Inauguration of Lead District Managers' office

........The office of lead District Managers’ was inaugurated by Dr Deepali Pant Joshi, Executive Director of Reserve Bank of India in presence of V R Iyer, Chairperson and Managing Director of Bank of India on July 31. The function was held at Zonal Office of Bank of India at Fort, Mumbai for inauguration of LDM’s office of Mumbai city and via video conferencing for the Mumbai suburb district in presence of senior functionaries of RBI, NABARD, BOI and the District Collector...........

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Can’t afford to take it easy - A.Seshan

As the Reserve Bank of India generated shock and awe in the financial system with its policy measures only a few days ago for tightening liquidity, there was a general expectation that its July 30 review would be a non-event with no dramatic announcements. It was proved correct. The bank should be thanked for not upsetting the apple cart with further measures, even as the results of the earlier ones are panning out. The exchange rate has so far seen up and down movements within a narrow range normally expected of the markets..............

Read - HBL

Financial inclusion not charity: RBI

.....“Banks must not approach financial inclusion as a charity but a viable business model,” Chakrabarty said. “Our regulations are one of the most flexible to support financial inclusion,” Chakrabarty said at the Mint conference, Architecture of Financial Inclusion: The Indian Model, in Mumbai on Wednesday..........

Read - Mint

Forex reserves adequate: Patel

......“Our reserves are adequate and 6.5-7 month of import cover is good. Short-term debt has increased but the short-term debt has been comfortably rolled over and refinanced over the last three years despite the high current account deficit (CAD),” said Urjit Patel, deputy governor, Reserve Bank of India (RBI), in a post-monetary policy conference call with analysts and researchers...............

Read | Business Standard

Why selection of RBI governor should be more transparent

A crisis is an opportunity. Manmohan Singh and P Chidambaram have a unique opportunity to reform the RBI

...............Unfortunately, Chidambaram has constituted no such committee to suggest names of candidates to succeed Subbarao. At the very least, the Finance Ministry should have advertised the position, in India and abroad. While it would be expecting too much for any Indian Government to consider foreign nationals for the RBI job (the UK recently appointed a Canadian as Governor of the Bank of England), it makes complete sense to solicit the candidature of Indian nationals from the worlds of academia or private sector (banking, investment banking) or international organizations (World Bank, IMF). That would only bring diversity and richness to a shortlist which would otherwise consist solely of economists serving in the Government system......................

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The curse that bedevils RBI governors

Finance minister P. Chidambaram has indicated that the Reserve Bank of India (RBI) will soon have a new Governor. He could become the latest victim of an old curse of trials by fire. Three out of the past five governors have had to deal with immense economic stress within a few months of taking the job............

Read - Mint

Has Subbarao been pushed out of the next RBI Governor race?

It’s not very often that you hear the finance minister discuss the appointment of the RBI Governor openly and in media interviews. After all, unlike many other autonomous arms of the government, the central bank is one of the most prestigious institutions of the country and great respect is accorded not only to the Governor as an individual but also to the post. So it was quite surprising to find an otherwise disciplined P Chidambaram virtually ruling out any extension to the present RBI Governor D Subbarao in an interview to Economic Times. ..............

Read | Business Standard

Govt is searching for new RBI Governor: Chidambaram

The government has started search for a new Reserve Bank governor as the incumbent, D Subbarao, who battled inflation through tight money policy during his tenure, is set to exit in five weeks.  'The Governor met me about 6 or 7 weeks ago... He (Subbarao) said that he would like to move on and he would not like to be considered for another extension. 'So I accepted that... That is where the conversation ended. We are now in a search cum selection mode of the new Governor,' Finance Minister P Chidambaram said at a press conference..........

Read | Business Standard

After Subbarao, who will be the next RBI Governor

........Prime Minister Manmohan Singh in consultation with Mr Chidambaram will finally pick the next RBI boss. Before, Wednesday's statement from Mr Chidambaram, there was a strong buzz that Dr Subbarao may be offered another extension given that elections are less than a year away and the government would have been comfortable with a man who's been at the helm of affairs for a long time rather than have someone new altogether. Currently, the RBI top job is not really the most enviable assignment to take on with the country's widening current account deficit and a hostile rupee..................

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DA Increase for Bankers from August to October 2013

Now CPI for all the three months has been announced for relevant months and the same is as follows:-............

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Deadline to file income tax returns extended to August 5

The last date to file income tax returns has been extended to August 5 by the government from July 31. This has been done due to the number of It returns being filed electronically. As per the Central Board of Direct Taxes (CBDT), there has been an unprecedented surge in number of returns being e-filed...........

Read | Business Standard

Saraswat Bank - Rupee Bank merger gets in principle approval

Pune: Saraswat Bank is understood to have received in principle approval from the State Co-operative Department to merge with the ailing Rupee Co-operative Bank. This was confirmed by one of the administrators of the Rupee Co-operative Bank, who did not wish to be identified. The Reserve Bank of India (RBI) will be providing a statutory package of Rs 320 crore to support the merger............

Read - Sakal Times

Push to replace old-format cheques

RBI’s efforts to introduce cheques with uniform security features have not yet fructified as a large number of customers are still using old-format cheques. RBI, which in December 2011 said banks should migrate to the cheque truncation system by September 2012, has extended the deadline four times. The new deadline is December 2013. Customers should come to the banks and get their old format cheques replaced, said Shubhalaxmi Panse, CMD, Allahabad Bank.............

Read | Business Standard

Banks looking at voice biometrics for security

........ “A voiceprint is a hashed string of numbers and characters that represent how specific an individual’s voice rates on a host of characteristics being measured. As such, a compromised voiceprint has no value to a hacker. It cannot be used to authenticate a system, nor can it be used to reverse engineer someone’s voice,”..............

Read - TOI

Participation of Senior Officers in Agitation Programme of NBOA

.........Incidentally, we have also come to know that our referral organization RBI too has never issued such an instruction and the officers associations at RBI have not been put under any such unconstitutional restraint. Similarly no such Circulars have ever been issued at other apex organizations like IDBI/SIDBI...............

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Bottling it up

..........When the senior officials walked into the press room a little ahead of the Governor and his deputies, staff were still placing name plates and bottles of mineral water on the table. As a standard practice, the label on the mineral water bottles were also removed, causing a senior official to ...................

Read | Business Standard

Sooner the better for RBI to unwind grip on liquidity

..............The RBI governor has indicated that there would be a calibrated relaxation of its July measures once the rupee stabilizes or at least till volatility is contained. There is a good chance of that once FII investment returns, something that will happen with the continuation of quantitative easing by the U.S. Fed. But the rupee is weak and should not be propped up by ad hoc measures. The sooner the RBI unwinds its tight grip on liquidity, the better it would be for the rupee to find a stable level and for growth to pick up.

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Bad loans and the death of the base rate

....The ecosystem too has done a bad job of eliminating the misconception that base rates have to dance only to the Reserve Bank of India (RBI) policy rate tune; instead, they depend on overall costs of doing business for the bank. Those of us with longer memories will recollect the furore caused by high bank lending rates when inflation dipped sharply to low single digits after the Asian crisis (remember oil at $10?) and after the tech meltdown (January-May 2002 inflation was 1-2%). Real rates (rates minus inflation) were an outrageous 10-15%. However, banks were helpless and the regulator too grudgingly acknowledged that with the mountain of bad loans that banks were sitting on, lowering rates meaningfully was a tough task...........

Read - Mint

Rupee@61: How the RBI 'snatched defeat from the jaws of victory'

..........The Reserve Bank has not only failed to announce any additional steps to defend the currency yesterday, but also said that it may withdraw the cash tightening steps taken so far in a calibrated manner if the rupee stabilises. These comments have led investors to doubt the RBI's resolve in sticking to its measures given surging bond yields threaten to raise borrowing costs...................

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The currency fall

.............That, together with his explicit reference to the "impossible trinity" of open-economy macroeconomics - that independent monetary policy, free movement of capital, and a fixed exchange rate cannot all be in operation simultaneously - was an indication that the RBI wished to manage the rupee, which had declined to about 60 to the dollar.............

Read | Business Standard

Govt must do more, not just look to RBI

........Dr Subbarao said there was a case for easing of policy rates but for the fact that stabilisation of the rupee and caution on the external sector have got precedence over growth deceleration and inflation. He said the Indian economy had been overrun by what he called the “impossible trinity” trilemma that started in May............

Read - Asian Age

Digging in

........... Merely tweaking interest rates in the next monetary policy review could risk even slower economic growth than RBI now prognosticates -- on Tuesday, RBI lowered economic growth projections for 2013-14 to 5.5 per cent from 5.7 projected in May this year. Applying further squeezes on rupee availability to importers will not help much going forward, as India’s growing trade imbalance or external deficit will undermine any value gains accrued from policy action.............

Read - Deccan Herald

RBI Governor didn’t Act Bold

This refers to ‘The Man Who was Never His Master’s Voice’ (ET, Jul 31). It is incorrect to call D Subbarao as one of the bold RBI Governors. He was a mute witness to the government’s 2008 decision waiving farm loans. Why did he not protest knowing full well the inimical effects of that decision on public sector banks’ balance-sheets? Now, within three months of the Budget announcement of a women’s bank, RBI has given its approval, knowing that the loans will be granted to women who form a big chunk of votes.  

- K V RAO, Bangalore (ET) 

Monetary policy and the exchange rate

......One wonders whether the Reserve Bank of India’s faith in the REER (real effective exchange rate) index, as presently constructed, as a measure of the competitiveness of the tradeables sector, is as grievously wrong as the IMF’s estimate of the fiscal multiplier. It may be recalled that the IMF realized last year that the multiplier (namely the ratio of fiscal compression to nominal GDP change) is not 0.5 as it had assumed, but anywhere from 0.9 to 1.9! Use of mathematical models without clarity about their underlying assumptions and limitations can be highly misleading—and the cost is too often borne by people least able to bear it. Ask the Greeks, for example!.............

Read - Mint

Is the RBI getting it wrong?

The RBI’s July 30 Monetary Policy Review has maintained a predictable ‘status quo’. This ‘status quo’ comes after the RBI had already ‘reviewed’ its policy twice earlier this month and imposed a series of ‘indirect’ liquidity tightening measures. The RBI has further clarified its stance as one of ‘active liquidity management...consistent with the growth-inflation balance and macro-financial stability’. Thus, going forward, we may anticipate further monetary tightening – either through direct or indirect measures.................

Read - HBL

RBI says it has enough firepower to aid rupee

.....“There is a lot of arsenal with the RBI, we will use all of that as might be necessary, as warranted by the situation,” ............

Read - DNA

Chidambaram's one year report card: More misses than hits

......Let me first of all say that we have already seen since August 2011 we have seen the rupee weakening from 44 to 60. So, RBI and the government are clearly at this point in time while the argument that we should not be worried about the rupee perhaps was valid when we were at 53 but when you are at 60 and all the negatives are priced in I don’t think that is really now a question. I think RBI had to do something and going ahead from RBIs perspective they have already taken some fairly severe steps..................

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Mix of pills to cure multiple ills

...........The government plans to ask public sector companies to raise funds abroad to cut debt. Officials have been planning to ask state-run infrastructure funds to raise long-term debt abroad to fund infrastructure projects. The finance minister today indicated that public sector banks, too, could be asked to raise funds. He said these would be “quasi-sovereign issues”, which means the bonds or debt instruments offered would have the indirect support of the government.............

Read - The Telegraph

Gold funds’ growth plans at standstill; jewellers push for recycling

With the Reserve Bank of India curbing gold imports, gold-backed exchange-traded funds and gold fund-of-funds find their expansion plans at standstill. On the other hand, jewellers, faced with shortage of gold, are encouraging recycling of used jewellery by their customers. Gold exchange-traded funds are awaiting clarifications from the RBI on gold import regulations.......

Read - HBL

Beyond gold: Chidu’s CAD reduction plan is better late than never

........... Importantly, Chidambaram promised to addressed the twin deficits and said the ‘red line’ of 4.8 percent for the fiscal deficit of FY14 would not be breached under any circumstances. The FM’s comments came a day after the RBI undertook its first quarter review of the Annual Policy for 2013-14, where the central bank stood its ground and refused to buckle under pressure and effect any cut in key rates, and also pointed to the CAD as a “daunting structural risk factor” which had been well above the sustainable level of 2.5 percent of GDP for three years in a row. In fact, RBI also stressed on the need for the government to seize the opportunity created by the RBI’s mid-July liquidity tightening moves to stem the rupee slide and put in place policies to bring CAD down to sustainable levels.........

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