..........The idea of a postal bank is not new. It was first mooted by S Venkitaramanan, the then finance secretary, and again in 1992, when he was Governor, Reserve Bank of India ( RBI). Over the years, the post office system did undertake limited banking activity. Post Office Savings Bank Deposit Accounts are widespread and did provide for checking facility. Also there is an array of term deposit and other savings schemes, such as Public Provident Fund, the Senior Citizens’ Monthly Pension Scheme etc. An important difference from banks is that India Post does not manage the funds it garners. All collections are credited to the government account and all payments are made from the government account. Since the outstandings increase over time, the government invariably ends up with a net surplus of inflow of funds. This cosy arrangement suited the government and hence, any proposal to enable India Post to evolve into a full- fledged bank, has been aborted by the Ministry of Finance............
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 15, 2013
The assignment problem - Dr. Subir Gokarn
........... in monetary policy, the instruments are either the quantity of money or its price (the interest rate). Theory and widespread evidence suggest that the macroeconomic outcome that these are most closely linked to is the inflation rate. Therefore, the assignment rule would suggest that inflation control should be the dominant objective of monetary policy. If other objectives are being pursued, other appropriate instruments must be created. So is a zone approach to policy completely ruled out? ...........
RBI To Organize All India Inter-School Quiz At Srinagar
......According to the official statement, the quiz is aimed to build a connect between RBI and the young student community enrolled in schools across the country and achieve extensive dissemination of financial literacy. It will also be an opportunity for recognizing and encouraging bright young students on a national platform............
Students shine at RBI quiz
...........Saurav Sinha, General Manager and Officer-in-charge of RBI, Ranchi, said: “This quiz was organised for the second consecutive year to generate interest among the students. We tested their knowledge in economics, current affairs, personalities and events that have contributed to the growth and progress of India over the years. The contest also aims to make the youngsters aware of the role of RBI in banking and finance sectors.”................
Venkitji - A true Karmayogi..................
I have felt very saddened by the going away of Venkitji. I could not see him before his leaving. I did not even know that he was seriously ill. I have since spoken to his family and expressed my deeply felt condolences. I think that it was my great good fortune that I had a person like Venkatji working with me. He was a true KARMAYOGI. He was super efficient in his work and was amazingly trustworthy and faithful. I know that he had health issues in his family but he never gave up on the serenity of his deportment and continued excellence in his work. He was a total Punyatma. I will miss him dearly as a very precious colleague.
- S n Bagai
The flip side of innovation - Book Review by A.Seshan
The volume is a collection of the transcripts of lectures and writings of eminent economists and financial experts. It narrates the story of India's financial sector reforms in the last two decades. It then focuses on the manner in which those reforms were implemented, the difficulties experienced in doing so and what remains ahead. There are 19 chapters, along with a good introduction by the editor......................
Who do you think you’re Kidding? - Book Review by P.P.Ramachandran
..................The 21st Century child is wired to technology and we have access to information as never before. The Internet has brought the world to our doorsteps. A typical urban child today has a Laptop, a phone, an i- Pod / i- Pad. His eyes are glued to the screen, his ears are plugged in with music and his mind geared to the game he is playing. Ashar has skilfully interwoven in her book extracts from books and reports on child development normally not available to us. Mark Twain famously said, “ I was born intelligent. Education ruined me”. This book offers sound advice on how to fulfill the needs of a Conceptual Age — out- of- box thinking, encouraging learners to follow their own intuition and instinct. She stresses on instilling creativity, imagination, ingenuity in young minds..............
Voice of growth- lobby is only heard: Subbarao
Indore: At a function organised at Indian Institute of Management, Indore, Reserve Bank of India Governor Dr D Subbarao has said voice of the growth- lobby is only heard in the country. While addressing students and faculty of IIM- Indore on Thursday, he said: “ Poor people’s voice does not get heard and it’s only voice of growth lobby that gets heard.” During his visit to the City, the RBI Governor also visited the elite B school to attend a function. During his one- hour long speech on “ RBI making a difference in everyday life” at the IIM- I, Dr Subbarao explained the multiple roles played by the RBI in monetary policy formulation, printing and distributing currency, regulation and supervision, external sector gate keeping, foreign exchange reserve management etc.............
Subbarao may get another extension
............“The government is pinning a lot of hopes on Subbarao’s economic acumen as he knows the pulse of the Indian economy. Despite being under pressure from the government and industry for reducing interest rates, he chose to cut rates in a very calibrated manner. Any change at the top may not augur well for the government and the economy at this stage,”..................
Race to succeed D Subbarao: Meet the contenders for RBI Governor’s post
The next RBI Governor
..............The first IAS officer to take charge of the RBI was R N Malhotra in 1985, followed by S Venkitaramanan. C Rangarajan and Bimal Jalan gave a short break of about 10 years when the RBI went under economists once again. The IAS returned with Y V Reddy and Subbarao, although it could be argued that Reddy had joined the RBI having discarded his IAS tag a few years ago. So, what does the past tell us about the chances of Chaudhuri, Mayaram and Rajan?.............
RBI Assistant Exam 2013 call letters uploaded
July 13 (TruthDive): The Reserve Bank of India has uploaded RBI Assistant Exam 2013 call letters. Candidates who had applied for the post in Reserve Bank of India can now download their call letter/admit card. Candidates can download call letters by entering registration no and date of birth at http://ibpsreg.sifyitest.com/rbijul13/login.php?appid=asdqnieidwe134ascalq
Fake currency from China worries intel agencies
Days after a consignment of fake Indian currency notes (FICN) worth Rs
37 lakh coming from China was apprehended in Delhi, another consignment
of comparable value from the same country has now been seized on the
Indo-Nepal border. This is the first time evidence of FICN being
routed from China has been found and the development has caused much
concern in the security establishment as China was not used as a fake
currency channel till now........
Read - TOI
Read - TOI
My View on "Indian economy in grim situation"
It is time to put in policies that will engender 'austerity for growth' model voiced by the Governor. Post liberalization, we moved to consumption led growth. While we moved a long way unwinding may be difficult but not impossible as the culture of India still rests on austerity. We have to re-set our priorities. State must get back to making available education and health within the easy reach of common man. Today they can be accessed only by the rich. It is the rich that capture media stories. We need to capture those stories where austerity in families led to greater elevation in them both in richness and diversity. Due to policy distortions intellect migrated to west but are now forced to return only to find that there would be disharmony in their living if they somehow do not acquire riches of the size they enjoyed thus far abroad. This is leading the youth into unwelcoming ways. Regulations have become relaxed when it came to outfits like the pubs and bars etc. Now there should be serious thinking on resetting priorities and the routes to growth.
- Yerram Raju
RBI raises concerns on India's large current account deficit
.........“India has generally been a current account deficit country. In view of the large current account deficit, the exchange rate of the rupee is susceptible to the influence of large capital movements, especially during crisis periods,” said G Padmanabhan, Executive Director, RBI in Singapore on Friday. According to Padmanabhan, this does not mean that the country does not aspire to see the rupee as an international currency, particularly as we increase global integration through trade and investment channels.................
PM calls industry after receiving SOS from Sharma
The much-awaited meet on July 29 to be presided by Prime Minister Manmohan Singh, it is learnt, is an outcome of an SOS sent by Commerce and Industry Minister Anand Sharma, who was apparently, cudgelled by captains of industry for the present condition of the Indian economy. On June 28, prior to holding his series of meetings with business chambers and export promotion councils, Sharma called for a closed-door meeting with a selected few at the capital's Taj Mahal Hotel to gather critical inputs. The invitees were former deputy governor of Reserve Bank of India (RBI) Subir Gokarn, former secretary of the department of biotechnology M K Bhan, former commerce secretary.............
No need to round off cheque amount, says RBI
...........The RBI circular was issued by Chief General Manager, P Vijaya Bhaskar. It referred to a high court ruling of February 2007 in which Justice RS Garg had said: "The RBI is hereby directed to issue fresh notifications/notices to all the banks, who have issued internal circulars, not to receive such cheques, etc. and see that stern action is taken against the persons who refuse to receive the cheques/drafts which are in fragments."............
'Certified Banking Compliance Professional Course’ launched by ICSI and IIBF
The ‘ Certified Banking Compliance Professional Course’ by The Institute of Company Secretaries of India ( ICSI) and Indian Institute of Banking and Finance ( IIBF) was launched in Mumbai last week by Dr K C Chakrabarty, Deputy Governor, Reserve Bank of India. This Course which will be offered as a joint certificate by ICSI and IIBF to members of the ICSI and IIBF members with a view to develop compliance professionals who can work in banks and consists of two parts namely an online examination followed by classroom learning for candidates who have passed the online examination..................
Shield yourself from errant bankers
............The Reserve Bank of India (RBI) has recognised this problem and recently issued guidelines to address this problem. These propose to differentiate between normal banking business and third-party investment-related products. The RBI has been voicing apprehension on the way banks have been selling third-party investment products or even handling their clients' money to invest on their behalf..............
Nitish Kumar orders action against fraud non-banking finance companies
PATNA: Chief minister Nitish Kumar has ordered harsh action against the non-banking finance companies (NBFCs) which have no affiliation with either the RBI or the SEBI. He said suchNBFCs are active in different districts andbefooling the public in the name returning their money with high profits...........
Cracking the rural banking formula
......For HDFC Bank, the game changer, according to Govind Pandey, the bank's branch banking head and the force behind Punjab's rural thrust, was using the bank's own staff to get the job done, something that has started paying dividends. In order to crack the formula in rural banking, two things held the key for HDFC Bank's rural branch managers — starting work early in the morning and progressively moving the touch-points closer to the rural masses. Nearly all of HDFC's operational 268 'grameen' branches have junked the conventional 9 am-6 pm bank timings, instead moving to a 7 am-4 pm slot as it is the key to catching the farmers before they go off to fields for work..............
RBI's dilemma intensifies
............If there is a reversal in the recent downward trend in both headline and core inflation, it will almost certainly stay the RBI's hand on July 30. In fact, unless RBI Governor D Subbarao's successor decides to follow a completely different tack for monetary policy, it is looking increasingly likely that the interest rate reduction cycle that began in April 2012 and reduced the repo rate by a cumulative 125 basis points has ended. In which case, the fundamental question has to be raised: where is the trigger for a recovery going to come from?............
The reviewer is an economic consultant, former officer-in-charge, Department of Economic Analysis and Policy (RBI), and was advisor to the National Bank of the Kyrgyz Republic and the Bank of Sierra Leone
Read | Business Standard
Read | Business Standard
Worth banking on new players
..........But the biggest impact would be on extending reach. Expanding financial inclusion requires not merely opening branches and dispensing credit, but actually expanding access to a range of financial services, such as savings and insurance products, payments services, etc., at low cost. In this sense, the new norms seek to ensure that not merely are there more banks, but they are also present in remote rural areas which need banking services. Importantly, financial inclusion is not seen as focusing only on rural poverty but also includes the urban poor................
Tatas up exposure to banking, NBFC stocks
New Delhi: In fray for new banking licences, salt-to-software conglomerate Tatas have acquired shares in about two dozen banks and NBFCs, such as ICICI Bank, SBI, HDFC Bankand Axis Bank through one of its group investment firms. The shares have been acquired by Tata Investment Corporation Ltd, whose portfolio of bank stocks rose to nearly Rs 183 crore, and that of non-banking financial sector stocks grew to about Rs 114 crore at the end of last fiscal............
Meet the first CEO of all-women bank
The suspense over who will steer India's first all-women bank is over. The finance ministry has identified Usha Ananthasubramanian, executive director of Punjab National Bank, to be the chief executive of Bhartiya Mahila Bank, which will launch its operations from November with six branches. Ananthasubramanian is leading the core management team (comprising employees from various public-sector banks) set up to put in place by October 31 the systems and processes necessary to start the bank's operations. The government will formally announce the name of the CEO after the Reserve Bank of India has issued the licence........
Women more sought after for top corporate positions
.......The demand for top-level women executives at Indian companies is rising fast, as the firms have begun to realise the business benefits of having female executives in their organisations, experts say. While India Inc continues to have a low percentage of top women executives, experts say that a slow realisation has crept in that hiring women at the senior level is imperative and makes good business ........
Muthoot Finance: Can turn 2,000 gold-loan outlets into bank branches
........"With our last mile connect in to the hinterland, a banking licence will enable us to play a larger role of financial inclusion by taking these services to the unbanked and undeserved population of the country,".................
Banking licence will help us reduce interest rate by 10%: Chandra Shekhar Ghosh
...........The issue is how to develop a model for banking, in keeping in mind our core activities. We will not dilute our reach in the unbanked and rural areas. As a bank, we will have two wings—one MFI and other banking wing. The banking wing will look after the corporate and non –MFI retail clients. We will continue with the doorstep banking services. Nearly 60 per cent of our lending will always be priority sector lending....................
The tough task of regulating wealth management
........The guidelines call for a “robust” grievance redressal mechanism, and segregation of wealth management functions in separate divisions or subsidiaries. These are important suggestions, which, however, will be difficult to implement. The former assumes a high degree of coordination among several regulators and service providers. If, for instance, a bank manager sells a totally unsuitable insurance policy, who will compensate the policyholder? In sum, there are weighty issues that the RBI will have to give further shape to in the final guidelines. The draft guidelines are, however, a step forward...............
Financial market integration vital for Asia region development
.......Asian countries have shown political support for greater financial cooperation and integration, but there is huge scope for channelising regional savings in the region, particularly in infrastructure development, he said. There is a need to address obstacles in areas such as differences in economic structure and development, maturity of individual markets and infrastructure, Padmanabhan said...............
Who is a politically exposed Indian?
.............three banks were found to have violated RBI regulations in terms of their correspondent banking relationship with cooperative banks, certain aspects of the so-called know-your-customer (KYC) norms and anti-money laundering guidelines, among others, but on the face of it, the RBI investigation did not reveal any evidence of money laundering. According to the central bank, any conclusive inference can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies. It’s over a month now since the RBI made this statement, but we have not yet heard from India’s tax and enforcement agencies on their plans to take the investigation forward.............
Chidambaram to attend G-20 ministerial meeting in Moscow
NEW DELHI, JULY 14:
Finance Minister P. Chidambaram will be leaving for Moscow later in the week to attend the two day G-20 ministerial meeting, which among other things will deliberate upon the current economic situation. The G-20 meeting of the Finance Ministers and central bank governors beginning July 19, will also be attended by RBI Governor D. Subbarao and Deputy Governor Urjit Patel. Chidambaram, according to sources, would be leaving for Moscow on July 18...........
Increase India’s competitiveness to cash in on rupee fall: Indranil Pan
.......The government should take advantage of the current rupee depreciation by increasing India’s competitiveness internationally, said Indranil Pan, Chief Economist, Kotak Mahindra Bank, adding for this there has to be a change in the way the economic momentum of the country is garnered. “The change the has to come in the way we are looking at the way we garner our economic momentum going forward, away from purely a service-oriented growth strategy to also a manufacturing sector-oriented growth strategy,”..............
Global factors to blame for weakening rupee: RBI official
..........In his comments circulated at the Official Monetary and Financial Institutions Forum at Singapore on Friday, G. Padmanabhan, Executive Director, Reserve Bank of India, said: “The Indian financial markets are now increasingly getting integrated with global financial markets…..This is reflected in the increasing volatility in Indian financial markets as a result of spill over from turmoil emanating from international markets.” Padmanabhan observed that, as witnessed in recent weeks, the rupee came under some pressure primarily on account of external developments............
Why the Rupee fell, and why it could continue to fall
A riddle that adults frequently ask children is “The more you take out, the bigger it becomes. What is it?” Almost always, the perplexed children are gently educated by know-it-all adults, that the answer is “A hole!” Someone should have reminded the UPA of that riddle. The year was 1990. India was on its knees. It had no money to pay for imports and had to mortgage its gold reserves for the first time in history...............
RBI rate cuts may now find their way to you
Aided by comfortable liquidity and stronger deposit growth, banks may now be able to pass on the benefits of policy rate cuts that the central bank announced in the past quarters. The Reserve Bank of India (RBI) had cut 25 basis points (bps) in three consecutive policy reviews since end January. Banks were, however, not able cut lending rates as aggressively owing to liquidity issues and lower credit demand. “After nearly three years, the gap between deposit and credit growth has closed. Since mid-2010, credit has been growing far in excess of deposit growth,” said Sonal Varma, economist at Nomura Securities. “This widening wedge between deposit and credit growth has been a key structural factor behind worsening liquidity conditions,” she added............
Weak Rupee Robs Indians of Darjeeling Tea
Indian
consumers used to Darjeeling tea may not get the best of the brew this
year. Rupee devaluation has prodded Darjeeling tea producers to step up
exports and shift the focus from domestic market to global markets................
Read - ET
Read - ET
Falling rupee puts government in a fix, RBI and policymakers debate over rate hike
.......But the central bank's prescription of monetary tightening has not found favour with other policymakers, notably the finance ministry that has been eyeing measures to boost investments and growth. Higher rates, it fears, could stifle growth that is already anemic. "There have been discussions on various options," said a government official familiar with the deliberations. He cautioned that no final decision had been reached and it was up to RBI to take a call on monetary policy................
Dancing to the Fed's music
..........The Reserve Bank of India has a tricky task. Does it cut policy rates at end-July with due regard to the weak demand? Or, does it hold rates, or even raise them, for fear of inflation going out of control and the rupee spiralling down if FIIs continue to exit? The central bank will probably hold or hike because of the fear of a balance of payments crisis. Against this backdrop can assets be reasonably valued at 18-plus P/E ? ............
Microfinance recovers from Andhra nightmare
......While the industry has travelled a long way by securing recognition from the RBI as non-banking finance company MFIs (NBFC-MFI), the big future need is to ensure that the MFI legislation, currently stalled, is passed by Parliament. Once that happens, MFIs can look forward to securing a more permanent place in the sun.
Give microfinance a chance
This refers to the report “Only Andhra govt can rectify the situation in state” (July 10). Livelihood financial services group Basix founder and chairman Vijay Mahajan is right in expressing his anguish that owing to the absence of micro-finance institutions (MFIs), borrowers in Andhra Pradesh are forced to approach money lenders who charge annual interest as high as 120 per cent against the 26 per cent that MFIs charge under the Reserve Bank of India directives. As a result of the ban,.........
Efficacy of Central Bank in Financial Market Regulation and Supervision
This
paper includes a brief introduction about how various financial sector reforms have
provided the Indian economy with a lot of resilience and stability and
boomed every sector of the economy and based on such reforms how RBI
have gone under strategic shifts and have made significant improvements in
the quality of performance of regulatory and supervisory function and consists the
limitation and loopholes emerging out in contemporary times as have been
observed in the recent issue of government pressurising RBI over the CRR issue. Along with
this, paper includes a brief study of inflation and the role of RBI
suggesting how it can reduce money supply and maintain equilibrium in reference
to the central bank failure of USA and observing its root causes of
failure in comparison to RBI as it being the apex body present in
India.........
“A POVERTY LENS ON FINANCIAL INCLUSION”
This report demonstrates that it is possible (and necessary) for the microfinance sector to measure and understand itself through a strongly pro-poor lens and make decisions based on this. But why make this a central point of a report when there seem to be even more urgent issues at stake today in the sector?.............
Read...........
Read...........
Textiles Ministry for according priority sector lending tag to industry
..........."I think textiles industry must be considered as a priority sector. I will soon talk to the Finance Ministry and Reserve Bank and make a case for granting priority sector lending status to the textiles industry," .................
Forex market manipulators under regulatory scanner
........The regulator also suspects that brokers and traders might be indulging in unauthorised trading of foreign exchange in the spot forex market, sources said, while adding that these issues are being flagged to the Reserve Bank. While the RBI mainly regulates the forex market, currency derivatives come under Sebi’s jurisdictions as they are traded on the stock exchanges. However, the suspected manipulations are mostly taking place outside the stock exchange platform and the brokers are luring gullible investors to place bets on currency pairs on promises that rupee is going to touch even lower levels............
New rules of filing tax returns
........For
some online tax filers, choosing the right form is not an issue. “A
taxpayer has to just enter what he has earned under different heads of
income and the portal automatically chooses the applicable form,” says
Sudhir Kaushik, co-founder and CFO of Taxspanner.com.
For instance, if the person has only income from salary and no exempt
income, his return will be filed using ITR 1, but if he made some
capital gains, has rental income from more than one house or his exempt
income exceeds 5,000, ITR 2 will have to be used. However,
taxpayers who upload their returns through the official Income Tax
Department website will have to be more careful about the form they use.
Delhi-based Kuldip Kaushik used the ITR 1 last year, but since he had
dividend income of over 5,000 for the year 2012-13, he will have to use
ITR 2 this year............
Students lose scholarship as banks set stiff rule to open A/c
HYDERABAD: Availing government scholarships remains a battle for as many as 750 students from minority communities, with banks now insisting them to maintain a minimum account balance of Rs 500 for opening a 'zero balance account' (ZBA). Ironically, the scholarship amount is a meagre Rs 600 per annum............
The forgotten software boom
.....As part of their evolution, Indian software firms have established overseas subsidiaries to deliver their services and execute contracts. To take account of this, the National Association of Software and Service Companies (NASSCOM) reportedly includes the software exports of the overseas subsidiaries of Indian companies in its figures on India’s software export earnings. The resulting NASSCOM figure is used by the RBI as the controlling total when reporting software services exports in its overall balance of payments (BoP) statistics.......
ATM business set to grow further in India, say experts
...........“Banks are aggressively expanding their ATM network across India and now it is convenient for bank customers to visit ATMs than going a bank branch,” said Navroze Dastur, managing director of NCR India — the largest ATM manufacturer in the country. From 69,000 ATMs in January 2012, the number has risen to 121,000 with the sector now attracting new players. The Reserve Bank of India (RBI) has now allowed private companies to set up ‘White Label’ ATMs ( the machines are owned by companies and not by banks themselves)...........
Mumbai resident arrested for biggest online credit card fraud
..........Investigating officers have found data of around 30,000 ICICI credit card customers in Tevar’s laptop, leading them to believe that the magnitude of the fraud could be much bigger. ICICI bank officials were unavailable for a comment. But investigating officers who contacted the bank said ICICI officials too have received complaints and have instituted an internal probe. “They are baffled,” said an investigating officer. “They are just wondering how this happened for more than a year. We feel that a bank employee must be involved.”...........
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