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, July 19, 2013
Subbarao pitches for greater autonomy for central banks
RBI Governor expresses dilemma on monetary policy forward guidance
..........“We have started the practice of giving forward guidance on monetary policy. Because of its potential impact, we pay much more attention to the language and nuancing of the ‘forward guidance’ paragraphs than other parts of the statement. Our experience in this regard has been quite positive. Nevertheless, we face some challenges,” ...................
RBI to open financial literacy centres
Reserve Bank of India (RBI) Assistant General Manager V. Raveendran has said that the bank will launch financial literacy centres in the State. Delivering the keynote address at a district-level consultative committee review meeting of banks in the district here on Wednesday, Mr. Raveendran said the financial literacy rate was very low among Keralites and the RBI would launch block-level financial literacy centres to sensitize the public to the issue by September end............
Is the Indian economy heading towards stagflation?
KOLKATA: Is India in a stagflationary phase?Chakravarthi Rangarajan, the chairman of the Prime Minister's Economic Advisory Council (PMEAC), spilled the beans in February in his paper titled 'Growth and Austerity: The Policy Dilemma'. "It is pertinent to note that stagflationary tendencies have already reared their head in emerging markets, like India, where financial intermediation was never a problem," he wrote, creating quite a flutter...............
Need to focus on employment generation - Charan Singh
.........The high fiscal deficit and current account deficit are a cause of concern and demand a very careful crafted policy environment. In these circumstances, despite the country being in an election year, stretching the policy to exhaust the fiscal space at the Centre and states by announcing new measures like Food Security Bill covering 83 crore people may not be defensible. Rather, measures to firm up expectations and unleash forces that help to generate skills and create employment would be useful.
VITALINFO - 'Re'serve EXpress..............
I have found VITALINFO as one space where we can express our views "WITHOUT RESERVE". I have found A.Chandramouliswaran's views on "Contender
- M.G.Warrier
My View on "How did a former RBI man end up on Yes Bank Board ?" - A.Chandramouliswaran
There is a rule in the Central Government Pension regulations relating to taking up employment after retirement. The government employee is not permitted to take up any employment within a period of two years after retirement without the permission of the Government. The scrutiny of such applications is expected to be done to ensure that the government employee was not in such a position where he had a regulatory role over the organisation offering employment. In the RBI Pension regulations, we have incorporated a similar provision. This is often circumvented by accepting appointment as an Adviser/Consultant and the permission is freely granted. After all, the appointment is cleared by someone who, sooner or later, would be finding himself at the other end and would expect his appointment to be cleared without any fuss. In the case of IAS officers, there is no dearth of such post retirement positions in the Governmental/Quasi- governmental organisations. There were two articles in the "Indian Express" some time ago about the number of positions occupied by retired IAS officers in CAT, as CIC, Principal Information Commissioner, CAG, Chairman of TRAI, members of Boards of companies such as ONGC, HPCL etc etc. In the RBI itself, even Deputy Governors ( not to speak of others down the line) have been allowed to take up positions in the Advisory Boards of Foreign banks, part time Chairman of private sector banks etc after their tenure in the RBI was completed. In this milieu, permission granted to M.R. Srinivasan ( who, incidentally, is a highly flexible person--please do not ask me what flexibility means!!) should not surprise anyone and the rule relating to prior permission for taking up post retirement position has become a laughable one and attracts nothing but contempt. I have known of some dedicated, intelligent and upright former colleagues of mine in the RBI suddenly changing colours a year or two and becoming 'flexible' prior to retirement with an eye on post retirement positions! There is total lack of morality in the offer and acceptance of post retirement jobs by Government servants and members of the top management in organisations like RBI, SBI and other PSUs.
- A.Chandramouliswaran
My View on "Time to cleanse banking in India"
This is a timely caution to government and regulators in the financial sector. Perhaps, confused with the shifting and dodging of responsibility by various authorities including finance ministry in the financial sector, FSLRC went to another extreme of suggesting a single regulator for financial sector. In the Indian context, such an institutional change may not happen that soon. But, regulators and GOI as also state governments should take cognizance of the blatant violations of established law by several agencies and take remedial action by following a coordinated approach. Coming to the limited issue of money laundering, finance ministry should take immediate supportive measures to follow up the symbolic action taken by RBI using its powers categorizing the goings on as a ‘KYC’ issue.
- M.G.Warrier
Beyond banker bashing
...........Instead of banker bashing, it would be more constructive towards mitigating the consequences of future disasters if banking were to be kept simple. Capital requirements could be beyond those prescribed under Basel III. However, this would be of little comfort if capital adequacy norms were not met and yet compliance were recorded through complex fudging..................
RBI’s laughable fines may well encourage banks to flout laws
..........Already, between the regulatory gaps of RBI and the Insurance Regulatory and Development Authority that regulates the insurance sector, banks have ensured that consumers lose Rs 1.5 trillion (that’s Rs 150,000 crore), according to a recent paper by the Indira Gandhi Institute of Development Research. This money has been pocketed largely by distributors in banks. But instead of learning from this colossal loss to many of them in rural areas, and tightening systems, the RBI is cheering the banks on. Unless, RBI changes its philosophy of fines and behaves like the regulator we expect, scams will continue to lurk in dark corners of finance’s first stop.
Passbook pangs
..........Despite the Reserve Bank of India pleading the case for the issue of passbooks, the new generation banks have not acceded to this demand. They have adamantly maintained their stand on issuing monthly statements. In fact, this persistent refusal borders on arrogance...............
PSBs could lose some good talent to new banks
.........."As their model would be technology-based, these banks might not need too many people for their branches. The issue is that all competent people of government banks would leave. Poaching will mainly happen at the level of assistant general manager, deputy general manager, and general manager. These positions will almost get empty,".............
New norms irk aspirants eyeing jobs in 21 banks
Pune:
The Institute of Banking Personnel Selection’s (IBPS) move to change
the eligibility criteria of the common written exam (CWE) for
probationary officers and management trainees at 21 public sector banks
has left several candidates in the lurch. The IBPS is an
autonomous body mandated with conducting the recruitment process for the
public sector banks. The enrolment process for the CWE, to be held in
November, is to commence from July 22...............
Read - TOI
Read - TOI
Tread cautiously prior to issuing new banking licences
........A debate has already begun whether corporate that doesn’t possess any banking experience but huge cash reserves should be issued licences or whether small time players like micro-finance firms and NBFC’s which have financial experience be permitted to make a foray into banking. Banking is a serious business and it involves lending, borrowing, maintaining liquidity, adhering to interest rates and lowering non-performing assets. All these aspects have to be managed amicably and require expertise which directly impacts a nation’s economy.................
SFL chief flays denial of level-field for NBFCs
.........The capital adequacy requirements for all NBFCs had been raised from 12 to 15 per cent, significantly higher than that required for banks, he added. Mr. Viji said based on a detailed analysis of the RBI guidelines, the directors were of the considered view that it was not in the long-term interests of the stakeholders to apply for a banking licence.
Not really; Subbarao is not paying you Rs 2 cr
........The RBI has been very aggressively creating awareness through its advertisements, poster, radio announcements and what not, regarding such fake emails. In fact, the apex bank runs a ticker on its website, urging the public in general to be aware of fictitious offers. Read the RBI notification here. We suggest when you get an email like this, you should simply ignore it.................
RBI ask banks to collect counterfeit notes and give credit to customers
...............According to RBI, reporting and detection of counterfeit notes has not improved on its expected lines. RBI said although 90% of the currency chests are with the public sector banks, they account for reporting of a mere 10% of counterfeit notes, while private sector banks with less than 10% of currency chests are reporting 90% of such cases. The central bank also warned that it would penalize banks that do not report counterfeit notes in its branch or currency chest. Banks would be penalized if found holding counterfeit notes in its branch or currency chest without reporting it to RBI or Police, during an inspection by the RBI. “It will be construed as willful involvement of the bank concerned in circulating counterfeit notes, and appropriate penalty strict regulatory measures against the bank including stringent disciplinary action will be imposed by RBI,” the circular said..............
SBI, Xpress Money launch dual-use remittance card
...........The State Bank Xpress Money Card, which will initially be available in Kerala and eventually cover other states, is a product of partnership between Xpress Money, State Bank of India and UAE Exchange and Financial Services Ltd. The card is a prepaid product which combines features of both debit and remit as it allows users to receive remittances from abroad and can also be used at ATMs and for e-commerce transactions..............
Ezetap takes on peers with low-cost payment device
Bangalore-based Ezetap has launched a new mobile point-of-sale device that will cost a lot less than similar products in the market, while meeting global security standards and RBI guidelines...........
Chidambaram leaving for Moscow to attend G20 ministerial
.....The G20 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. The finance ministers of BRICS member countries are also scheduled to meet on the sidelines of the G20 ministerial meeting as a follow up of the Durban Summit earlier in March,............
Central bank turns cautious on monetary tightening
..........After some liquidity-tightening measures aimed at increasing borrowing costs, the Reserve Bank of India has turned cautious. Market experts said the central bank did not want interest rate to rise sharply as that could create more problems for the economy...............
RBI strikes fresh blow to worst bond sales in six years
Mumbai: Rupee-denominated bond sales were already having their slowest start to a month in almost six years before India wrecked prospects of a revival by unexpectedly raising interest rates..........
Dalal Street fears CRR hike as RBI manages to sell just Rs 2,500 crore worth of bonds
The Reserve Bank of India's attempt to squeeze liquidity in the system to shore up the battered currency suffered a setback on Thursday. It managed to suck out just a fifth of what it had planned, raising the spectre of harsher measures. If the central bank still believes that excess liquidity is leading to speculation that the rupee will weaken more, it may raise the cash reserve ratio (CRR), the portion of deposits banks keep with RBI.............
RBI measures losing steam
..........The most significant factor, they cite, is foreign investors’ faith in the currency and the efficacy of recent measures taken to attract foreign investment. The equity market has suffered due to massive flight of the foreign capital. The brokerages point out the RBI and the government cannot overlook the fact that foreign institutional investors' equity portfolio is at $250 billion which is many-fold larger that $35 billion parked in debt bonds.
How Humble Post Offices Can Save the Rupee - Charan Singh
............One
such avenue could be inflation-indexed small saving instruments (IISSI)
to be sold through the network of more than 1,55,000 post offices, and
bank branches. These IISSI could be an extension of existing instruments
like small savings accounts, recurring deposits or public provident
funds with a regular interest reset clause, as envisaged in the ‘Report
on System of Administered Interest Rates’ (Chairman: YV Reddy, 2001).
Existing national savings certificates (NSC) could have an
inflation-indexed option or even introduction of inflation indexed
special bearer bonds. And more importantly.................
RBI move bad for industry, hopes quick reversal: Naina Lal Kidwai
......."The other side of it is that it makes liquidity tight which means access to funds becomes harder which is RBI's intention. Hence, it is de-facto interest rate rise without being an interest rate rise," she said. "So, to that extent its not good for the industry. So, I hope it does not stay forever," she said, adding, the steps are temporary in nature.......
Story Difficult choice, doubtful outcome
......The central bank has generally followed a ‘hands-off’ approach in the currency market since the bout of rupee depreciation started in May. The extent of currency intervention and other measures has been small, and policymakers tried to explain that the down-move in the rupee is part of a broader emerging-market currency-depreciation story. However, the recent RBI measures present a very different approach to the issue..............
RBI’s Failure to Defend Rupee Calls for a Bazooka
.........Indeed, the spike in interest rates militates against Subbarao’s theory
of ‘Indian exceptionalism’ which essentially is that unlike text book
cases, foreign
flows from equity funds into India rise when interest rates fall
because it would boost economic growth and corporate earnings. “The
recent RBI moves do not ensure an effective curbing in pressures on the
rupee since they can potentially lead to FII outflows, especially in the
current backdrop of a prolonged phase of weak growth,”.............
A govt can neglect growth at its own peril: Naina Lal Kidwai
..........It is a very big fear right now that rates could actually go up. That would be horrible for industry and growth because industry has long been asking (for) interest rates to come down. RBI began bringing down the rates, but unfortunately banks did not drop the rates because of various reasons. RBI’s recent step fell short, fortunately, of putting interest rates up. The effect it has is reducing liquidity in the market, which will bring its own pain. But we have to hope that government and RBI don’t believe putting interest rates up is the only way to stop the falling rupee.............
Gold loan NBFCs plan public offer of nonconvertible dentures
.........At a time when gold loan business is showing a tepid growth with a fall in gold prices, NBFCs have no option but to go for public offer of non-convertible debentures and to list them on stock exchanges to raise money. They have to begin the process of converting their unlisted debentures to listed ones as they mature. .......
Plugging regulatory gaps
..........So now that Sebi has been empowered to act, it needs to be staffed with people with the appropriate level of expertise in different aspects of the law and accounting. It is this that needs to be done to rid India of financial sector scams and not, as the FSLRC report recommended, merging all non-RBI regulators into one.
SC issues notice to Centre, WB, CBI, RBI on Saradha chit fund scam
.......On the chit fund business run in illegal manner in other states, the petitioner said, "Millions of people have been cheated by the chit fund companies. There is no one to regulate their activities in the absence of coordination among central authorities like SEBI and RBI." It requested the court to examine the necessity of banning chit fund business...........
Bank of Maharashtra asked to pay for mediclaim loss
.........., “It is important to note that the cheque, which was issued by Kothari was not for commercial transaction, but for securing his life. Hence the objection raised by BoM cannot be accepted. The case shows the bank’s inefficiency. Kothari is a consumer and is entitled for compensation.”
SBI associate bank unions vow to intensify protests over merger
.........In fact, officers of the five banks under the umbrella of the Associate Bank Officers' Association (ABOA) have their reservations on the issue. General Secretary of ABOA (SBH unit) Harshavardhan Madabhushi said, “When a big bank takes over a small bank, there are natural concerns of step-motherly treatment being meted out to the merged entity's employees.” He reiterated fears of bank employee unions that there will be rationalisation of branches post-merger, possibly leading to job losses..............
C M Vasudev re-appointed as HDFC Bank non-executive chairman
.......Vasudev, who joined the Indian Administrative Service in 1966, has worked as an Executive Director of World Bank, representing India, Bangladesh, Sri Lanka and Bhutan. He served the Ministry of Finance for eight years in various capacities, and was also made the government nominee director on the boards of State Bank of India, IDBI, ICICI, IDFC, NABARD, National Housing Bank and as well as on the Central Board of the Reserve Bank of India......
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