...........Huge Government borrowings, lack of solid policies and growing demands of gold also contributed to the weakening of the Rupee. When asked whether RBI should intervene, Dr. Das said, "Yes of Course RBI should intervene. If it is not being done then it indicates that they want to support foreign investors in the short run. These foreign investors could be 'Indians' or people with close interest in India. A dollar flowing in gives you more money. Interested people may also want to know more about the ‘Promissory Notes' scheme of the GOI that allowed foreign funds to flow in easily.".............
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.
Monday, July 1, 2013
Fall in GDP: The wages of sin - S.S.Tarapore
.....The current problems of high retail inflation, low growth, a large CAD and an overvalued exchange rate of the rupee are all symptomatic of macroeconomic instability and are the wages of sin. I do not tire of repeating that if hurting the poor is a sin, the creators of inflation are the sinners of society. If the government persists with its overbearing pressure on the RBI to keep reducing interest rates and making available easy accommodation from the RBI, there will be a further resurgence of domestic inflation, a fall in savings and a widening of the CAD. Needless to say, this could very quickly end up in a serious external sector crisis, which will ultimately further reduce the growth of the economy......
India Needs Top Dogs for its Financial Watchdogs
...........
India too will have a new RBI Governor this September — but the
government is yet to name Duvvuri Subbarao’s successor. Expectations are
that finance minister Palaniappan Chidambaram, known for his ability to
take quick decisions, will end the suspense soon. But that’s not good
enough. As the US and British examples show, searches for key regulators
need to begin early. Look at how much difference the predetermined time
schedules for release of macroeconomic indicators has made. There’s now
certainty, and analysts and markets know when to expect what. That’s
what is needed for key appointments as well. Of course, picking the
right person for a regulator’s job is even more crucial...........
Statistics Day celebrated all over India by the Ministry of Statistics and Programme Implementation
Data digitization to help banks
.....The issue is being pushed forward by the banks for over one and a half years as the Centre and Reserve Bank of India had been asking the banks to go for financial inclusion and improving their credit-debit ratio in the state. M R Nair, executive director of Allahabad Bank, during a meeting of the state level bankers committee in September 2012 had asked the government to ensure that the records are updated by the month-end as was promised by the then chief minister Arjun Munda...........
'There is need to make statistical system more effective': C. Rangarajan
........."The relevance and importance of collecting data relating to labour and employment cannot be over emphasized. These data are critical to understand how an economy functions. Ultimately, the objective of all governments is to create and sustain an environment in which everybody who is willing to work finds a job,"...........
Madhu's nostalgia @ 'Father' Joseph's retirement..............
 |
| File photo of Shri F.R.Joseph - being welcomed by Ms.Kamala Rajan, the then Principal, CAB at the CONFERENCE OF PRIVATE SECRETARIES (COPS 2010) |
Shri F.R.Joseph, Banking Ombudsman, Thiruvananthapuram retired from Bank's
service on 28th June 2013. M.N.Sawardekar, PS to Banking Ombudsman, Mumbai who had worked with him
pens down his memories.............
On my promotion from Class III to Officer, I was posted as Private Secretary to Shri F.R.Joseph, Chief General Manager, FED in 2004. I was very lucky to have him as my boss. I remember every time he was appreciating my work. That kept me motivated to do more and more work efficiently. I remember once, I had to leave office early for some reason, I went to him and told him, Sir, I want to leave office early for some urgent work. He gave me very surprising look and said that whenever you have to leave office, you don’t have to take my permission, simply give your charge to your assistant and leave. No boss will say like this. Because he had full faith in me. When Shri Joseph got transferred to Chennai as Regional Director, on his farewell party not only me but the entire department was touched by his emotional feeling towards us. I thoroughly enjoyed working with him and I will I remember, whatever good things he has taught to me. He is very down to earth person, very humble and very caring person. Very meticulous in his work and very sharp in remembering small small things of his subordinate staff. I wish him a very HAPPY, HEALTHY AND PEACEFUL RETIREMENT FROM RBI AND NEW JOURNEY TOWARDS SECOND INNING OF HIS LIFE.
External debt - A.Seshan
.......... Governor Venkitaramanan appointed a two-man group called "Policy Group on External Debt Statistics of India" in December 1991 to reconcile the data and formulate a scheme to put them on a reliable basis. It included Y Venugopal Reddy, then joint secretary in the finance ministry, and me as adviser (international finance) in the bank. The group was assisted by a task force of officers of the bank and the finance ministry who visited various institutions and undertook a detailed examination of the accounts. ...........
RBI's new debt recast norms - M.G.Warrier
..........In this context, the methodology for issue of guidelines being followed by RBI in the recent past, which elicits and accommodates the concerns and views of the stakeholders, simultaneously ensuring protection of country-specific and sector-specific regulatory and supervisory needs for which the central bank is responsible deserves appreciation. Perhaps, like the present day parents who are not able to cope with the speed and coverage of teaching in the best schools they send their kids, Finance Ministry and top managements of banks and financial institutions are finding it difficult to keep pace with the professional and democratic functioning of RBI..........
Canara Bank widens rural presence
Canara Bank has launched the Aaadhar Samruddi Card, an Aaadhar-enabled debit card that enables cash withdrawal at ATMs and also micro ATMs with business correspondent agents in the rural areas. At an event in Mysore, Reserve Bank of India Deputy Governor K C Chakrabarty explained the policy initiatives taken by the RBI in extending banking coverage/facilitation in rural areas and providing citizens access to credit facilities with the objective of bringing more people under financial inclusion..........
No comments, please
...........Remember that at Mint Road, where the headquarters of the Reserve Bank of India (RBI) is located, its governor rarely opens his mouth on such matters, despite knowing full well that he can actually make a difference to the exchange rate of the rupee through interventions. Nor does he allow his deputy governors to speak on the issue unless that is direly needed. In sharp contrast to Mint Road's reticence, North Block, headquarters of the finance ministry, goes the other extreme, often facing the charge of making statements a bit too frequently...........
More onus on bankers
..............In the case of banks, while RBI’s baseline case estimates expected losses to rise from 2% of advances right now to 2.1% by March 2014, the baseline case for unexpected losses is as high as 7% — while this is undoubtedly a tail risk, the RBI thought it important enough to say “therefore it would be prudent for the (banks) to increase their provisioning from the present levels”.............
'Unpredictable' Bank Negara
Bank Negara Malaysia again emerged as among the top central banks in Asia in terms of being the least predictable in its monetary policy, says Credit Suisse. Bank of Korea and the Reserve Bank of India topped the research house's non-Japan Asia list and Bank Negara came in second.........
Easing pressure on rupee is key: Rangarajan
If pressure on the rupee eases then it will give greater room for the Reserve Bank of India (to lower policy rates), C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council said on Saturday. He was speaking on the sidelines of the Statistics Day event to mark the birth anniversary of India’s statistical and development planning pioneer, P.C. Mahalanobis...........
INDIAN BANKS FACE REPUTATIONAL, OPERATIONAL RISK
....... This
is not the first time the Indian banking system has come under
regulatory scrutiny for violation of banking norms. Banks have been
fined for not conducting adequate due diligence in financing initial
public offerings, they have been sued by clients for misleading
them on the suitability of exotic derivatives, and banks have faced
criticism for using recovery agents to harass defaulters. The RBI has
been taking steps to check these malpractices. It has issued guidelines
on credit cards, compensation policies, and a fair practice code...............
RBI cancels CoR of two non-banking FIs
......The CoR's of the two companies were cancelled on May 9 and June 6, respectively, according to a public announcement by RBI. In exercise of powers conferred on it under sub-section (6) of section 45-IA of the Reserve Bank of India has cancelled the CoR of these companies, as these companies have voluntarily cease to be NBFIs, according to the announcement..........
SMS alerts set to cost Rs 60 per year to SBI customers
......... "With effect from quarter ending June 2013, SMS charges of Rs 15 inclusive of service tax per quarter will be recovered," SBI said in an announcement. The country's largest bank, which has about 18.5 crore customers, did not specify whether the charges are for special alerts only or even debit or credit card transaction alerts sent as per regulatory guidelines will also come under this............
Rupee recovery will help RBI cut lending rates, says Rangarajan
.......“On the last occasion, the decision took was largely influenced by external sector considerations. Wholesale Price Index (WPI) was showing downward sign and non-food manufacturing inflation was below three per cent,” Rangarajan said. “But the pressure on rupee prevented the RBI to go in that direction (of policy easing) and it took a pause. And therefore, if the pressure on the rupee eases, then it will give greater room for the Reserve Bank,” ...........
Kuwait, India discuss bilateral economic, trade relations
.........Ahluwalia is scheduled for three-day official visit to Kuwait, starting from Monday, along with an accompanying economic and trade delegation, during which he is to meet with prominent figures from the Kuwaiti leadership and government, Kuwait embassy said in a statement. His delegation includes senior officials from Ministry of Commerce and Industry of India, the Reserve Bank of India, Investment Management and the Finance Ministry, and state-owned companies..........
India’s Tryst with Destiny
.........The authors depict the historical evolution of Indian macro-economic policy framework ranging from Jawaharlal Nehru’s affection for socialistic ideas to the active implementation of nationalisation policies under Indira Gandhi regime to present post-liberalisation era to the future possibilities of enhancing the pace of economic progress with enhanced reform measures. They also delineate how these restrictive policies ended up in reduced growth rate to abysmal levels and increased the social inequality.................
Balance sheet bomb
There is a ticking bomb in many corporate balance sheets, and two releases by the Reserve Bank of India (RBI) serve as a useful reminder of this............
Let’s bank on this duo
.................Considering the fact that the RBI has created a regulatory framework for the microfinance sector covering all aspects, the microfinance sector has no option but to live up to the expectation of all concerned on the above-mentioned aspects. In view of these developments, all stakeholders should pool their resources to implement many more instruments of confluence to achieve the amalgam of the ‘Funding Capability’ of banks and the ‘Credit Delivery Skills’ of NBFC-MFIs to further the interest of ‘financial inclusion’. Neither banks nor NBFC-MFIs can do it alone. But there is a high probability that they could do it together, and there could be a time-bound acceleration of India’s financial inclusion plans.
They are good enough to die for us but…
...........It is such practises that give banking a bad name, especially when nobody is willing to even acknowledge that such practices exist, though it is an open secret in trade circles. The Reserve Bank of India (RBI) has washed its hands off the affair by requiring that banks provide reasons in writing for rejecting any loan or credit application. Banks rarely reject loan applications in writing and when pushed by applicants, the reasons are mentioned in normal bureaucratese such as "the application does not meet our credit norms". So, what is wrong with such practices that an entire column be devoted to it?................
Read | Business Standard
Central bankers on the ground - Raghuram Rajan
.........Indeed, perhaps a better explanation is that instead of creating more room for central bankers, the banking rescues narrowed their political room for manoeuvre. Perhaps what forced central bankers to act creatively was the political difficulty of doing nothing after having spent billions rescuing private banks. After all, how could one let a technical hitch like the zero lower bound on nominal interest rates stand in the way of rescuing Main Street when innovative financing facilities had been used to save Wall Street? Once central bankers undertook the necessary rescue of banks, perhaps they became irremediably entangled in politics, which made quantitative easing an inevitable outcome..........
Rupee may plunge to 61.50 in 3 months: credit Suisse
........“The depreciation of the rupee means the chance of the RBI cutting interest rates at its next meeting on July 30 is virtually zero, and indeed there is probably a higher risk of rate hikes not cuts right now, given Subbarao’s hawkish nature,”...........
Payments crisis 2.0?
........... The latest data from the Reserve Bank of India shows India to have received $ 89.3 billion of net capital flows in 2012-13 – the highest ever since the record $ 106.6 billion of 2007-08. These inflows are now drying up, making it difficult to finance even what could be a lower CAD this year. Unlike 1990-91, however, India is today a much bigger and a more open economy offering far greater long-term growth prospects. While its external imbalances are too large for a bailout of the kind that the International Monetary Fund extended in 1991, there is no reason to believe that global private capital would forever shun a country that showed a glimpse of its potential only last decade............
PM advisers failed to forsee slump, relied on West policies
As the Indian economy slips, fingers are being pointed at those government advisers who failed to foresee the situation and suggest corrective measures. The Prime Minister's economic experts are being blamed for formulating policies based on the Western experience, which is not relevant in India. Reserve Bank of India Governor D. Subbarao in particular is being criticised for failing to rein in the falling rupee. "He has a single-track mind, focusing only on interest rates and the banking system rather than the entire economy," a Central banker lamented. However, as former Finance Minister Yashwant Sinha said, the ultimate responsibility of implementing suggestions given by the advisers lies with the government. "As per the Constitution, the Finance Minister and the Prime Minister are responsible for each and every decision related to finance,...........
Receding headache
..............Indian households have bought gold and real estate because they offered protection against high inflation. It was not a bad decision, with real returns on bank deposits negative. Now, gold prices are falling, real estate is weakening, and inflation is softening. It is perhaps time to take a fresh look at household portfolios.
RBI's new bank license norms: Now, corporates may vie for takeovers in banking sector
......Once the winners are announced, it may not be as if the failed applicants will throw in the towel. In fact, they may well pursue a go-ahead from the central bank for an alternative entry into the banking — via the inorganic route. Sudip Bandyopadhyay, who heads Destimoney Securities, feels that many of the private players who will not be allowed will later petition the RBI to allow them to acquire existing banks. "If the RBI allows new banks, there can't be justification for not allowing takeovers. Taking over an old existing bank may be a better strategy,"............
Rupee at 60: the options before RBI
.............On the contrary, it can nullify what the government and the RBI have achieved vis-a-vis the fiscal deficit and inflation. Fiscal deficit in 2013, estimated at 4.9%, is better than what many had expected. India’s wholesale price inflation dropped to a 43-month low of 4.7% in May and retail inflation dropped to 9.31%. What is more reassuring is that the so-called core inflation, which excludes volatile food and fuel prices, has been coming down rapidly. But a weak local currency will have an adverse impact on both fiscal deficit as well as inflation..............
Now, you can't use credit card to buy gold jewellery on EMIs
After taking policy measures to lower gold imports, the Reserve Bank of India (RBI) has decided to curb retail consumption, too. It has asked banks not to convert gold purchases done through credit cards into equated monthly instalments (EMIs), besides mandating that cards should not be accepted for purchase of gold coins at branches. Many banks, especially the ones aggressive in the credit card business, offer EMI facility on purchase of air tickets, mobile phones and gold jewellery. Normally, on any transaction of more than Rs 10,000 value, customers are offered the option of converting the dues into EMIs. ..........
Gold unlikely to regain its shine any time soon
..................And while it is true that Indian jewellery buyers purchase more gold when the price falls, the Indian government is increasingly anxious to curb their demand. With gold imports accounting for between a quarter and a third of the country's swelling trade deficit, in recent weeks the Reserve Bank of India jacked up import duties and banned loans to finance gold imports for domestic consumption. As a result, emerging demand from Asian consumers is unlikely to be strong enough over the coming months to convincingly reverse gold's downward trend. For now at least, the yellow metal has definitely lost its shine.
Manmohan Calls for Urgent Steps to Check High CAD
............Though
the official growth and current account deficit numbers for 2012-13
have only come in later weeks, the prime minister had correctly
anticipated in May that the first year of the 12th
plan would see GDP growth of “only 5%” and a current account deficit of
about 5% of GDP. Figures released by the RBI last week put the deficit
at 4.8% of GDP. India’s growth aspirations, Singh said, pose a
challenge for its democratic system. There is a need for consensus about
the “difficult but necessary policy choices we face” amidst the
country’s “vigorously competitive politics”. The path India chooses to
take, Singh said, could also mould the future of democracies around the
world............
Gold is no longer an attractive investment option
.........A large part of this is due to the stiff measures to curb gold imports being put into place by the Reserve Bank of India (RBI). RBI has been battling a rising tide of current account deficit (CAD) and has quite rightly clamped down on import of gold. The fall in CAD to 3.6 per cent of gross domestic product in the last quarter of FY13 will bring some cheer to RBI, but the apex bank is unlikely to change its policy on imports..................
Sebi opens local office in Chandigarh
.....Opening of local offices is part of the regulator's efforts to promote a balanced pan India securities market and help in bringing Sebi closer to the investors and intermediaries. Reserve Bank of India (RBI) Deputy Governor Anand Sinha inaugurated the local office in Chandigarh while Sebi Chairman U K Sinha was also present at the occasion.............
Building it brick by brick - Charan Singh
............In such a scenario, public participation could be the most efficient alternative to reconstruct infrastructure in Uttarakhand. The government should set up a Special Purpose Vehicle (SPV) which will float bonds to construct various parts of the destroyed infrastructure in the state. The complete task of reconstruction should be divided into smaller components like building each of the temples; areas around the temples; roads from one temple to another.....................
Charan Singh is RBI Chair Professor of Economics, IIM Bangalore
Bombay HC to hear Kapur’s petition on Yes Bank Board seat on Monday
.............The letter also said Rana Kapoor recused himself from the deliberations surrounding this issue both at the nominations and governance committee meeting and then at the overall board level. When contacted, the bank’s spokesperson refused to comment saying “the matter is subjudice”. While Gogia claims she has the right due to her status as legal heir, the bank argues that she may not pass muster with the RBI’s fit and proper criterion for bank directorship.
AP urban co-op banks sail smooth amid falling gold
The urban co-operative banks in Andhra Pradesh have been fully insulated from the sudden fall in the gold prices. Thanks to the cautious and tight measures adopted by the banks in advancing loans against gold and gold instruments, said the Andhra Pradesh Urban Banks and Credit Societies Association............
J&K to seek financial help from PCI during Annual Plan finalization meet
.....In case of losing banking character, these institutions would only be able to work as Cooperative Credit Society and no transaction whatsoever in the form of banking could take place. It is worthwhile to mention here that as a part of Government of India’s initiative of recapitalization of the week Cooperative Banks across the country, a committee headed by Prof Vaidyanathan was constituted to suggest ways and means for the accomplishment of this task. The Committee submitted its report along with a set of recommendations for the Central Government, State Governments, NABARD, RBI and the concerned Banks...............
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