...........“The Reserve Bank has served our country with great distinction. But, I venture to think that the best is yet to come,” the Prime Minister added. D.Subbarao has touched upon various facets of policy-making, the Prime Minister said adding, “I dare say, Raghuram Rajan will build on the experience of his predecessors to chart out a new course of action in very difficult circumstances that our economy is facing.” In his address, the outgoing RBI Governor Subbarao mounted a strong defence of the RBI’s policies, arguing that it was “oversimplification” to say that central banks went for price stability at the expense of growth.............
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Monday, August 19, 2013
PM wants RBI to re-think monetary policy
...........“The Reserve Bank has served our country with great distinction. But, I venture to think that the best is yet to come,” the Prime Minister added. D.Subbarao has touched upon various facets of policy-making, the Prime Minister said adding, “I dare say, Raghuram Rajan will build on the experience of his predecessors to chart out a new course of action in very difficult circumstances that our economy is facing.” In his address, the outgoing RBI Governor Subbarao mounted a strong defence of the RBI’s policies, arguing that it was “oversimplification” to say that central banks went for price stability at the expense of growth.............
WHIPLASH: Fresh advice from an octogenarian
............Where's the 'fresh thinking' on your end, Dr Singh, other than 'no loss' arguments, 'coalition dharma' and a Finance Minister insisting that the government can 'walk it alone' without the central bank? Incoming RBI governor Raghuram Rajan will be well placed to consider new approaches to monetary policy, but he would also do well to take learn from his predecessor and ignore the advice of those who fail to practice as they preach.
Time to Reverse Policies that Don’t Work
.........Inadvertently,
the RBI’s liquidity squeeze has further scared foreign equity investors
about an expected plunge in corporate earnings and debt investors on a
rise on bad loans and defaults. On the other hand, the hypothesis that
easy liquidity was fuelling rupee speculation was true only to a limited
extent. Today, the Indian economy is a lot more externalised than most policymakers perceive.............
Read - ET
A new monetary paradigm
..........Singh’s suggestion, coming as it does in response to the ongoing currency crisis, has been made at the wrong time. When currency and foreign exchange issues become a bigger concern than the slowdown in domestic economic growth, then surely structural constraints are a problem rather than some distortion and aberration in the foreign exchange market that can be alleviated by market intervention. This is all the more important because the foreign exchange constraint is now becoming a binding from the demand side. This is unlike in the pre-reform period, when foreign exchange shortage was a supply side issue..........
Economic history recurs because we don't learn from it: Subbarao
.........Releasing the volume, Prime Minister Manmohan Singh hoped that RBI governor-designate Raghuram Rajan would steer the country of the present challenging times. Subbarao said the challenge for Rajan is to make RBI a knowledge institution. "How you will use your formidable intellect, scholarship and global experience to shape the Reserve Bank as a knowledge institution that will set standards for how an emerging economy central bank should manage macroeconomic policy in a globalising world."................
Restoring confidence primary task before govt: PM
........The 30-minute long function had a galaxy of special invitees that included Raghuram G Rajan, who would succeed Duvvuri Subbarao as the next governor of the Reserve Bank of India next month, Planning Commission Deputy Chairman Montek S Ahluwalia, several former RBI Governors including, C Rangarajan (at present chairman of the PM’s Economic Advisory Council), Y Venugopal Reddy (at present chairman of the 14th Finance Commission), Bimal Jalan and A Ghosh, member of the 14th Finance Commission Sudipto Mundle, and former deputy governors of RBI, Rakesh Mohan and Subir Gokarn..........
RBI committed to inflation control as it cares for growth, says Subbarao
The differences between Finance Minister P Chidambaram and outgoing Reserve Bank of India (RBI) Governor D Subbarao over the central bank’s mandate refuse to die. Within days of Chidambaram seeking a Parliament message to the RBI Governor that price stability was not RBI’s sole aim — but part of the larger goal of boosting growth and generating employment — Subbarao on Saturday shot back, saying the monetary authority had not ignored economic growth in trying to rein in inflation...........
Crisis Of Credibility
Statements from different officials have conveyed the impression
that India’s central bank is not on the same page as the government. This has
spread confusion and undermined the efficacy of monetary policy. Signals from
monetary policy are most effectively transmitted when communication is clear.
Crosstalk doesn’t help.........
Read - TOI
Midnight’s bankers
Fielding questions from the media at a banking conference, RBI Deputy Governor K.C. Chakrabarty said the central bank would put up details of some recent measures taken by it on its Web site soon. A reporter suggested that this be done before 8 p.m., as if to hint that the RBI is known for putting out releases very late on its Web site. The deputy governor was unmoved. He said the nation wants its journalists to work hard and so the central bank may well put out its release at midnight.
Need for concerted policy reforms - DR. N. A. MUJUMDAR
That the relationship between the ministry of finance and the Reserve Bank of India is far from harmonious was clear last year itself, when the finance minister made the following statement: “Growth is as much a challenge as inflation. If the government has to walk alone to face the challenge of growth, then we will walk alone.” The minister’s open plea, made many times, to reduce interest rates, was not heeded by the RBI and hence the minister’s displeasure. The debate around the First Quarter Monetary Policy 2013- 14 statement, made by Governor Subbarao on July 30, provides ample evidence to demonstrate that this relationship has not improved and that the minister will have to walk alone to reach his goal..........is clear. Crosstalk doesn’t help.........
Throwback to 1991? Not really - A.Seshan
.........The measures introduced by the Reserve Bank and the Government in the recent period to deal with the problems on the external sector have raised a public debate. Some have feared that it marks a return to the pre-Gulf-Crisis days in the early 1990s, both in terms of economic conditions and policy measures. The Prime Minister and Finance Minister have reassured the nation that it is not so, and what we see now is only a temporary deviation from the liberal policies initiated in the 1990s. The truth is somewhere between the two extreme views.................
Rajan & Larry: A Central Difference
........Rajan’s presumed US counterpart, Lawrence Summers, hasn’t gotten the
official nod yet, although he has received a lot of presidential
blessing as the right man for the job. And yet I wonder. Sure, Summers
as an economist is as brilliant as Rajan. Both were star professors in
the US economics scene. But in complete contrast to Rajan, Summers has
excelled almost exclusively as a propeller and enabler of vested
interests. His speciality is not speaking truth to those in power, but
rather most agilely further empowering those in power...........
Read - ET
A wand for Raghuram Rajan
.... does Rajan “have enough domain knowledge” to comprehend India’s myriad monetary and public finance problems? Much of his approach to Western financial markets seems divorced from the reality of how India’s peculiar credit markets and monetary and banking system have evolved. Mathematical finance is a relatively new small specialized sub-field. Rajan’s academic path of engineering and management in India followed by a finance thesis in the management department of a US engineering school may have exposed him to relatively little textbook economic theory, monetary economics, public finance, international economics, economic development, etc., especially as these relate to Indian circumstances..........
Retirees Hitguj August 2013
Text of the circular dated 8th August 2013, issued by the United Forum, after the Massive Rally by RBI Staff and Retirees, prior to Central Board Meeting in Mumbai, is reproduced below for information of our members.......
Separatist slogans on banknotes in J&K
........According to their statement posted on social networking site Facebook, the group has stamped currency worth Rs 30 crores in the last four months. The group has also put a video on youtube about it. According to the Reserve Bank of India's clean note policy announced on May 10 this year, inscription or scribbling on any part of the banknote would render it to be classified as unfit for reissue. Accordingly, such banknotes get treated as soiled banknotes and cannot be re-circulated.......
Even RBI refusing to exchange torn currency notes
NAGPUR: Those banking on the Reserve Bank of India (RBI) as the last resort for exchanging a torn or mutilated note may be left disappointed. In a bid to implement a policy initiated almost a decade ago, which spelt out that RBI should eventually exit from public dealings, the bank's office here has abruptly cut the quota of such notes to be accepted at its counters. As against the norm of exchanging 25 notes from one person, the RBI office at Nagpur is now exchanging only three notes...............
Panchayat president, agent held for cheating in Thiruvalla
..........both the accused were taken into custody from Thiruvalla town on Saturday night when Vimalraj reportedly made an attempt to ran away with the three foreign currency notes. The police suspect that the duo were trying to convert the `currency’ notes with the help of an authorisation letter obtained by Mr. Punnose from the Reserve Bank of India on behalf of a private trust named Olivermala run by him.........
Unique ‘facial signature’ solution
Voice of Bigdata, a US-based analytics company, has launched a ‘facial signature’ solution that can create a unique digital signature for people’s faces. Using some 80 nodal points on the face, the solution generates an equivalent digital signature. “Barring 16, the remaining 64 nodal points on the face are unique to a person. Once we enter this in the database, we can easily identify them if they come again to a place,”............
Panagariya, Gopinath among top contenders for CEA job
Economists Gita Gopinath and Arvind Panagariya are the likely front runners for the post of the finance ministry's chief economic adviser (CEA). "It is too early to say but they are some of the top choices for the post. The economists will also have to be asked for their interest in the position," said a source close to the development.......
Retirement savings: Start early, despite the risk!
........You can moderate returns-compounding risk by continually reducing your equity investments after 45 and buying bonds that mature at retirement; returns-compounding on bonds is positive if held till maturity. This positive feature of bonds is useful as you can apply the rule of 72 (72 ÷ return is approximate years to double your investment) to achieve your objective, especially in the 10 years leading to your retirement. So, start your retirement savings early!.........
How good are our banks?
..........A Reserve Bank of India (RBI) calculation puts the depreciation figure for the public sector banks atRs.21,500 crore, based on their bond portfolio in June. Since then, yields have risen further. The gross NPAs of Indian banks in March 1994 were 19.07% and for the next seven years, till March 2001, they remained in double-digits. If the banks could survive that phase, they would definitely come out of the current crisis too. But at what cost? ...........
Banks and the F-word
.............The RBI’s Study Group on Large Value Bank Frauds defines fraud as “a deliberate act of omission or commission by any person, carried out in the course of a banking transaction or in the books of account maintained manually or under computer system in banks, resulting into wrongful gain to any person for a temporary period or otherwise, with or without any monetary loss to the bank”. A 2012 survey by consulting firm Deloitte Touche Tohmatsu India found that a high proportion of respondents identified retail banking (77 per cent), corporate banking (57 per cent) and private sector lending (33 per cent) to be the principal areas in which fraud occurs. The latter two are likely to be the areas where the big fraud cases lie, whereas retail banking has a large number of small instances of fraud that drive down the average size of frauds..........
Banking boom
At a time when there is a reduction in hiring and campus placements by the IT sector, banking is one of the few industries that is optimistic. As the Reserve Bank of India is planning to open up the banking sector with new players set to be given licences, a lot of jobs will be created over the next few years. Keeping this in mind, NIIT IFBI is offering diploma programmes for students to get them ready for the times ahead.........
All women bank to have 25 branches by fiscal-end
..........The proposed bank, to be headquartered at Delhi, is likely to be operational by November this year. Reserve Bank of India gave its in-principal approval for the Bharatiya Mahila Bank in June and the banking company is being set up, the official added. One of the key objective of the Bank is focus on the banking needs of women and promote economic empowerment.........
Crash lessons
....... On the contrary, these are now beginning to seriously unsettle foreign investors. The immediate trigger for the biggest single-day market fall in four years was the Reserve Bank of India’s curbs on outward foreign exchange remittances by domestic companies and residents. The markets interpreted this as a throwback to the era of capital controls and speculated about such clampdowns being extended to repatriation by foreign investors as well.........
Whose inflation?
......... it is a matter of exasperation for most corporates and bankers that the RBI has chosen to focus more on the CPI in managing liquidity and interest rates. Is it any surprise therefore that even good quality corporations are now turning into non-performing assets?
India’s financial crisis - Through the keyhole
ON SATURDAY morning August 17th India’s top policymakers gathered at a rather obscure event—the launch of an official history of the Reserve Bank of India (RBI), held in a room in the prime minister’s house in Delhi. Present were Manmohan Singh, the prime minister, and the past, present and future bosses of the central bank, among others. .........
There Is No Rollback of Reforms: Mayaram
...........There
is nothing in these measures to say we have imposed capital controls.
You need to instill some responsibility in people who spend
forex. We have not said you can’t spend overseas, which would have been
reverting to capital control. RBI has only changed the methodology by
putting it on the approval route to instill responsibility...........
Read - ET
The good, the bad and the risky
..........With the economy mired in a slowdown and the possibility of any decline in interest rates fading, the months ahead promise to be tough on companies which have taken on high levels of debt. The Reserve Bank of India’s recent measures to mop up excess liquidity from the system have had the effect of spiking the cost of short-term borrowings as well. As short-term borrowing costs for companies have gone up by almost 2 per cent in just a month, they will now have to shell out more to finance their working capital requirements. This may force companies facing a cash crunch to delay or even default on.............
Banks as brokers: Good for you?
........RBI in its Financial Stability Report (FSR) had said banks assuming the role of brokers might lead to conflict of interest. RBI said in some cases, it was observed banks did not have a clear segregation of duties of marketing personnel from other branch functions. Bank employees were directly receiving incentives from third parties such as insurance companies, mutual funds and other entities for selling their products. Experts feel the new regulations are advantageous for potential policyholders......
You can file your tax return even after the due date
..........So say you are a salaried employee who has not filed his or her return in time, however, the tax due from you has already been deducted at source in the usual course. In this case, the maximum downside even for a late filing would be the Rs. 5,000 penalty amount. Since the tax due from you has already been paid ( by way of the TDS), there would be no liability on account of interest. Remember, interest is levied only if you owe any tax to the government.......
Keralites get the better of online fraudsters
.........Over a period, the modus operandi changed. They nowadays target youths in search of jobs. The job aspirants get a mail inviting them for an interview at a reputed company. The youths do not hesitate to pay the caution deposit required to be paid before joining since they are being offered a very high salary. People do not even care to verify when they feel that lady luck had blessed them.............
RBI needs to stop trying to save the Indian rupee
There is a growing sentiment that the Reserve Bank of India’s (RBI) recent actions to stop the rupee’s weakening is like a doctor fighting the symptoms, and not the disease itself. That statement massively misses the point. India’s economy doesn’t need a couple of pills from the RBI, the country’s central bank. The ‘take a cut in interest rates and call me in the morning’ approach is appalling misplaced. The economy needs a surgeon, in this case the Indian Parliament, who can remove the blight of corruption and perform some major economic reforms. Anything less will only prolong the rupee’s descent. That the RBI’s efforts are ineffectual are largely self evident...........
Costly fight for a stable rupee
Policy-makers must have valid reasons for going all out to defend the rupee, but the time has come to assess the impact of recent policy measures in their totality. Does the end justify the means? The collateral damage that some of these measures inflict cannot be ignored for long.........
‘Swap 200 tonnes gold RBI bought for dollars’
.........“The Reserve Bank of India bought 200 tonnes of gold for $1,045 an ounce from the IMF four years ago. The Government can swap it for US dollars,” said Gornall, who is here for the India International Gold Convention 2013. According to RBI sources, the gold that India bought never came into the country as the transaction was only a book entry. The gold was purchased for $6.7 billion, in cash. Asked about this, Finance Ministry officials said the RBI will have to take a call on swapping the gold for dollars...........
Public sector banks pay for the rupee war
.....On manic Friday, the RBI had to set the yields on the most popular government paper the 10-year ones, at 8.74 per cent, which is 53 basis points more than the previous auction — yet 8 per cent of the papers went unsold. The choice for the public sector banks and their owner, the government, is now to make provision for these losses and book it to the public, the taxpayers......
RBI diktat to be no sweat for India Inc's big boys
........"As RBI and the government haven't explicitly banned large acquisitions, the deal structure will now become crucial in getting an official approval. Acquisitions will now be structured in a manner that minimises the dollar outflow from India and there is little recourse to the parent Indian company's balance sheet," .............
Moody blues
Given how asset quality at India’s PSU banks has been deteriorating, it is not surprising that Moody’s downgraded three of the country’s top state-owned lenders—Punjab National Bank, Bank of Baroda and Canara Bank—saying their financial strength was reduced and that the quality of the loan book was weakening. It’s hard to counter this: with the economy in a downturn and several sectors like telecom, steel and infrastructure in trouble, gross NPAs at PSU banks have moved up to 3.61% at the end of March. ...........
Present scenario offers avenues to get quality biz: Yes Bank
.........."These are challenging times but it also provides opportunities to originate good quality business... There are large opportunities, especially with diversity among the corporates,"..........
JK Bank lends little,charges 140 per cent more interest in JK
........ Pertinently, the corporate governance and supervisory controls of the J&K Bank recently received a big jolt when Reserve Bank of India fined it Rs 2.5 crore for violation of KYC guidelines. An ex-auditor of the bank on condition of anonymity said: “Usually such big loan cases are thrust upon the bank branches and branch advance heads reluctantly oblige out of fear of harsh postings and loss of promotions.”........
Finance ministry seeks relaxation in selection norms for SBI chief post
New Delhi: The finance ministry has sought relaxation in the eligibility norms for selection of State Bank of India (SBI) chairman so as to have more candidates to interview for the top post at the country’s largest bank. “To have suitable panel of candidates, we have requested appointments committee of the cabinet (ACC) for exemption in regulatory guidelines,” financial services secretary Rajiv Takru told PTI.............
Diabetics can't be denied jobs, says Madras HC
........" Diabetes usually has no impact on an individual's ability to do a particular job and in most cases the employer may not even know that his employee has diabetes. As the impact of diabetes and its management varies among individuals, there cannot be a blanket ban on giving public employment to persons with diabetes," a bench comprising Justice R Banumathi and Justice T S Sivagnanam held as it dismissed a petition filed by the Southern Railway challenging an order of the Central Administrative Tribunal........
Retirement age of state government employees hiked from 60 to 62 years
With an eye on the polls, chief minister Raman Singh, on the occasion of Independence Day, announced to increase the retirement age of state government employees from 60 to 62 years. The demand for extending the retirement age was pending since long...........
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