........Post his "intense" stint at the central bank "where there was never any let-up", Gokarn now steers the research agenda at the Indian arm of one of the world's most respected think-tanks — Brookings Institution. Brookings India's founders include the who's who of India Inc, including Reliance Industries' Mukesh Ambani, the Birlas and the Tata Group. Edited excerpts:--
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 22, 2013
Corporate lending rates: Sterile debate - DR. N. A. MUJUMDAR
......Reverting to substantive issues, is there any empirical evidence to support the thesis that financial engineering can by itself, generate real growth? RBI Governor D Subbarao, has given a convincing answer to this question in his foreword to the RBI’s Financial Stability Report ( No. 7 issued in June 2013): “ In the years before the global financial crisis of 2008, the financial sector took on a life of its own with a growing belief that real growth can be generated by sheer financial engineering. That myth is now demolished. We now know that the financial sector has no standing of its own: it matters only to the extent that it aids the growth of the real sector. It is this wisdom that must guide the ongoing global effort at financial sector reforms: it is this wisdom that must inform the Reserve Bank’s policies and actions.” The financial system can aid but not generate real growth.............
Tackling crisis of confidence in economy - Dr. T. V. GOPALAKRISHNAN
...The foremost thing is to bring down the inflation and any cost incurred by the Government and the economy. The RBI has been doing its best for the past few years but it was not given the attention it deserved by the Government. The RBI’s efforts have kept inflation under check and below the double digit. Raising resources from both domestic and external sectors are the major hurdle and herein lies the solution to give strength to the economy..............
Demise of a humble persona.............
Very sorry to inform about the sad demise of Mr. E.U.KHAN (70), Retd. Chief General Manager, Premises Dept. CO. Mumbai on Sunday, 21 July 2013 at about 8 pm in Saifee Hospital, Mumbai. We pray for the departed soul to rest in peace. Funeral on Monday, 22 July at 1.30 pm at Mira Road, Mumbai. Residence: Asmita Vintage A204, Asmita Heritage compound, Near N. H. School, Mira Road East.
Son's Mobile phone number:
- Irfan 9867145533
- Akram 8828449190
- A.U.Shaikh, Mumbai
Remembering K.S. Krishnaswamy: Essential Mysorean and Sensitive Economist
.........Many years later, as I was building a small centre for women’s studies, and he was the Deputy Governor in the RBI, I went to see him and made him more or less swear that when he retires to Bangalore, he shall not join the councils of the famous centres of economic research in Bangalore, like the ISEC or IIM or any other, but will join and advise our little centre called the Institute of Social Studies Trust—which he did! ............
Read............
Question of change or continuity hovers over Indian central bank
The identity of India's next central bank chief remains a matter of speculation even as Reserve Bank of India Governor Duvvuri Subbarao scrambles to support an embattled rupee with less than seven weeks to go before he is due to leave office. An extension of Subbarao's tenure, once unlikely, has become a possibility as the rupee reels from a selldown of emerging markets that has hit India especially hard because of its high current account deficit...............
RBI chief Subbarao not offered job extension so far
 |
| .................."No offer has been made so far, so there is no question of accepting so far. It is a hypothetical question. As I said before, I must move on,"................. |
Rajan, Mayaram in race for RBI Governor’s post
.......While India negotiated that crisis relatively unharmed, the latter part of Subbarao's tenure spawned a stark dilemma as fiscal and monetary measures to tame inflation, while failing to hit the target, cast side effects on growth. He has presided over decisions to repeatedly raise lending rates to cool prices. In the last few weeks, the sharp decline in the rupee has added to the array of problems for the RBI Governor who has, so far, withstood pressure from all quarters to slash lending rates. He has also ushered in key reform measures including savings bank rate deregulation and a plan to issue new bank licences.
Next Gov by choice??
In
my view the choice of the next Governor of the RBI should be identified by a
Committee of ex Governors of RBI as they know best what are the demands and
expectations of the job and the country and they have been in the high echelons
long enough to know the potential of the candidates available.
- Kamala Rajan, CGM, UBD
Through the VITALINFO I wish to share my thought on behalf of ALL THE RETIREES that next GUV should be one who can think of the plight of retirees if Pension Updation is not finalised at the earliest. We are not going to be affected whether a person is close to PM or FM or someone else. Our only concern is that PENSION UPDATION SHOULD BE TAKEN UP ON PRIORITY BASIS. Otherwise koyee aye koyee jaye......mainoo kee.......
- K.S.Wadhwa, Retd. PS
Anonymous view on VITALINFO........
As rightly said, one can express frank views in VITALINFO and Re-Tyred Express without reserve and without fear of hierarchy or APAR. However, let us acknowledge that VITALINFO/ Re-Tyred Express is not a platform for score/avenge. All writers may kindly ensure that their contributions are free from admonition of x or reflective of idiosyncrasy. In sum, let the views expressed in VITALINFO/Re-Tyred Express necessarily be those of the authors /contributors.
- Anonymous
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
My View on "RBI to open financial literacy centres"
It is comforting to find that RBI is taking forward the initiative to promote financial literacy vigorously .While such efforts will yield results in states like Kerala where literacy level is high, across the country the position is pathetic. There were 11 states with literacy rate below the national average of 74 per cent in 2011. These states together accounted for 55.76 per cent of the population (121 crore-Provisional). Kerala, Lakshadweep and Mizoram had literacy rate above 90 per cent. Himachal Pradesh, Chandigarh, Delhi, Sikkim, Nagaland, Tripura, Daman & Diu, Maharashtra, Tamil Nadu, Pondicherry and Andaman & Nicobar Islands had literacy rate between 80 per cent and 90 per cent. Literacy rate in the remaining 9 states/UTs was above national average, but below 80 per cent. States and Union Territories with below national average (74%) literacy rate. One wishes, GOI joins hands with RBI and guides states to improve literacy at primary and secondary school levels.
- M.G.Warrier
Mind elsewhere!
It is customary for speakers, especially the chief guest, to make platitudinous remarks about what an honour or pleasure it is for them to be in any conference. In a rare and candid admission at a recent conference on financing strategies for urban infrastructure conducted by the Centre for Advanced Financial Research and Learning (CAFRAL), RBI Deputy Governor H. R. Khan, said, “It is a pleasure being here, but my mind is elsewhere!” He was alluding to the anxiety in the RBI and among market players following the series of steps taken to curb liquidity. Luckily for him, nothing untoward happened.
Mayaram meets RBI brass
Mumbai, Jul 19 (PTI) With the troubles on the macro-economic front continuing, Economic Affairs Secretary Arvind Mayaram met the Reserve Bank brass, including Deputy Governor H R Khan, here this afternoon. Coming out of the hurriedly convened meeting, which lasted for two hours, Khan described it as a "routine meeting", but refused to divulge any details. Apart from Khan, who looks after the internal debt management, the meeting, held at the central bank''s office in sub-urban Bandra Kurla Complex, was also attended by RBI Executive Director G Padmanabhan, who oversees the Foreign Exchange Department..........
RBI to conduct inter-school quiz on August 8
The Reserve Bank of India (RBI) will conduct RBIQ, an all-India RBI Inter-School Quiz at Carmel Girls Higher Secondary School, Vazhuthacaud, here, on August 8, from 9.30 am to 12.30 pm. The event is being organised with a view to create awareness and interest about the history and role of RBI, about banking and finance, other banking institutions, economics, current affairs, personalities and events that have contributed to the growth and progress of India over the years..........
Now, currency exchange cell at various banks
KANPUR: Exchanging damaged currency notes with fresh ones has been made easier by the authorities of Reserve Bank of India (RBI) by setting-up currency exchange cell at various banks in the city. Even the mutilated currency notes, with essential features intact, can be exchanged at designated branches of the banks, RBI said in its issued press release.The exchange facility is available at 38 branches of government banks while eight private banks will also offer this facility to the citizens. RBI has also asked the all bank branches to accept coins and currency notes for transactions or exchange.The designated branches have also been asked to display prominently a notice saying, 'Mutilated notes are accepted and exchanged here' for the convenience of the customers.
Programme on ICAAP and SREP by CAFRAL
The objective of the programme is to have a thorough discussion on the issues related to Internal Capital Adequacy Assessment Process (ICAAP) and Supervisory Review and Evaluation Process ( SREP). It has been specifically designed and targeted at the senior officers of banks who are responsible for implementation and validation of the ICAAP document as well as Inspectors in the Banking Supervision departments of RBI who would undertake SREP..........
RBI online exam postponed
Srinagar, July 20: Reserve Bank of India postponed the online examination for the post of Assistant which was scheduled to be held at Srinagar and Baramulla on July 20 and 21. “The examination has been postponed due to the prevailing situation in these places,” RBI said on its website. The revised dates of the examination at these centres shall be intimated to the candidates, it said.
Greater Kashmir
Stung into action
.............The question that arises, therefore, is: Why has the RBI seemingly woken up only now and gone on to impose fines on 22 banks (in addition to three others in June)? Has all this come about only because of a ‘sting operation’ by an online news portal, apparently showing officials from three banks willing to accept large amounts of unaccounted cash and deploy these in suitable investment schemes? The fact that the RBI scrutiny happened just a month after the news portal’s expose does indicate so. Given the compulsions that banking staff face to keep deposits flowing, it would be a folly on the part of the RBI to count on their good behaviour alone as the basis for compliance with KYC norms........................
Misuse of funds: probe begins against cooperative bank
.........The chairman said under the scheme, Rs. 5.30 crore was credited to the bank in 2009 and subsequently the amount was credited to 1,390 beneficiaries. “Since then, three audits have been conducted and no one has objected. When the CAG reported loans had been given to ineligible beneficiaries, we remitted an amount of Rs. 1.05 crore in June and Rs. 3.7 crore on July 15 to the Reserve Bank of India. When we have remitted the amount, the question of misuse does not arise,”...............
'Politicians should be barred from running district cooperative banks'
............ At a time when the DCCBs, are in news for wrong reasons, Kailashchandra Agrawal, a veteran of cooperative banking, feels it is time to bring about a fundamental change. "Cooperatives should be out of political influence and more entities should come under the Reserve Bank of India's (RBI) ambit," he says. The director of Maharashtra Urban Cooperative Bank's Federation, Agrawal is also a member of Task Force on Cooperative Urban Banks (TAFCUB), a committee under Reserve Bank of India, for monitoring the banks' performance.
Excerpts from an interview............
INDIAN BANKS FACE REPUTATIONAL, OPERATIONAL RISK
.... All
banks are in overdrive to improve their operational risk management
which includes evaluating all processes and systems. Banks are now
insisting on multiple documents to verify a customer’s identity instead
of just one. But the job of bankers will become difficult in a country
where everything from fake passports, to fake stamp paper are freely
available...............
Why Seniority Based Promotion IS Comparatively Better?
........I therefore always plead for seniority based promotions and punishment to those who do not perform in the view of assessment committee manned by ten senior officers. Though management of banks have been advocating and pretending to put in action merit based promotion for last two to three decades , the assets of banks is moving from bad to worse despite all so-called reformatory steps taken by RBI and Ministry of Finance from time to time..........
PNB opens first all-women branch in Solan
Exhorting the women folk to come forward to get the benefits of banking schemes, launched for speedy socio-economic uplift by providing loans and related facilities, social justice and empowerment minister DR Shandil on Friday said the union government after the approval of Reserve Bank of India had already given its nod to establish women banks across the country............
SBI says needs Rs 2.3 lakh crore to meet Basel III norms
..........Gupta said for SBI, it is important to time the capital raising appropriately, as other banks will also be looking to raise capital. "When the whole banking industry will need money, we need to time our capital raising accordingly. Therefore, the sooner we go to the market, the better it is," he said. Gupta, however, expressed reservations if this is the right time to do so, citing highly volatile capital markets..........
Digital currency to abet money laundering: Report
........."This new techniques of money laundering (using digital currency) includes opening accounts with low cost and little known payment gateways, buying digital currencies, purchasing stolen data, setting up online shops with payment gateways, using the bank accounts of money mules to transfer so earned money to different countries," said the report by Pune-based 'Indiaforensic'............
RBI goes fishing for NBFCs
..............Unable to save lakhs of investors from losing thousands of crores, the Reserve Bank of India (RBI) has started fishing for non-banking finance companies (NBFCs). It has recently shot thousands of notices to companies asking to send their annual reports, for the RBI to examine whether the company is an NBFC or not. The same RBI slept over the years as Sahara collected in excess of Rs20,000 crore. All this, surprisingly, comes just in the backdrop of the Usha Thorat Panel Report, which sought a major recast of NBFC regulation................
Driver ferrying cash for ATMs runs away with 1.16 crore
Pune:A
daylight robbery with all the trappings of a great heist unfolded at
Wagholi on a wet Saturday evening when a driver ferrying cash for ATMs
of the State Bank of India took off with the cash van, removed the iron
box containing Rs 1.16 crore, put it in a waiting vehicle and fled...........
Read - TOI
Read - TOI
Govt could ban ponzi-scheme ads that offer easy money
Faced with a mushrooming ponzi menace across the country, the government is considering a possible ban on promotion of money-collection schemes promising unrealistic returns. Emphasising on the need to prevent dissemination of false information to the public by the operators of illegal deposit-taking schemes, Corporate Affairs Minister Sachin Pilot has said that the advertisements for such products need to be banned, just as promotion of alcohol, cigarettes and many other products are prohibited by law...............
Despite RBI guidelines, significant number of banks' recovery agents harass defaulters the age-old way
........"Your son has taken a loan of Rs 5 lakh from the bank and run away. Give me his number," said the man who claimed to be a recovery agent with HDFC Bank. When the senior citizen refused to share the number, the recovery agent repeatedly called and threatened him. Bhargav was forced to bear with the abuses silently............
Policy for banking
......While there are 26--Corporate houses, non-banking finance companies, government entities and broking companies, in the race for getting the licences, it’s anybody’s guess how many of these would be given the go-ahead by the RBI. However, the apex bank should grant licenses to only..........
Read - Kashmir Times
Will Pincodes Bring Profits?
........To be an effective asset manager, says N. Srinivasan, a Pune-based consultant who has worked with NABARD and RBI, the post office will have to learn how to invest money, give loans to factories and village folk. It will also face an onerous task: collections. “Setting up a bank will prove a challenge. Today, people feel postal deposits are government deposits. Will this perception last when it becomes a bank? It’s to be seen,” he says.............
Don’t Bank On That Idea
........The central question is: does India Post need to reinvent itself? The answer is: certainly. What shape could that take? The rural network, for instance, could turn itself into the country’s largest banking correspondent network. Second, it has the best database on Indians and could leverage that to provide authentication of KYC services. The postal department is one of India’s best institutions and it can definitely reinvent itself in a million different, and sustainable, ways. But a bank?
Bank on strong ones
In a sudden change of fortune, banks are staring at margin erosion while lenders that are dependent on wholesale funding are finding their cost of funds go up as a result of RBI’s recent tightening measures...........
RBI nod sought to set up special bank: WHEF
The World Hindu Economy Forum (WHEF) today said that it has sought RBI's permission to set up a special bank "to promote Hindu economy". "We have urged the RBI to allow us to set up a special bank to promote Hindu economy globally. Our aim is to create awareness among Indian traders and businessmen to strengthen the Hindu economy on a global scale,"................
Inflation-indexed bonds issued through post offices can dim the shimmer for gold - Charan Singh
............According to some studies on India, nearly three fourths of gold jewellery is sold in rural India and most gold sales are through jewellery itself. According to Professor Jeffrey Franks, holding gold is the only way the peasant can protect himself against inflation and the vicissitudes of politics. The rising demand for gold imports is not merely psychological but rather practical — gold can be purchased in cash and in small amounts, without any documentation, across the country; can easily be used for loans from many local shops/NBFCs; and serves as a safe haven and instrument of easy transfer of inter-generational wealth...............
RBI's failure to suck out liquidity raising doubts over direction of interest rates
..........The suspicion that banks were borrowing using the repo window for buying dollars has also gone. "It does not look like that banks are borrowing from RBI to take position in forex market. I think RBI will take the extreme step of CRR hike only if it thinks it need to control the diversion of funds," CARE Ratings chief economist Madan Sabnavis said..........
Eleventh hour pinch-hitting
............A significant fall-out of the RBI action in the past week is that the benchmark 10-year bond yield has risen. This is bound to seriously erode the efforts of the RBI to drain liquidity from the system. What does this portend? What will the apex bank do when it meets on July 30 for its monetary policy review?................
Is RBI unwilling to raise rates to strengthen rupee?
 |
| ......."If we don’t have a simultaneous movement on structural issues; steps that are actually addressing the causes of the problem, will peter out over a period of time,............ |
Unified Regulation for Modern Finance
.........The
way forward is to have a unified regulator spanning the entire
financial sector, after first unifying the financial sector itself as a
formal, inclusive sector amenable to regulation. Till that is achieved,
we will have to make do with piecemeal empowerment of segmental
regulators. It is time the government and the RBI stopped dither on
creating banking inclusion via Aadhaar-enabled no-frills accounts. That
is the first step to effective regulation of finance.
Transition Trauma
.......................Amid all the discussion on the challenges new banks will face in coming years, one important issue has skipped attention. India already has close to 90 commercial banks including state-run, private-sector and foreign lenders. The country also has thousands of rural and cooperative banks. Does it really need more banks? No, says KKR's Nayar. "What India needs are big banks which have bigger balance sheets so that they can lend more," he says. That's a point to ponder.
Chidambaram sees no shift in RBI stance after rate move
Finance Minister P Chidambaram has said that the Reserve Bank of India's move to raise two of its interest rates while keeping the main repurchase rate unchanged doesn't signal a shift toward a tightening bias. "What I think the central bank did a few days ago is not to be understood as affecting the policy rate one way or another," Chidambaram said in an interview on Saturday in Moscow, where he's attending a meeting of Group of 20 finance ministers and central bankers. "That decision will be taken separately."......
RBI GOVERNOR SUBBARAO’S UNENVIABLE REPORT CARD
..........But in Subbarao, India has a fickle monetarist, whose fetish for changing goalposts has meant the economy totters with average credit and deposit growth rates falling from 20% plus when he took charge in September 2008 to well under 15% now. During his reign, India’s savings rate fell from 34% of GDP to barely 30%, trade deficit has widened from $120 billion to almost $190 billion and, worst of all, the rupee has depreciated over 35% from 44/$ to nearly 60/$. Subbarao has claimed that monetary policy is the preserve of the RBI and fiscal policy of the government. Should he not, therefore, share at least half the blame for the pathetic state of affairs?...............
RBI Governor’s prescription: Indians deserve the whip
...............On 19 July, Manmohan Singh went before television cameras for what must be the 400th time to claim that he was on the cusp of taking measures which would stimulate growth. Hopefully, the experience of the country will be different from that of the other 399 times, when growth fell soon after the PM promised to boost it. Given that it was Manmohan Singh who gave an extension of tenure to a wrecker of economic growth of the stamp of Subbarao, few will be holding their breath for the economy to turn around..............
All eyes on the Guv’nor
........Overall, the RBI seems to be inclined to go in the direction of tightening, but India Inc hopes the RBI Governor will stand still. Very few are in the camp that see RBI cutting policy rates in the near term. The recent RBI measures that made additional borrowing from the central banks expensive has put some banks in a quandary..........
Bitter pills
..........In other words, the governor has invited the finance minister to a tango which is likely to see some spectacular flourishes. The common man had better enjoy the sight, for the real implications of the RBI’s drastic actions are all dire. Bank credit is about to be curtailed, and with it, business expenditure on investment and inventories. Those big companies that can borrow abroad will still have an option; but it too will begin to sour as foreign financiers look at the prospects of the Indian economy and ask themselves whether it would be wise to sink their money into it. Meanwhile,..........
Collaretal damage
.....In a so-called textbook response, RBI this past Monday increased the penalty rate at which banks that do not have excess government securities borrow from the central bank, imposed checks on inter-bank liquidity and unveiled plans to hold open market sale of government securities to drain out rupee liquidity from the system. The measures had precise objectives: to squeeze liquidity and squash speculation in the forex market and to make domestic bond yields attractive (though the central bank later in the week looked reluctant to let the yields rise, even when the government sounded more willing, offering to even defer its planned borrowing by at least a week). But these measures have much wider ramifications .....
Out-of-step rupee and a fistful of solutions
.........“If the RBI and the Ministry of Finance keep playing their cards to keep the fiscal deficit in control and have the RBI's balance management done, the rupee would slide further down to a level of Rs 65 to a dollar,” ............
Deconstructing RBI's strategy
.......There is perhaps another less technical but equally important implication of these measures. By adopting these somewhat harsh measures, the RBI has signalled its discomfort with the rupee breaching the threshold of 60 to the dollar. It has also indicated that it is willing to pull out all the stops to "defend" this level. This "guidance" from the central bank could itself anchor the exchange rate at this level and even cause it to measures............
RBI Has to Undo Damage Caused in Money Market
.........the
collateral damage is far more than the benefit is becoming clearer. A
day after the announcement, RBI had to open a special liquidity window
for bleeding fund houses, with most liquid funds showing negative
returns following a bond price crash. There are signs the central bank
may be trying to find a way out of the mess that it had possibly not
bargained for. It cancelled treasury bills auction; held back sale of
securities at higher yields in the open market; and, lastly, let the
government bond auction flop, letting a chunk of securities devolve.
These are hints that the RBI is not comfortable with the high yields.
But these are subtle messages that stay within the money markets of
Mumbai. Undoing the damage would call for bolder steps.
Read - ET
Manmohan Singh: RBI steps not to result in high interest rate
The Reserve Bank of India's tough measures to arrest rupee's fall will not translate into higher interest rate and the steps will be reversed with easing of speculative pressure on domestic currency, Prime Minister Manmohan Singh said today. "More recently, it (RBI) took additional steps to raise short-term interest rates. These steps are not meant to signal an increase in the long-term interest rates. They are designed to contain speculative pressure on the currency...........
FDI reforms might not rein in CAD: Former RBI Deputy Governor Subir Gokarn
The government's strategy to bring the current account deficit under control by opening up foreign direct investment (FDI) across sectors is unlikely to work, believes former RBI Deputy Governor Subir Gokarn. India must take policy actions to address the structural root causes that are driving up the deficit, such as poor infrastructure, a static manufacturing sector and Jurassic-age labour laws, Gokarn told............
Beat books to give way to RFID devices
Conventional police beat books may soon be a thing of the past in the city. The city police are likely to replace them with passive Radio Frequency Identification (RFID) devices. The constabulary is also likely to revamp its beat system to include more areas. The RFID devices will replace beat books placed in residential areas and in front of key offices such as the Reserve Bank of India. Policemen and women walking the beat will carry battery-powered devices that will activate the electronic beat books at the press of a button...........
Young Economist Competition 2013 for Under Graduate Students
...........This year they are giving an opportunity to all students irrespective of their discipline to gather together on a national platform to match their talents and accomplishments. You are invited to contribute research based papers to the 8th National level Young Economist contest on the theme: Dynamics of Falling Rupee: Issues and Policies . We invite research based papers on the following sub themes:
• Impact of falling Rupee on Foreign trade and Investment
• Falling Rupee and Financial Market
• Impact of Falling rupee on internal and external debt
• 4.Role of RBI
• Falling Rupee and Inflation ........
Dr Rana Kapoor takes over as Assocham President
....In his statement after taking over his new role, Dr. Kapoor said that he would promote five point agenda on securing sustainable growth for India during his presidentship of Assocham in 2013- 14 which include economic security, livelihood security, energy security, ecological security and national security..............
YES Bank: Selective use of regulations?
...........When a regulator endeavours to establish 'fit and proper' criteria, it finds it difficult to identify the right benchmark. The board process is a cerebral process. In the absence of a mandatory retirement age for professors, in Ivy League institutions in USA (e.g. Harvard University), many academics hold the position till the age of 80 and continue to guide and mentor students in research. There is no reason to believe that an individual who enjoyed a good living during his/her active career loses his/her cerebral faculty at the age of 65. The YES Bank saga reflects the attitude and approach of business leaders. They use regulations to their advantage undermining the spirit of the same..........
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