........Thereafter, concerns have emerged that FSLRC’s recommendations make FSDC a “super-regulator”, erode individual regulatory autonomy, and allow for political interference in what ought to be the fiefdom of regulators. Unfortunately, many of these comments (most recently by the Governor of the Reserve Bank of India, D. Subbarao) appear to stem from a lack of clarity on the recommendations. Understanding this issue requires delving into a bit of history............
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.
Friday, June 14, 2013
Call for single financial sector regulator
....... “We have seen how regulatory gaps have enabled sharks to swim through. The obvious reason is, if you say that this regulator has this domain jurisdiction, then it refuses to look at anything else...In between, somebody takes advantage and runs away with public money. “The ponzi scheme arises because regulator ‘A’ says this is not my baby. Regulator B says I am not concerned with this... So the ponzi runs through… That is exactly what is known as the regulatory gap,” said Srikrishna. According to him, we need one unified regulator which will, irrespective of the jurisdiction, have to deal with it (the wrongdoings), be it insurance frauds, ponzi schemes or any other financial issue........
Eco may have bottomed, but no signs of recovery yet: Gokarn
Subir Gokarn, Director of Research, Brookings India says the economy may hit bottom but there is no sign of recovery yet. He feels the current account deficit (CAD) problem needs to be addressed on various parameters; a diesel price hike alone will not be enough. Gokarn, who is also ex-RBI deputy governor, also says restriction on gold imports only a short-term solution. He says the government must ensure alternate investment options to gold. "The inflation-indexed bonds (IIB) a clear alternate to gold investment," he told ................
Everybody is accountable in a democracy: B N Srikrishna
......."In our country, even the Prime Minister and President can be challenged. So, who are the regulators?" ..............
Mayawati all set to launch her own commercial bank
.......Interestingly, RBI has welcomed the move. “If more politicians were to divert their personal wealth from godowns and the Swiss Banking System to the Indian Banking System, we would witness a significant rise in the money under circulation and would be able to bring an increasing percentage of our adult population under financial inclusion,” RBI Governor told............
My View on "The mechanics of money - Dr.D.Subbarao"
The article gives an insight into the function of money and how one deeply involved in handling monetary policy perceives the role of money. A quick read of the article will also help today’s busy executives how to approach books and reading habit in general. Those who are more interested in financial markets and products on display there, can benefit from pointers to the evolution of ‘market’ during the last century and also try to find answers to questions like “Is a hurricane more likely to hit because more hurricane insurance has been written?” posed by The Economist long ago. In sum, Dr Subbarao’s review of the book “The Physics of Wall Street” by James O. Weatherall is a sumptuous treat which will ignite your appetite for further reading.
-M.G.Warrier
Tightened recovery laws will help banks deal with bad loans
....Under the amendment to the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, a Tribunal can grant adjournments if sufficient cause is shown. But such adjournment can be granted no more than three times to a party and where there are three or more parties, the total number of adjournments cannot exceed six. According to M.R. Umarji, Chief Legal Adviser, Indian Banks’ Association, due to the adjournments given by the Debt Recovery Tribunals (DRTs), banks were facing long delays in getting orders for recovery..........
Govt interviews 2 candidates for SBI managing director post
..........While the government appoints managing directors, the bank's chairman is responsible for allocating portfolios. A search panel headed by the Reserve Bank of India governor conducted the interviews earlier this week. The search panel included Rajiv Takru, secretary, financial services, in the ministry of finance; Anand Sinha, deputy governor of RBI (nominee of the governor) and one professor from an Indian Institute of Management, among others. The selection for this post is crucial as the selected candidate could well be made chairman of the country's largest bank when Pratip Chaudhuri's two-and-a-half-year term ends in September..............
Remembering KSK
This refers to A Seshan's letter "KSK: Gentleman-economist" (June 11). I was working with State Bank of Mysore, Dalal Street branch, Mumbai in 1976-79 when K S Krishnaswamy was the RBI deputy governor. His salary account was with our bank. I was asked to reconcile our accounts with the RBI that was in arrears for more than a year. During the course of verification, I found that .................
Bank unions want ‘adequate increase’ in salary in 10th bipartite wage settlement
.....When asked if unions were agreeable to the proposal of variable pay linked to productivity, Venkatachalam said that they were open to proposals that offer incentives for performance or motivate employees. However, he clarified, that these could not be in lieu of the increase in basic emoluments that they were demanding. He also debunked the ‘cost-to-company’ concept that was floated by the IBA during the talks held last week.............
Shocking
It is rather shocking to learn that the management of the Bank of Maharashtra has terrorised its employee to cover up its misdeeds (“To fix whistleblower …,” June 13). The RBI should have ordered an inquiry into the whistleblower’s charges of imprudent banking decisions made by the mangement. By not acting on such an important tip, and forwarding instead the letter in a routine bureaucratic manner to the BoM management, the RBI acted irresponsibly. By initiating action against Devidas Tuljapurkar for carrying a poem he published 19 years ago as editor of Union’s in-house magazine, the management is coercing him and his Union to desist from whistle-blowing activities. The management of a PSU is supposed to be model employer.
-A.G. Rajmohan, Anantapur (The Hindu)
My View on "India’s Small-Change Problem":.........
The issue is are we minting sufficient number of coins to cater to the needs of our growing economy ? It is to be recognised that a considerable number of coins get wasted during religious rites in our country. The recent Kumbh Mela is just one such example.Do we make effort to replace the coins that are swept away or melted by some unpatriotic business ? The answer is NO. This partly explains the reasons for not finding reasonable quantity of coins that were minted prior to the year 2000. Thus the data relating to 'coins in circulation' has to be taken with a pinch of salt. In other countries we find lot many coins in circulation that were minted in the 1960s and later. But not so in our country. Another thing. Have we coinised all the five rupee notes that were not renewed. And remember, this has has to be done on a continuous basis and not as onetime basis for reasons mentioned above. So what's the answer ? Making available more coins DEFINITELY ! Either we convince the Govt to increase the capacity of the mints or import coins. Now if both the proposals are not acceptable to the Govt. for economic and political reasons, its time we decided to set up mints ourselves as we did in case of note printing. This is because the shortage of coins in the market does not dent the image of the Govt. but it does as far as RBI is concerned.
- G N Rath, General Manager
Racketeers take advantage of loopholes in RBI circular
Taking advantage of loopholes in a Reserve Bank of India circular on norms to register fake currency cases, a racket is engaged in circulation of such notes in the city, the police feel. Though they are receiving many complaints from banks and shops, a case cannot be registered in many instances because of the circular.......
FM to meet PSU bank chiefs;persuade them to cut interest rates
.......: "What I want to tell the RBI, I tell the RBI quietly and indirectly. I like them to take correct decisions"...........
Role models
This refers to Subir Gokarn's column "When role models fail" (Muddy Waters, June 2). In the mid-1940s, India saw a number of selfless heroes. Subhas Chandra Bose, who cleared the Indian Civil Service examinations, did not accept the plum post and lead a "comfortable" life. Instead, he joined mainstream politics, became His Majesty's enemy and gave his life for the freedom of the country.......
From a trot to a canter
............ But the possibility of a depreciating rupee pushing up prices and, therefore, inflation rates, is tying up the RBI chief’s hands. If he cuts rates to push growth, he risks stoking inflation. If he keeps rates intact, he risks perpetuating the slowdown. It is in this backdrop that finance minister P Chidambaram announced on Thursday that the government would come out with a slew of reforms measures over the next couple of months. Hopefully, his steps to get stalled projects off the ground will also begin to show results soon. Then, he has urged all departments of the government to start spending their budgetary allocations............
Govt gives Sebi, RBI access to call data records
Centre has decided to include Sebiand RBI among the nine agencies which will be authorized to accesss call data records (CDRs). Sources in the home ministry, which is finalizing the new norms for interception in concert with the department of telecom, said that the inclusion of the central bank and market regulator is meant to help them track economic offences, including insider trading and money laundering............
India needs to restructure policies for trade with China: RBI study
India could gain from its economic engagement with China only if it restructures domestic and external policies and pursues a cautious approach to ensure that the country's long-term interests are preserved, according to a research study by the Reserve Bank of India. This is required to address the widening trade deficit of India with China and to ensure an effective partnership between the two neighbouring countries, RBI said in a project research study titled `India China Bilateral Trade Relationship' on its website.
Why central banks intervene in the currency market
...There are various motives of different central banks behind intervening in the currency market. For example, RBI has by and large stayed away from the currency market in the recent years and has allowed the rupee to find its own value in the marketplace depending on the host of market forces. However, it does intervene in the market to curb excess volatility. These interventions also help...........
Free slide
........ few days ago, the governor of the Reserve Bank of India, Duvvuri Subbarao, said that the central bank would let markets decide the rupee’s value, demolishing any expectations that the central bank would intervene in the currency markets. But on June 11, the central bank and the government announced some administrative measures to stem the rupee’s decline: exporters were told to bring their foreign exchange earnings into the country within a year, and the chief economic advisor, Raghuram Rajan, said that the government was considering raising limits on foreign direct investment in certain sectors. Will that be enough to restore faith in the rupee’s value?......
What’s Behind the Declining Rupee
.............Under these conditions, it looks unlikely that the R.B.I. will lower interest rates at its next meeting on Monday. The focus will be on ensuring stability in the foreign exchange market before taking further monetary policy action. The recent upgrade in India’s outlook by Fitch Ratings will be a comforting factor, and the R.B.I. will try hard to get the rupee in order before pursuing its goal of easing interest rates to take the economy forward.
Which set of numbers will determine Subbarao's stance on Monday
The Reserve Bank of India (RBI) will announce its mid-quarter review of monetary policy on June 17 amid a weakening rupee on one hand and falling headline inflation on the other. Here are factors that Subbarao will take into account for the policy decision:...........
RBI not likely to cut rates, eyes Indian rupee, CAD
A tumbling rupee and pressure on the CAD (current account deficit) are likely to prevent the RBI (Reserve Bank of India) from lowering policy rates on Monday despite softening inflation and decade-low economic growth. A policy hold would halt a cycle that has seen the central bank cut rates at each of its reviews in 2013...............
RBI could crash rates
For the first time in recent memory, the RBI may be emboldened to cut interest rates sharply. Nothing succeeds like success. The corollary is that, for interest rates to fall, nothing succeeds like failure on the growth front. The slowdown of the Indian economy in the last year is precipitous. We are now below 5 per cent from 10 per cent levels a few years back and if this continues, we would be staring at a recession in the next couple of quarters or shortly thereafter. What, one might well ask, is the cause?...........
It ain’t over yet
........Bank loans are usually classified as either performing or non-performing. If non-performing, lenders must build up reserves against potential losses. In 2008 the Reserve Bank of India (RBI), the supervisor, permitted the widespread use of an intermediate category of “restructured” loans. The terms of these loans had been watered down to help the borrower but banks could assume any difficulties were a blip and avoid building up provisions.
IPO scam: SAT asks NSDL to file reply by June 20
........A Sebi probe panel, headed by K Mohan Gopal and V Leeladhar, who was then the deputy governor of RBI, had found both NSDL and Bhave guilty of negligence and said that there should be accountability fixed in the case. But by that time, Bhave was heading the Sebi. Following this, Sebi board rejected its own committee findings on the matter........
FIIs' commitment to India remains strong: Nikhil Johri
........It is difficult to say if the worst is over for the rupee, because the fall was led not so much by local factors but global fears on QE. At least in this round the decline in the RUPEE is not very different from what we've seen in many other emerging market (EM) currencies. The Reserve Bank of India (RBI) is intervening. However, any direct intervention by the RBI in the forex market will be limited............
XLRI to host three-day Conference on 'financial inclusion'
............Aimed at deliberating on research and contemporary issues on ‘financial inclusion’, XLRI Jamshedpur will host academicians, practitioners and microfinance institutions from across the country at its 3-day international conference & competition to be held in September this year. According to the premier institute, both the events -2nd International Workshop on Inclusive Finance & National Level Competition Innovation (Impact), will be held on September 13-15, 2013 at the XLRI Jamshedpur campus................
Read.........
Sub-inspector suspended for submitting false report in court
.............The office premises of Rose Valley Corporation in Gardanibagh were raided on May 2. The cops also froze its accounts with a private bank on Boring Road. The raids were conducted at the offices of 15 non-banking companies in Bihar after getting confirmation from Securities and Exchange Board of India ( SEBI) and Reserve Bank of India (RBI) that they were non-banking financial institutions without licence................
Gold continues to glitter for customers, banks
The Government and the RBI may have gone hoarse asking people not to buy gold. But the yellow metal holds a fatal fascination for Indians. Be it coins/bars or jewellery, people continue to invest in gold, say bankers and jewellers. This is mainly because the precious metal is seen as the most liquid asset. From gold coins that weigh just 2 gm to bars of 50 gm, some public sector banks sold more than a tonne of gold last fiscal. Now, with the Finance Minister suggesting that banks keep off selling gold coins, some banks are disappointed with a source of income shut.........
'Stop buying gold!' Chidambaram begs gold-crazy Indians
........."You give rupees, we have to provide dollars. You think you buy gold in rupees but actually you buy gold in dollars. I would once again appeal to everyone, please resist the temptation to buy gold,"...............
Stop buying gold, says FM; unapologetic that savers have so few options
...........The trouble is that the FM is brushing major problems that savers have with other financial products. Bank savings accounts and fixed deposits are the commonest options for intelligent savers, but there are hindrances in Know-Your-Customer rules’ implementation by the banks at entry level. By the time the saver learns a little more, the quality of customer service leaves much to be desired...........
Delay in draft payment costs Central Bank Rs.10,000
....."It has not been shown to us that any particular time limit is fixed for deposit of a demand draft and its payment and we have also not been informed if there are any guidelines of the Reserve Bank of India about the time limit. We are, therefore, left on our own to determine as to what is reasonable and proper time which should elapse before a demand draft is honoured for payment after presentation,"......
US top target for phishing attacks; India ranks fourth
...Of late, the attackers also changed their modus operandi. They now target high net worth individuals and high online spenders by sending specific mails, rather than the earlier practice of mass mails. Another trend is using the names of governmental organisations such as the Income-Tax Department and even the Reserve Bank of India...........
Nigerian held in ‘black dollar scam’
.........Rupavathi, a post-graduate student, received an e-mail on May 24 saying that she had won an annual prize of 1 million pounds. She paid Rs.21,000 into an SBI account as directed by the fraudsters. Within hours, she received another mail from the ‘RBI’ saying that she was the lucky winner of 1 million pounds and directed her to pay Rs.2.31 lakh towards the ‘cost of transfer of the prize money’..........
SBI alters how it sanctions credit to avoid bad debt
......Acknowledging that there had been a “sharp increase in non-performing assets (NPAs) in the first three quarters of the year, which abated only in the fourth quarter”, Chaudhuri told the bank’s shareholders that a major reason for the high bad debt accumulation was the slowdown in economic growth and other macroeconomic factors. He added that the bank’s credit policy also needed to be rearranged. The committee was formed to “analyse and address the reasons for relatively higher NPAs in comparison to the other banks”, and to know the “reasons for our relatively low share in better performing business segments”. It has different subcommittees that comprise heads of all business groups and segments. The main committee held 17 meeting throughout the year, while the subcommittees met frequently, the annual report said.........
Foreign Banks In A Tight Spot Over EU Trading Norms
.............The issue has now come to a boil given the initial reluctance shown by the Reserve Bank of India (RBI) and the country’s CCP –- the Clearing Corporation of India Ltd (CCIL) -– to fall in line with ESMA’s (a third party) wishes. ISDA officials met with RBI and CCIL officials on 11 and 12 March, but those in the know of these meetings, nothing conclusive was arrived it. Foreign banks have also approached the RBI to seek an early resolution, but senior officials at these banks admitted the matter has taken diplomatic overtones..................
Staff benefit costs may delay merger of associate banks with SBI
.....“Cost, expenses and employee perquisites are different and we need to bring them on equal footing (with SBI). For instance, there are three terminal benefits in SBI as compared to two in case of associate banks. Capital will be required to create a corpus,”..........
Planning for Retirement? NPS May be Worth a Second Look
........However, the grand retirement scheme is not without its share of limitations. The key one, of course, is the cap
on maximum exposure that you can take in equities, which stands at 50%.
Now, if you are a young professional willing to stomach risks and stay
invested for the long term, financial planners recommend a high equity
exposure of 60-70%. Such investors may not find NPS’ proposition
appealing. This apart, remember, if you need funds during a crisis, you
cannot tap into your entire NPS corpus.............
Read - ET
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