..............Overall, his thinking seems to be in the Fund-Bank mould - when what has saved India in the past is going against received wisdom. The Indian economy and the social forces driving it are far too complex for solutions of any particular kind to work. Besides, there's no point in having a brilliant RBI governor if politicians do not listen to him. You need a person who is able to add persuasion to advice behind the scenes. In this, an insider who knows how the system works has a greater chance of success.
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.
Wednesday, August 14, 2013
Looking back to see ahead
...........In the present context, pursuing this goal will inevitably bring him into conflict with the finance ministry and the minister, Chidambaram, as has been the fate of outgoing Subbarao. Subbarao’s single minded devotion to inflation control and to the independence of the central bank brought him into direct confrontation with the finance ministry. When in the face of falling growth numbers Chidambaram was desperately and openly asking for interest rate cuts, Subbarao kept on increasing the interest rates—for 13 times at a stretch -- in copybook style economics. In pursuing his professed objective, Subbarao kept his own counsel and asserted the independence of the central bank over the political establishment............
Subbarao comes out against 'monopoly' in banking sector
.............Subbarao said the country should aspire to have a few Indian multinational banks in the near future by selective acquisition. "What type of largeness should Indian banks attempt? Large banks like the Chinese banks or large banks with global presence? ... It may take years for our banks to become global players by way of organic growth."..............
NBFCs must be under RBI watch, says Subbarao
.......The RBI Governor’s comment assumes significance in view of the government’s plan to take away the regulation of non-banking financial companies from the central bank, and put it under a unified financial authority. Dr. Subbarao said any such move would prove detrimental to financial stability................
CRR, SLR could come down further: Subbarao
Outgoing RBI Governor D. Subbarao, who had disagreed with the bankers’ call to further trim the cash reserve ratio (CRR) or pay interest on these deposits and cut SLR, on Tuesday said “perhaps” there is a need to reduce these rates. “I do recognise that there is a demand, and perhaps a need, for further reduction (in CRR and SLR),” he told .........
Subbarao cautions on ‘too-big-to-fail’ banks
................Citing the 2008 credit crisis, which was triggered by too-big-to-fail banks, Subbarao said, “We don’t need monopolies… as large banks can become too-big-to-fail, leading to moral hazard problems.” He also said consolidation could pose problems of technology migration, customer attrition, cost of implementation, besides raise HR issues of seniority, salary, transfer, promotion, parity in perks and litigation. Large banks will not be able to provide the personalised services small banks offer...........
Trilemma that Felled Guv
..........Subbarao
faced a trilemma. He could not check inflation, manage the rupee and
spur growth together. So, he focused on inflation. He failed in this
because of a high fiscal deficit and the fact that inflation here is
food-led, which monetary policy cannot check. Going for fast growth or
exchange rate control, advocated by critics, would have worsened
inflation. The trilemma felled Subbarao. It would have felled his
critics too. Central bankers cannot work miracles. They have a
limited arsenal of limited effectiveness. For today’s problems or
yesterday’s boom, RBI governors deserve little of the credit or
discredit: those belong mainly to global winds and New Delhi’s follies.
Raghuram Rajan’s transition from economist to policymaker
Raghuram Rajan assumes office as RBI Governor at a time when central banks in the advanced, beleaguered countries have come to shoulder extraordinary responsibilities that would normally reside with governments. This development, he recently observed, challenges the myth of central bankers being “mere technocrats, hovering independently over the politics and ideologies of their time,” adding that “their feet, too, have touched the ground.”...........
New banks will improve efficiency in system: RBI deputy governor
......"We need to bring in more competition and new banks will improve efficiency. When new banks entered, PSBs were able to partly improve their productivity. But ironically later on those banks have themselves become inefficient," Mr Chakrabarty told reporters at a banking summit in Mumbai on Tuesday evening...........
RBI's timing - A.Seshan
...........Would it not be advisable to time the RBI policy deliberations a day or two after the FOMC meetings when the impact on the forex market would also be known?
Finmin Seeks More Names For SBI Top Post
........“We
have received a communication from the finance ministry asking for a
relaxation in the case of A Krishna Kumar,” one of the officials quoted
earlier said. The guidelines for the selection of SBI chairman stipulate
that a candidate should have at least two years to go before retirement. This rule made all the managing directors at SBI, except Bhattacharya, ineligible for the post. “Among
the other three managing directors, Krishna Kumar has the longest
tenure and the government has decided to provide for a relaxation in
this case,” another official said...........
RBI takes steps to remove currency shortage
MUMBAI: The Reserve Bank on Tuesday came out with incentive scheme for banks to ensure distribution of notes and coins to the public, a step which will help in removing shortage of currency in circulation. Accordingly, the existing scheme of incentives and penalties has been reviewed taking into consideration the recent developments in the area of exchange and distribution of bank notes and coins to the public, RBI said in a statement............
RBI levies penalty on 25 banks: Will it change banking for good?
........... However, RBI has not clarified as to whether such investigation by the tax and enforcement agencies was being carried out and if so, when it is expected to be completed for the sake of putting a lid on this much publicized role of banks in money laundering and tax evasion in our country. No doubt the banks would have quietly paid the penalty and got rid of the Damocles’ sword hanging on their head, but are these penalties deterrent enough to ensure that the rules and regulations will be followed scrupulously both in letter and spirit at least in future?...............
Banks' deposit, loan structure have become wholesale: RBI
............“Allocational efficiency has not improved along the lines of the improvement in operational efficiency. The increase in operational efficiency has come at the cost of allocation efficiency. The benefit of increase in operational efficiency has not reached customers, particularly in rural areas,” said RBI deputy governor K C Chakrabarty. RBI data shows operational efficiency of banks has improved since financial sector reforms were initiated in 1991..............
Apex bank logic to protect turf
.........Subbarao, who retires next month, has once again articulated his concern over the move to take non-banking finance companies out of the regulatory supervision of the RBI and place it within the ambit of the yet-to-be created Unified Financial Authority, which is the brainchild of the Financial Sector Legislative Reforms Commission (FSLRC) headed by former Supreme Court judge B.N. Srikrishna.................
Acting on the bigger picture
........Three sets of measures by the RBI — the first one was on July 15 — have given only limited respite with the rupee falling relentlessly after a brief period of trading in a narrow range of between 59 and 60 to the dollar. However, going by initial reactions on Monday and Tuesday, the government’s new package might not yet succeed in stabilising the rupee. The time has come to view the rapid rupee depreciation in a larger perspective .........
Most foreign banks open to local incorporation: RBI
Mumbai: Many of the 95 foreign banks at present operating in the country on branch model have shown interest in converting themselves into local subsidiaries, a senior Reserve Bank official said Tuesday. "Many banks are interested in subsidiarisation and the RBI is in the process of issuing the final guidelines on this," RBI Executive Director B Mahapatra told reporters on the sidelines of a banking event here this evening. He did not offer a timeline for the same...........
Wholly-owned subsidiaries: RBI takes cautious approach
..........In an effort to protect the interests of retail depositors and creditors, the RBI has adopted a cautious approach towards wholly-owned subsidiaries. After all, in a buoyant economy, the relationship between bank branch and parent may be of little importance but, in adverse conditions, the structure and location of both assets and liabilities have the potential to become far more important. Local incorporation gives greater control to the host country regulator, which can act independently against the branch operations. The wholly-owned subsidiary model makes it easier to define the appropriate law of jurisdiction............
Schemes and scams
......For example, play the role of a restaurant owner in a country with hyper inflation. As the inflation rate shoots up, the menu prices need to be revised, sometimes several times daily! Through the money lab you can learn why currencies strengthen and weaken against one another. May be after a few currency games, you may be in a position to recommend to the Reserve Bank of India a solid defence for the poor rupee which is weakening on a daily basis. And meanwhile if some dodgy person comes to you with an emu investment scheme, you can tell him that such schemes are strictly for the birds!........
RBI designates bank branches to collect income tax dues
".......... The public is required to wait in queues in the RBI for unnecessarily long periods. To obviate the inconvenience involved, assessees in the city are advised in their own interest to avoid last minute rush by remitting their income-tax dues sufficiently in advance to the due date," RBI said in a circular............
What about bad loans?
I am disappointed that many learned columnists and journalists are not asking the Reserve Bank of India (RBI) or public sector bank chiefs the right questions. Why haven't we heard you ask them if depositors' money is now at risk?.........
RBI to examine financials of 34,754 NBFCs: Meena
..........."It has been decided by RBI, that as a one-time measure, the financials of all these 34,754 companies (other than those registered with RBI) will be examined to ascertain their eligibility or otherwise for registration with RBI," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha. "The main objective is to determine whether among these companies there are NBFCs that ought to have registered with the RBI for carrying on their NBFI (non-banking financial institution) activities," he said..................
Reserve Bank of India won't regulate virtual currency Bitcoin, yet
............ The Reserve Bank of India, which has its hands full trying to arrest the slump in the value of the rupee, will first seek to understand Bitcoins - which have attracted regulatory gaze in the United States -- before seeking to bring it under its purview. "As of now we are watching and learning about the developments in Bitcoins but are not regulating it," an RBI spokeswoman wrote in an e-mailed response. In a note published in June, the central bank acknowledged that virtual currencies "pose challenges in the form of regulatory, legal and operational risks." ...........
India’s exchange rate policy
......The central bank should then announce that it does not care where the exchange rate is within +/-15% of this rate. This is a level of deviation so large as to account for difficulties in calculating competitive exchange rates and wide enough to account for normal market volatility. At the same time, this band is sufficiently wide that on the very rare occasions that the central bank has to intervene to defend the boundaries, it will appear so appropriate that the market will run with and not against it.........
Takru’s tough talk: Banks must seek management change before recasting corporate loans
.........“We are seeing more and more cases of people who are taking advantage of the distress, trying to go to the debt recast cell, trying to go back on their obligations, not paying when they are supposed to, trying to negotiate deals with the banks for moratorium and better interest rates,” he said. The banking system has been “too” tolerant of such behaviour and this is not required, he said. Companies cannot sit back and expect that banks will continue to take hits on their behalf, he added.................
Saving Government Banks from the Government
.........If Rajan has his way, something, which has not been discussed before, may come to the fore - the emergence of many banks, instead of just a few big ones. The central bank has been reluctant to issue more than a few banking licences, saying it may not be in the best interests of the nation. RBI could also partly be looking to prevent debt-laden conglomerates from cornering licences. Rajan, who has seen US community banks flourish and perform a role in the real economic activity, may turn the argument on its head..........
Brick-and-mortar branches still main source of business: bankers
.........“Five years ago, people said the brick-and-mortar branch was doomed. Those people have now come back. For example, when we opened branches in areas like the North-East, Chhattisgarh, UP and Himachal, many people including myself questioned it saying there are no people there but the consumption story has made that move look far sighted,” .............
SBI displays photos to shame educational loan defaulters, faces flak
........."Would they ever be willing to portray the photograph of Mr Vijay Mallya for all the payments he has not paid back banks for years? This is a loss of dignity and human rights for the poor people. They should resort to legal recourse even in the worst case.".................
IIFCL Appointment Irks FM
..........The Search Committee, comprising two secretaries to the government of
India, the RBI Deputy Governor, and two prominent independent experts —
the IIM-Lucknow director and HDFC Chairman Deepak Parekh — was aware of
the fact that Bagla was the first choice for the same post during the
last selection process done in March 2010, when his candidature was not
considered by the then finance minister on account of conflict of
interest.........
ATM cards with photo will check frauds: Ombudsman
Bangalore, Aug 13 (IANS) Banking Ombudsman in Karnataka M. Palanisamy Tuesday advised banks to issue chip-based ATM cards with customer's photo to check frauds committed through debit or credit cards. "As complaints related to misuse of debit or credit cards have jumped to 1,279 till June from 732 year ago, I have directed state-run and private banks to issue only chip-based ATM cards with photo of an individual customer to check their fraudulent use," Palanisamy told reporters here at the annual conference of the Reserve Bank of India's (RBI) regional office..............
All about Savings Bank interest rates!
Every individual has a Savings Bank account, but pays little attention to the interest earned on the balance in this account. Some people may not even know that the balance they maintain in their savings bank accounts earn an interest. In the past,.......
SEBI to go in for a major overhaul
......The nine-member board of the capital markets regulator decided to implement a plan of action in this regard, following recommendations made by an independent consultant. Among others, it has been recommended that SEBI should impart a greater focus on mobilising household savings into capital market assets, strengthen its supervisory functions and its oversight of listed companies. Besides, it has been asked to work for a re-organisation of its functional departments, increase its manpower, improve its IT strategy for organisational efficiency and strengthen its training and performance management system.............
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