal of Barclays Capital.............
Gold Fever
India’s mania for the yellow metal is turning us into beggars with the rupee hitting a new low
.....India’s
gold mania – without the give-and-take of gold jewellery no Indian
wedding is considered auspicious – is literally beggaring us. If all the
gold lying idle in the country were to be converted into funds for
industrial and business growth, the flagging economy would revive almost
overnight.............
No lower EMIs?
The fall in the value of the rupee has weakened the chances of your home loan EMIs coming down. How? Because Reserve Bank of India Governor D Subbarao may be unwilling to cut interest rates, as the fall in the rupee will fan inflation by knocking up prices of oil and other imported items...........
Losing its value
............Despite the Clean Note Policy of the Reserve Bank of India (RBI) and the Banking Regulation Act restricting people from any sort of writing on the watermark window of currency notes, many continue to write and disfigure the currency notes because of lack of awareness. Under the RBI guidelines, any sort of writing or inscription on the watermark window of currency notes is a punishable offence under Section 35 A of the Banking Regulation Act 1949; something common citizens seem unaware of. ............
Got fake currency from ATM?
Cases of getting fake currency notes are coming from across the country. This is an alarming situation for the banking system. Getting counterfeit currency notes from ATMs shows the strong flow of fake notes in the economy. This surge finally incurs loss to the common man who brings out money from ATMs. Banks do not take the responsibility of such fake currency dispenses through ATM until concrete evidence is available. Since, it’s very difficult to prove the source of fake notes, so, at last the person gets nothing even after a complaint..................
RBI's hidden hand brings Indian rupee off record low
.............."Finally the central bank stepped in. The selling was not huge but enough to cause a rebound in the rupee," said a senior dealer with a state-run bank, who declined to be identified given the sensitivity of the matter.............
A long view of the rupee
.......there appears to have been some reluctance on the part of the Reserve Bank of India (RBI) to retrench a part of its foreign exchange reserves to stall the rupee’s depreciation. Left to itself the economic situation seemed to warrant depreciation of the rupee, and even moderately good capital inflows did not help to stall that decline. Thus, a fundamental weakness in India’s balance of payments seems more important than inflows and outflows of foreign capital in influencing the course of the rupee............
In Young India, Re Now Almost a Senior Citizen
All
the king’s men stepped out on Tuesday to prop up a battered rupee and
deal a blow to currency speculators. As the rupee plunged to a new low,
the government’s Chief Economic Advisor, Raghuram Rajan, said India is
planning to float either sovereign or non-resident bonds as well as
liberalise rules on foreign direct and portfolio investments..............
Read - ET
Read - ET
Government to take 'warranted' steps to stop rupee fall: Raghuram Rajan
...."We will continue to implement measures to ensure that portfolio investor inflows are enabled and encouraged and some of these measures will be announced very shortly. "In the coming weeks, we will recommend to the Cabinet policies to enhance FDI limits on number of areas all this will help not just in short-term objective of financing the CAD safely but also in the longer term objective of ensuring sustainable growth,"........
Arrest That Fall
.............But
the RBI must desist from intervening to prop up the rupee. The falling
rupee is emblematic of our economy’s troubles where dollar payments
exceed dollar inflows, growth has slowed and inflation grown. Further
depreciation may lie ahead. First, this could work in India’s favour,
helping correct trade imbalances by making.............
Sinking rupee, failing economy
..........Also, the RBI would find it hard to reduce the policy rate when it announces its mid- quarter review next week. Currency depreciation has made it hard for it to cut rates because it would make capital inflows further unattractive and would further add to inflationary pressures. The government is trapped in a cul- de- sac. It cannot clamp down on imports for fear of further slowing down the economy and violating multilateral trade agreements. It cannot absorb the higher costs of..........
Dare we think capital controls to save the rupee?
.........So rather than wait for the rupee to fall even more precipitously or even gyrate like the Japanese yen, the government must step in and do something no government would like to do: impose capital controls.............
The rupee responses Why?
......The Govt has failed to take appropriate and timely measures to contain the import bill by containing the demand for gold when it was reaching the peak, improving the supply of coal by augmenting the production of quality coal domestically, creating an atmosphere to attract flow of funds from abroad by its taxation and ease of doing business through better administration and governance,..............
Read the views expressed by Dr.T.V.Gopalakrishnan
Read the views expressed by Dr.T.V.Gopalakrishnan
Does RBI lack firepower to defend Indian Rupee
......A few billion Dollars in sustained intervention is warranted if RBI's efforts have to bear fruit in a meaningful sense. A few billion! But given the current state of affairs, RBI could only shell out only some $500 million. This cannot sway the markets beyond a point to the advantage of Rupee. In other words, RBI lacks the firepower to intervene in FX markets as of now..........
Rupee reaches record low, but here’s why govt is not worried
......The ministry’s chief economic adviser, Raghuram Rajan, said authorities, including the RBI, the SEBI and government, were ready to act if needed to stop a runaway currency market. Rajan argued that the extent of the rupee’s slide had taken it into undervalued territory. On a trade-weighted basis, however, the rupee is fairly valued to slightly over-valued. In real effective exchange rate (REER) terms, the rupee was at 105.74 in May against six of its key trading partners, above the 100 that denotes fair value.........
'EVM cards are more secure than magnetic strip cards'
.........Credit/ debit card skimming is financial industry's one of the major concerns and often results in forms of identity theft, credit card fraud or bank fraud. The magnetic stripe credit and debit cards store user's financial data in static format. This data is vulnerable to be copied during offline transactions by skimming devices, which can be used to create a clone card and make unauthorized offline transactions...................
Bank problems? You can file an online complaint now
..........How does the complaint mechanism work? Any individual, whether a customer of that particular bank or not, can lodge grievances against a bank using the SPGRS. Under this system, bank websites are to have an ‘SPGRS’ icon leading to an online form where grievances can be filed. Physical complaints received through complaint registers at branches are to be entered into the SPGRS immediately. The advantages of the SPGRS are numerous...........
Card issuers in a fix over Aadhaar
Credit
card issuing banks are in a fix over Reserve Bank of India’s move to
consider Aadhaar as an additional factor for authentication of credit
card transactions in shops. The reason — a huge investment in upgrading
credit card swipe machines and prospects of losing customers in states
where Aadhaar enrolment has been slow. RBI had constituted a
working group headed by Pulak Kumar Sinha, general manager, State Bank
of India, to study the feasibility of Aadhaar as an additional factor
for authentication of card-swiped transactions and the panel is set to
submit its report by the month-end............
Read - TOI
Read - TOI
Fewer customers revolving their credit card dues
.......It is estimated Indian customers who revolve their credit card payments account for 26 per cent of the total customer base. In terms of the amount, credit card dues were estimated at 52 per cent, with the rest being carried forward, said an industry official..........
HDFC Bank pitches toxic product to NRIs
Dr KC Chakrabarty, Deputy Governor RBI, tells customers to be wary of higher returns offered by banks. The global consultant who received this was certainly sceptical and checked with a fund manager who, in turn, sent it to Moneylife with this comment: “Is this real or is HDFC Bank pulling a 3-card trick?” A simple reading of the email suggests it is pitching a fixed deposit with a 5-year lock-in. We asked the Bank if the email was genuine...........
Axis Bank, HDFC Bank and ICICI Bank in focus after RBI penalty
Private sector banks Axis Bank, HDFC Bank and ICICI Bank will be in focus after the Reserve Bank of India (RBI) on Monday, 10 June 2013, said it has imposed a monetary penalty on these three private sector banks for violating Reserve Bank of India instructions. A penalty of Rs 5 crore has been imposed on Axis Bank, Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank............
Read | Business Standard
CAREER IN PUBLIC SECTOR BANKS
............In the last two decades Public Sector Banks in India have witnessed a transition from traditional banking to modern technology driven banking. Exposure to competition has made these banks re-engineer and re-structure their processes, systems and product line. After economic liberalization these banks have been given enough freedom to do so. However, for various matters these are required to follow guidelines issued by Ministry of Finance, Reserve Bank of India and Indian Banks Association. Post nationalisation, the Banks were asked to open more branches in rural areas. Large number of people were recruited to man these newly opened branches. Expanded network gave a new identity to these banks and millions of new customers came to the fold of Banking. The business of Banking moved from class banking to mass banking............
Are you FIT enough to be a bank director?
......“There is an urgent need for making the Boards of banks more contemporarily professional by inducting technical and specially qualified personnel. Efforts should be aimed at bringing about a blend of 'historical skills' set, i.e. regulation based representation of sectors like agriculture, SSI, cooperation etc. and the 'new skills' set, i.e. need based representation of skills such as, marketing, technology and systems, risk management, strategic planning, treasury operations, credit recovery etc.”.........
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