India has named Chief Economic Adviser Raghuram Rajan as the next Governor of the central bank after current Governor Duvvuri Subbarao steps down from the post in early September. Economists and investors welcomed the appointment but they said Mr. Rajan, who took over as chief economic advisor in India’s finance ministry in August last year, will have his work cut out. .....................
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Wednesday, August 7, 2013
Meet Raghuram Rajan, the New RBI Governor
India has named Chief Economic Adviser Raghuram Rajan as the next Governor of the central bank after current Governor Duvvuri Subbarao steps down from the post in early September. Economists and investors welcomed the appointment but they said Mr. Rajan, who took over as chief economic advisor in India’s finance ministry in August last year, will have his work cut out. .....................
RBI gets a world-class economist as Governor
Read - TOI
INDIA BANKING ON RAJAN
.....Rajan will be the first central bank Governor who will have the responsibility to regulate not just a bank or bank
group but entire conglomerates that have a bank as part of their
business. The new Banking Regulation Act grants the central bank powers
to regulate corporates that have a bank in their group. This is
ostensibly aimed at preventing risks from other business percolating to
the bank. But Indian conglomerates have extremely complex structures
with presence in several countries and RBI may have to substantially increase its regulatory capabilities..............Right on, Rajan!
......But we also need a macroprudential regulator with overarching powers, whose writ should inform the decisions of the transactions regulator. How precisely these arrangements should be wrought have to be painstakingly worked out. Having someone who understands the high-voltage world of finance at the helm of the RBI would help the government work out the appropriate arrangements................
GUV TALES
...........Rajan
calls himself a 10th class pass in Hindi and wants to improve his grasp
of the language. “I want to develop to a point where I can give a
working interview in Hindi.”...............
Read - TOI
Read - TOI
Baptism by fire
..........Given the old IMF prescriptions of monetary and fiscal tightening, in east Asia and now Europe, have been discredited since—the IMF’s current chief economist did a major mea culpa when he published a paper arguing IMF’s short-run austerity policies in Europe probably worsened growth—it is to be hoped Rajan will be more pragmatic since there is little doubt interest rates play a major role in stimulating growth and, in turn, curbing supply-side inflation. Rajan’s A Hundred Small Steps in financial reform is equally important and suggests a Governor in sync with what real reforms are needed, ................
Ex-RBI guvs give thumbs-up to Raghuram Rajan's appointment
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| .............at the moment I think that he will make an excellent Governor........... |
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| ...........He knows the global economy; he knows our economy and is an excellent economist. So I am absolutely confident that whatever he can do he will do it........... |
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| ..........One advantage Raghu has is that he is familiar with the developments of the world and is extreme knowledgeable and thoughtful so I do think that he is an excellent appointment."............. |
No magic wand to deal with economic woes, RBI Governor designate Raghuram Rajan says
Reserve Bank Governor designate Raghuram G Rajan said on Tuesday there is no magic wand to pull the country instantly out of challenges being faced by the economy. "These are challenging times for the Indian economy. The government and the RBI are working together to address these challenges. We don't have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt, we will deal with them,"..............
A friend of financial innovation, competition
............Rajan’s choice as RBI Governor designate is probably the best decision that the Prime Minister Manmohan Singh took during the last four years, is what many bankers say in private. Rajan is not known to many in the Indian polity could be a plus point for him and the country too...................
What to expect from Raghuram Rajan as RBI governor
..........It is unlikely that Rajan will make any compromises to help the politicians who have appointed him and is likely to make decisions that are best suited for the Indian economy, rather than help him win brownie points with politicians.................
Raghuram G Rajan will be among the youngest to head RBI
When noted economist Raghuram G Rajan takes over as RBI Governor next month, he will be among the youngest to occupy the high chair at the central bank. Rajan, a former chief economist at the International Monetary Fund, will be 50 years and six months old when he takes over as the 23rd Governor on September 5.....................
Taking over at a difficult time for the economy
..........In his new role, Rajan will be tested again and again. He will have to maintain his independence and deal with the Finance Ministry’s pressure even while working in tandem. He will have to spar with some of the key people with whom he has worked closely in the last one year as the Chief Economic Advisor to the Government. Incidentally, the last three Governors had all done stints in the Finance Ministry in various capacities before their appointment at Mint Street...........
Don't get cowed down by govt: BJP's advice to new RBI Governor
Trial by fire, again
......... Dr Subbarao articulated his scepticism about many of the proposals both during the process and after the report was submitted. In fact, several proposals closely follow the recommendations of the Committee on Financial Sector Reforms, which was chaired by Dr Rajan himself and submitted its report in 2007. Does this mean that the significant amendments to the Reserve Bank of India Act, which the new code suggests, will now get the backing of the RBI Governor? Or, as has been seen to happen in the past, does "where you stand depends on where you sit" kick in?.............
New Governor won’t Get to be His Own Man
In
2008, the new RBI Governor, Raghuram Rajan, detailed his idea of the
right agenda for India as head of the Committee on Financial Sector
Reforms. Of its many recommendations, the key one was that RBI should
have a single policy focus — low, stable inflation. Corollary: it should
not focus on targeting the exchange rate or stimulating GDP. Noting
that historically RBI sometimes targeted inflation, sometimes the
exchange rate, and sometimes economic growth, the report said “by trying
to do too many things at once, RBI risks doing none of them well”. Will
Rajan put this vision into practice as RBI Governor? Not a chance.
Indian politics will not permit an inflation only focus for RBI. After
his spell in the finance ministry, Rajan must be well aware of the
limits to the independence of any RBI Governor............
Read - ET
India picked the right man at the wrong time to be its new central bank Governor
It would be hard to name a more qualified candidate to take over the Reserve Bank of India. But despite his long list of career successes, Raghuram Rajan, who takes the helm in September, may do a terrible job—though it probably wouldn’t be his fault. Why?..............
Steep learning curve ahead for next RBI Governor Raghuram Rajan
.....In an era when the credibility of almost every institution here has been eroded, Rajan has the unenviable task of leaning against the government to protect India's central bank. Despite its flaws, the RBI is still seen as an institution that is uncompromising — be it with interest rates, banking regulation, currency or even bank licences. Rajan, who will be India's youngest central bank Governor, will take over at a time when the communication between the government and Mint Street's top man has almost broken down. Only a rupee collapse helped a patch up. Finance minister Chidambaram and Governor Subbarao have had public spats in the past few months, which has not helped anyone's cause. The foremost task is to be on the same page, but that will be inviting trouble for Rajan's credibility if the government continues with its imprudent policies...........
Will Rajan the Intellectual Survive Rajan the Governor?
Most
things that Raghuram Rajan has argued for over the years are contrary
to what the UPA wants in its monetary policy now. That’s his key
challenge................
Rupee makes dramatic recovery on Rajan's appointment as RBI chief
The Indian rupee made a dramatic recovery after the government announced the appointment of Raghuram Rajan, the chief economic adviser in the finance ministry, as the next governor of the Reserve Bank of India. The partially convertible rupee not only erased all losses, but ended higher at 60.77 per dollar as against Monday's close of 60.88. The rupee traded at 61.45 before the announcement of Mr Rajan's appointment...............
Rajan on a High, Re at a Low
.....Rajan
now faces the delicate task of giving a sympathetic hearing to the
government’s growth concerns without compromising RBI’s functional
independence. It is also likely that Rajan may reform the 78-year-old
institution, making it more democratic in terms of monetary policy, as
is the case in developed countries. In the process, he may have to
dilute some of the extraordinary powers of the Governor..............
Sorry and Thank you Mr. Subbarao
I write this with a single purpose in mind - to apologize to Subbarao, present RBI Governor. Though I do not 'take back' or anything I wrote but my perception of his working was clearly wrong, and has been wrong for at least past few quarters. This post in that sense is an acknowledgement of my views offline, into the same pages that I used to disparage him in past. The long story short,.......................
A Bheeshma Facing Abhimanyu’s Fate
.............Though
he has not intervened to stem the slide directly, he had to intervene
by raising interest rates. The measure appears half-hearted. He wanted
rates to rise, but did not say so. A reasonable guess here could be that
he did not touch the repo rate because the government persuaded him not
to do so since it would be seen as a reversal. It is hard to believe
that someone without conviction could bump up interest rates by 300
basis points in the market, but did not want to say so. The absence of
clear communication is a double whammy. It has not helped the rupee, but
damaged the fixed-income market. Subbarao said, “There will be
consequences for this. There will be pain in the economy. Somebody will
have to bear the cost for this. Those costs are inevitable and
unavoidable.” Many of his actions may not have reflected his thoughts,
but most of his thoughts reflected the reality. The 2010 speech shows
that unlike Abhimanyu who was trapped in the chakra vyuha, Subbarao knew
what he was getting into.
Subbarao, man who fell into cauldron of woes
....For Duvvuri Subbarao it was baptism by fire when he took over the reins of the Reserve Bank of India nearly five years ago. As soon as he stepped into the corner office at the central bank headquarters in Mumbai's Mint Road, a tsunami struck the global financial system. The force of the 2008 global financial meltdown meant that RBI had to call on all its resources to shield the economy from being brutalized. ...........
Why does Chidambaram not get Subbarao?
As D. Subbarao begins his last month as the 22nd Governor of the Reserve Bank of India (RBI), it is time to take stock of his tenure. A vital aspect of this was his relationship with Finance Minister P. Chidambaram. The intense media speculation about differences between the two amounts to more than analysing the equation between two individuals. It encapsulates an important challenge India faces in monetary policy making. Two markers will give a sense of what happened during the Subbarao governorship...........
Inter-school quiz
.......Speaking at the inaugural, Dr Sujatha Elizabeth Prasad, Banking Ombudsman for Tamil Nadu, Puducherry and Port Blair areas from the RBI, shed light on the working of the RBI and gave the students a few tips on how to safeguard their bank accounts through fair transactions. Hari Krishnan, General Manager (Banking), and S Venkatesan, Deputy General Manager (Human Resources), from RBI Chennai, were among the dignitaries who inaugurated the quiz.................
Impossible trinity
..........Impossible trinity or trilemma in monetary policy means that a country cannot have a fixed exchange rate, free movement of capital and an independent monetary policy at the same time. As it happened in India, after lowering interest rates over the last one year, RBI went ahead to protect the rupee by sucking liquidity out of the system, which has resulted in higher cost of money and higher interest rates. From a pure monetary policy standpoint, RBI had no intention of raising interest rates. In fact there was a case to cut policy rates to support growth, but while targeting currency it lost a bit of control on the monetary policy,which resulted in higher interest rates..............
RBI is behaving like a football goalkeeper
A former Governor of the Reserve Bank of India (RBI) once told me that in a “moment of crisis the central bank can’t be seen to be doing nothing” even if “do nothing” might be the best strategy to follow. This might well be the spur behind the RBI’s recent defence of the rupee.................The curious case of two indices - Renu Kohli
....RBI is grappling with two issues here. The first being statistical reliability of the new CPI. The second issue is its divergence from WPI. An early adoption raises the probability of policy errors from erratic data points in a short time-series. The latter could potentially shift the yield curve upwards, to the detriment of growth. RBI’s official position on the former is to wait for statistical robustness checks before formal adoption. Its response to the more crucial second issue of WPI-CPI divergence has not been publicly articulated.........
Turkey lira defense a lesson for India
LONDON (Reuters) - If the Reserve Bank of India wants some pointers on how to lift the rupee decisively off record lows, it could try asking Turkish central bank governor Erdem Basci. The rupee tumbled to a new record low against the dollar on Tuesday, raising the stakes for the RBI, whose stop-start currency defense strategy is widely seen as inadequate............
Phishing fraud is back; you have got fake mail from Reserve Bank, I-T authorities
..........Another scam involves the impersonation of outgoing Reserve Bank of India Governor Dr D Subbarao. An e-mail purportedly sent by RBI offers to transfer $12 million (approximately Rs 72 crore) to the receiver's personal account. A Madhya Pradesh resident paid thousands of rupees after hearing that "Subbarao had met United Nations secretary general Ban Ki-moon to release funds". RBI spokesperson Alpana Killawala said they had been running a multi-pronged awareness campaign to alert people to this fraud. "We have messages scrolling on our website www.rbi.org.in and are running four spots on FM radio. We have also inserted advertisements in 13 languages in 800 newspapers," she said............
A Licence to Print Money in Underbanked India
If the Ministry of Finance has its way, and if the Reserve Bank of India does not drag its feet, some time next year, you would be able to choose from a wider range of banks. Will this change anything for customers? Will the new banks succeed? The short answer to these two questions is No and Yes. Here’s why.................
Read - Forbes India
Read - Forbes India
Three questions on India’s economy
........Three questions should be salient right now. First: What is the rate of economic growth that India can currently sustain without sparking off high inflation? Second: Why is the rupee losing value against the dollar? Third: What is the correct level of interest rates given the current economic situation? The answers could help us get a bit more clarity on what the policy response should be..............
Nabard wants co-ops to understand reality
National Bank for Agriculture and Rural Development (Nabard) chief general manager R Amalorpavanathan said here on Tuesday that primary agricultural cooperative societies (PACS) should understand the emerging reality in the banking sector and initiate urgent steps to keep themselves in the mainstream. He told a news conference here that the RBI and the Union government had the responsibility to evolve a safe and secure payment system in the country and the RBI directives were aimed at better services to all bank account holders, including farmers.........
RBI to restructure loans in disaster-hit areas of U'khand
The Reserve Bank of India (RBI) has started taking steps to provide relief to the disaster-affected people in Uttarakhand by restructuring loans for one year period. Confirming this, the Allahabad Bank CMD Shubhalakshmi Panse today said she has received a letter from the RBI for “restructuring” of loans in the disaster-affected areas of the state. “I have received a letter from the RBI regarding restructuring of loans in the disaster affected areas”, she said after handing over a cheque of Rs 5 crore to Uttarakhand chief minister Vijay bahuguna for disaster relief works.............
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