..........On his first day as officer on special duty in the central bank 17 days before taking formal charge, Rajan checked into his office, which is on the 18th floor of the RBI headquarters on Mint Road – the same floor where the governor has his office -- and met all top officials of RBI, including the deputy governors and executive directors to understand their responsibilities and the departments they handle. Central banking sources said he took a series of meetings – all on one-on-one basis – with all the top executives before signing off late in the evening. The style he adopted in the meetings was pretty informal as his tenure as the chief economic advisor in the finance ministry ensured that he knew most of the top RBI officials already, the sources said...............
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.
Tuesday, August 20, 2013
Will Raghuram Rajan really listen to Raghuram Rajan?
Rajan Must Get Radical
... While
many have focused on the symptoms of India’s recent troubles — twin
deficits, high and unstable inflation and, more recently, rupee weakness
— we believe that Rajan should focus his attention on structural issues
underlying these problems. He needs to focus on two main areas: (a)
monetary policy, and (b) the role of financial sector regulation. The
most pressing issue facing the RBI is inflation, which has a
disproportionately negative impact on the poor and disadvantaged, those
with fixed incomes and those with the least bargaining power in society.................Mr Rajan’s entry strategy
........ While it is not certain that this will stabilise the rupee, the current policy clearly isn’t—a return to status quo ante, on the other hand, may just have a positive impact since a return to reasonable liquidity can help stabilise consumer demand to some extent and lower pressure on corporate balance sheets. Even if it doesn’t, incoming Governor Raghuram Rajan needs to jettison the current policy for a variety of other reasons. Come September 30, if bond yields stabilise at even current levels, banks could be looking at mark-to-market losses of nearly Rs 50,000 crore—...........
Focus: 'Raghuram Rajan, Wearing The Crown Of Thorns'
........But there is a silver lining. Sri-Vaishnavas are traditionally great devotees of Lakshmi, the goddess of wealth and prosperity. Surely, the goddess knows that Raghu and his country need a lucky break or two now. My friend SS Tarapore once told me that when he had joined the RBI as a young economist, the then governor HVR Iengar worked only in the mornings. Every afternoon he had to be on the tennis court. Let us hope that Raghu is able to imitate his predecessor. After all, on some afternoons it is better for a central bank chief to do nothing, instead of trying to defend the indefensible (Dear Reader: Did I say the indefensible rupee or did you?)
PM gave RBI Guv a pat on back, not rap on knuckle
........The PM’s exact words were something like this: “The Reserve Bank has done the country proud – the role which it has played in shaping the monetary policy, in shaping the credit policy, and, if I remember correctly, in also influencing, particularly, the supply of credit to rural areas. The Reserve Bank has served our country with great distinction. But I venture to think that the best is yet to come.” If this sounds like “sparring” maybe the dictionary meaning of the word “spar” needs to change...............
Don' carried away by "cut & paste".........
One cannot disagree with PM when he says the obvious. He said: “We can never be satisfied with the status quo. When I became the Governor, I had no great knowledge of what monetary policy is about, and therefore, I asked the late Prof. Chakravarty to head a committee to look at the functioning, the goals, the means and measures of monetary policy, and that report was pretty influential for a period of time. ……….. at least among professional people, a degree of national consensus, which we need, if we have to carry out social and economic change in a country as large, as diverse, as complex as India is. As I said, the Reserve Bank has served our country with great distinction. But as I ventured to think, the best is yet to come.” One wishes, he asks his colleagues (including the present FM) to read the Sukhmoy Chakravarty Committee report so that they are not carried away by the cut & paste FSLRC Report now on their table.
-M.G.Warrier
File RTI application on Pension updation......
.....This is admissible as per LAW. Shri Takru
first started with lacuna in our Service Regulations citing that there was no
provision in RBI Regulations for PENSION UPDATION, then he
wanted comparison with GOI and SBI pension system and now he talks about DOMINO
EFFECT. What next?............
Different takes on who fits the bill
.........N.K.Thingalaya, former Chairman of Syndicate Bank, says the eligibility to get a licence need not be related to the sector from which the licences are sought. It should be based on the track record of the applicants and their performance in discharging their corporate social responsibility. It would be best to avoid microfinance companies and industrial houses, Thingalaya goes on to add. In fact, the Executive Director of RBI, R. Gandhi, had stated recently that financial inclusion has to be a precondition for new banks to come in. “It (the number of banks) depends upon the proposal and business plans, including their proposed efforts on financial inclusion. We cannot predict how many applicants will meet these requirements,” he had stated............
Experienced bungler
...........Under his orders, the Reserve Bank of India has asked banks to raise interest rates on nonresident Indians’ schemes. In the early 1990s, the RBI used to decree dozens of interest rates. The idea was to reward virtuous savers and investors, and to give incentives to approved ones. But there never was any evidence that those manipulations served any purpose......
The many perils of borrowed prosperity
..........It is in this backdrop that the finance minister and the RBI have unfolded their external rebalancing strategy. The official policy mix has two components: (a) compressing import of gold, silver, oil and other ‘non-essential’ items by increasing customs duties (b) attracting more capital inflows by raising interest rates and liberalizing the norms for external borrowing. With these steps, Chidambaram expects............
Is there a 'FICN' hiding in your wallet?
.....RBI had observed that although 90% of the currency chest are with the public sector banks, they are reporting a mere 10% of counterfeit notes, while private sector banks with less than 10% of currency chests are reporting 90% of such cases. Short-term solutions: In the meanwhile, alternatives like internet banking and mobile banking are being aggressively promoted. The rationale is that if we utilise technology and avoid using actual currency during certain transactions, it will help to curb the menace to a large extent.............
Now get Rs 10, 20 and 50 notes from ATMs
Kanpur: With an aim to provide better services to the debit card holders, the Reserve Bank of India (RBI) has directed all commercial and public sector banks to introduce new Automated Teller Machines (ATM) that can deliver lower denomination notes such as Rs 10, 20 and 50..............
Wherever you go, the tax department follows
............ "We are touching everybody; the question is priority. Our main focus is eight big cities but we are keeping an eye on non-filers in other regions too," he said. A compliance management cell has been set up to monitor return filing and tax payment of the target segment. This information is now being made available to the jurisdictional assessing authorities through the online monitoring system for verification and issue of notices in relevant cases................
When symptoms are mistaken for disease
...........The question that rises now is: did the RBI and government press the panic button much too soon? Hindsight is always 20:20 and it is easy to comment on the RBI’s actions, especially when you don’t have access to the information and data that prompted its actions. Yet, one needs to ask if the measures, especially the second set announced on the eve of Independence Day, were called for. Of course, to be fair to the central bank, it can only do what is within its powers and that is using monetary policy tools; these cannot substitute for resolute action from the fiscal side, which is the government’s prerogative. Indeed, the comments of Prime Minister Manmohan Singh on Saturday at a RBI function couldn’t have been more apt..........
Focus on the fundamentals - Charan Singh
Like the weather, the economy continues to surprise. The successfully tested measures of 1998 by the RBI are refusing to yield expected results in 2013. Nearly a month of relentless efforts by the authorities has not been able to suppress the Indian Rupee which continues to plumb new depths. On August 16, the Indian Rupee touched Rs 62 against the US Dollar. A pertinent question is: why did the same harsh measures succeed in 1998 and not in 2013?...........
Irrational inexuberance
....... If, for instance, the RBI’s moves to tighten liquidity and indirectly raise interest rates to check the rupee’s fall stays longer than intended, there is no doubt that growth will suffer. But growth will also be impacted if the rupee continues to weaken, inflation remains high, unhedged corporate balance sheets come under increased pressure and fiscal consolidation becomes even more challenging. The urgent task is to calm the markets. Clearly, for policymakers there are no easy options at the moment. Having chosen a particular line, it is best to stay on course lest the credibility of our monetary institutions is undermined. More effective communication will certainly help, as will the RBI and the government following the elementary rule of not speaking in discordant voices.
Flying back? No more duty-free TVs
.........The government, according to a notification, has decided to "disallow import of flat panel (LCD/LED/Plasma) television as part of free baggage allowance" with effect from August 26. Air travellers currently can bring a flat screen television for personal use without paying any duty...........
RBI Dashes Green Card Dreams of Rich Indians
.......While
most of the formalities were over, he was hoping the money could be
remitted once his wife would visit the place in late August. Now the
deal has been shelved after RBI’s new regulations...........
No need to make people panicky over Rupee fall: Congress
......"Rupee depreciation is a very serious concern but it is global phenomenon. Between 2012 and March 2013, every major currency in the world depreciated against the US dollar because the US economy which was earlier growing at the rate of 0.5 percent but is growing at the rate of 2.5%," party MP Bhalchandra Mungekar told reporters..............
Basu prescribes Keynesian pills for battered Indian economy
World Bank chief economist Kaushik Basu, who used to advise the finance ministry on major economic issues from mid-2009 to mid-2012, says it needs to loosen a bit on the fiscal side to propel economic growth. The Keynesian advice comes after Finance Minister P Chidambaram has said he considers the fiscal deficit at 4.8 per cent of gross domestic product in 2013-14 as a ‘red line’.................
A twist in the rupee tale
......RBI, as usual, has been left holding the baby, as it is the case when anything goes amiss. It also runs the risk of facing the flak because every economic decision has a tradeoff, and some constituency gets affected. The latest buzzword is ‘collateral damage’ caused by too much intervention as bond yields have zoomed and the stock market has plummeted. The alternative would have been to do nothing and let the market decide the exchange rate, in which case the participants would have panicked in the expectation that RBI was targeting a higher number. The more uncharitable would have likened the state to that of Nero. Really, a hard choice to make under these circumstances........
The rupee at Rs 63: How fear can make you money
....The only hope for the INR is interest rates coming off in the economy. The question is how will interest rates come off? The RBI can reverse its tightening policy but markets will be too worried on any reversal of steps to bring down bond yields. Banks will hold back any cut in lending rates as their nerves are shattered by the RBI’s moves. Markets have absolutely no faith in the government taking the right decisions even if the government is actually trying to do the right things for the economy...........
The fallacy of 'dollar = rupee' in 1947
.......Over years, we have an inherent respect and trust for the written word. In the non-digital age, printing was expensive and restricted and the written word earned it's respect because of the care people invested in it before printing it. The digital age has democratised and commoditised printing. Our habits and trust still belongs to the non-digital age. The only lesson to draw here is to check sources and not believe everything written on a webpage. It is easier said than done.
RBI hikes FDI cap in ARCs to 74%
......This is another measure to attract capital inflows to support a sagging rupee. "The ceiling for FDI in ARCs has been increased from 49 per cent to 74 per cent subject to the condition that no sponsor may hold more than 50 per cent of the shareholding in an ARC either by way of FDI or by routing through an FII," the RBI said in a notification.........
CII against RBI move on outward investment
The RBI’s move to contain the Nation’s burgeoning current account deficit by imposing a cap on outward investment would act against the Indian economy’s globalisation drive and hamper the overall reforms process, according to Kris Gopalakrishnan, president of the Confederation of Indian Industry (CII).............
Frauds - can't be eliminated, can be minimised..........
ATM Frauds are of varied nature.
1.Technology based eg. Men in the Middle(MiM) ie between the User and the Server of the issuer/acquirer and hack from the Network.
2.Men in the Browser (MiB) thru Malicious software with advanced features, 'sit' in the browser and divert or spoof or do Phishing without his presence being noticed by the user.
3.Manipulations by Depressed staff responsible for System Maintenance, ATM Oerating System (OS)Modification, Cash Replinishment of the ATM Stackers etc.
The first two methods enable the unauthorised person to phishout data from the magstripe card which is stored in the card , in 'TEXT FORM' and Travels in text from without being encrypted and hence easily readable by the Hacker and enables him to clone the card.The PIN entered by the USer gets collected by installing pinhole cameras that can capture the keys depressed at the time of user entering the PIN at ATM.
Answer for all this could be
to deploy Terminal Level Encrypter at the ATM Terminal level or Usage of Integrated Chips embedded cards (Smart Card ) with PIN which encrypts the CVV in the Magstripe before transferring the data to the Network , also supported by OTP(One Time Password) where necessary.
The authorisation at the Issuer end can be further verified by
a)asking multi layered Challenging questions from the user B4 authorisation ,
b)monitoring the variations in the Geo Locations of the devices from where the Issuer's Server is accessed, Changes in the Config of the Use's device, ITP TP address etc etc
The methods suggested are not exhaustive and do not cover instances of malfunctioning of the ATM. However, due care and vigilance on the part of the User concerned is of paramount importance.
While Frauds can't be eliminated, can be minimised with the introduction of adequate protective and security measures in the Card Network System.
- R.Muralidharan
Fraud companies: A tale of lofty promises and vanishing acts
...........“Multiple growth is not possible and any lucrative offer should be crosschecked properly. Investors should not put in their money in companies promising more than 12.5% profit since it is against the RBI guidelines.” He said the investors should also do a thorough background check on the companies’ investments. “Investors should go through offer documents before investing into such companies,” he added. Haider said regulatory authorities like RBI should carry out sensitisation drives more frequently to spread awareness about such schemes or else people would continue to fall in the trap........
Enhanced eKYC to increase efficiency of UIDAI
....Above all, the fully paperless, electronic, low-cost aspects of eKYC make it more inclusive, enabling financial inclusion. Both end-points of the data transfer are secured through the use of encryption and digital signature as per the Information Technology Act, 2000 making eKYC document legally equivalent to paper documents. .................
SBI suggests FM to ban short selling in markets
...........He also said RBI's move on Liquidity adjustment facility (LAF) rate to 10.25 is “extremely ill advised” because the long term bond rates move in the range between 50 basis point. Because LAF was at 7.2%, long term bond rates were between 7.25 and 7.75%, now they have increased to LAF rate or repo rate to 10.25%, I will be surprised if the bonds rates moves to that level”...............
Reforms move in cooperative credit system faces opposition
..............The farmers would be constrained to go to the district level CCBs for fulfilment of their credit needs if the three-tier system was replaced by the two-layered one”, he apprehended. T. Ganga Raju, member of the Andhra Pradesh PACS Employees Union said the move for ‘dilution’ of the PACS was very much in contravention of the RBI guidelines which envisage provision of a credit disbursement outlet in every habitation with a population not less than 2000 under its flagship programme of Financial Inclusion (FI).
IOB's core banking system caught in technical glitch
.............It may be noted that Reserve Bank of India (RBI) has asked the Indian Overseas Bank (IOB) and some other banks to shift from its existing Core Banking System (CBS) platform to an Oracle based platform as part of integrating data from various banks through an automated data flow system. Since most of the banks are on Oracle platform, the rest of the banks were asked to migrate, said an official from IOB..........
Where are we heading? - M.G.Warrier
Mint deserves a word of gratitude for exposing the casual approach of the government to succession plans for top posts in big organizations. The possibility of SBI Chairman’s post falling vacant was known long back. It is sad that Mr Takru, a new entrant to finance ministry is toying with the idea of inventing norms for selection of candidates for consideration to the post. It agonizing to find that even Mr Takru’s problem is ‘just ensuring compliance with a procedure for selection’ as the eligible candidate, at the moment is only one. Where are we heading?
- M.G.Warrier
PSU Banks Told to Review Credit Growth Targets
...In
a letter to chairmen and managing directors of all state-run banks last
week, the ministry said, “The credit growth projections submitted by
the banks do not appear to be in tune with the credit growth expected of
the economy.” The RBI has projected a credit growth of 15%, while most banks have projected a 16-20% growth. ............
Yes Bank expands footprint, opens 500th branch
Yes Bank, India’s fourth largest private sector bank, has further augmented its retail banking footprint by establishing its 500th branch. In accordance with its strategy to develop the inclusive financial and banking network across India, the bank also has significant presence of 240 branches in rural or semi urban areas with population of less than 1 lakh people............
All subsidiaries will be merged with SBI in next 10 years: Chairman
The State Bank of India has chalked out plans to merge all its subsidiaries with itself in the next 10 years. India’s largest bank will merge one subsidiary every two years. “It will take two years to digest a merger, as we have to work on branch rationalisation and various issues,” said Pratip Chaudhuri, Chairman, SBI..........
ISLAMIC BANKING – Shattering the concept of Commercial Banking
I have been hearing about Islamic Banking for
last over a decade but have been able to gather only some basic
information. Now in August 2013, after the proposal for appointment
of Raghuram Rajan has been cleared, it has come in fresh discussions as the new
RBI Governor is considered to be a strong advocate of this concept. The financial reforms commission headed by Rajan had even advocated
Islamic banking............
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