Subbarao, take a bow

Let us salute Governor Subbarao

............How will history assess Governor Subbarao’s era? A dispassionate account will surely appreciate the valiant role of Governor Subbarao in keeping the ship on an even keel. He has heroically led the RBI with maturity and judgment, despite being aware that he would be pilloried by the government and others who survive on government patronage. Subbarao can take comfort in the fact that, at some point of time, each of his predecessors in the past thirty years has been vilified, only to be recognised that they were the saviours. Notwithstanding all the attacks on Subbarao — overt and covert — he can close his stint in the RBI with great satisfaction and a clear conscience..................

Read - HBL

RBI History Mirrors 1991 Crisis and Reforms

The Reserve Bank of India and the Academic Foundation deserve the readers' thanks for bringing out the latest volume of RBI History in two volumes. The earlier histories were fat and unwieldy single tomes. The RBI is one of the few central banks to have documented its institutional history. The book under review is the fourth volume of the History of RBI and relates to the 16- year period 1981- 1997. During this period RBI had six Governors for different terms -- Dr I G Patel, Dr Manmohan Singh, A Ghosh, R N Malhotra, S Venkitaramanan and Dr C Rangarajan.......

Read - FPJ - 

Book review by P.P.Ramachandran

Fourth volume of the history of the Reserve Bank of India

..........This volume is more than a mere narrative of the history of the Reserve Bank; it also provides valuable insights into India's economic development and policy during an eventful and significant period...........

 ..........This volume of history takes us through the difficult times when the Reserve Bank and the Government had to contend with unprecedented strains on the external payments situation......

........The comprehensive economic reforms, mostly home-grown, that were launched in 1991, with support from multilateral institutions and implemented in a gradual and cautious manner enabled India to gain international credibility.............

Read.........

Manohar Parrikar meets RBI dy governor in Mumbai

........In a meeting in Mumbai on Wednesday evening between a Goa delegation led by chief minister Manohar Parrikar and a team of RBI officials headed by RBI deputy governor Anand Sinha, the RBI asked Goa to schedule the SLBC meeting either in late August or early September. The RBI will send their representative for the meeting and once detailed submissions by the government and bankers are made to the RBI, it will examine the matter.......

Read - TOI

For a change, visit Udupi’s numismatics museum

............Nearly 1,800 coins from 400 B.C. to the present times are on display at Corporation Bank. Coins in materials such as gold, silver, copper, lead, nickel and steel are on display. There is explanation in English besides all the coins. “We will soon provide explanation of coins in Kannada on each exhibit stand,”..........

Read - The Hindu

RBI receives proposal for Rupee-Saraswat merger

The Reserve Bank of India has received a proposal for merger of Rupee Cooperative Bank and Saraswat Cooperative Bank from the latter two days ago. It is likely that the RBI would give its nod for the merger in a fortnight after which the actual process would start which is expected to take two to three months............

Read - DNA

Most transactions still done through cash, cheques

.........According to a vision document by the RBI, developing accessibility, availability, affordability and assurance among other things are needed. In addition, simplifying documentation requirements, increasing role of non-banks in the payment systems, innovation and competition, uniformity, addressing risks could facilitate more usage of the electronic mode of fund transfer...................

Read - HBL

Appraisal standards of nationalised banks responsible for steep rise in NPAs, says Chakrabarty

....“There is enough evidence to suggest that a substantial portion of the rise in impaired assets in the sector is attributable to non-adherence to the basic appraisal standards by the banks,” said Dr KC Chakrabarty, deputy governor, RBI, while speaking at a conclave organised by SBI Capital markets..............

Read - Moneylife

HC allowing plea challenging directors’ appointment will cut into RBI powers: Yes Bank

Mumbai: If the Bombay high court allows the Madhu Kapur group to challenge the appointment of directors on the Yes Bank Ltd board, “it will cut into the powers of the Reserve Bank of India (RBI)”, the lender said on Thursday. “RBI does not say it will decide (on appointment of new directors). It gives the powers to the board to decide. Once the board decides, unless you say that the board is bad and has to be replaced...(you cannot change)..............

Read - Mint

Rajan's genuine concern

My View on "Rajan wants definitive shape to bank licence by January": 

It is refreshingly comforting to see that an executive who is still with GOI has started getting seriously concerned about the goings on in an institution which he will be heading a fortnight later. The need to ensure continuity at the top in RBI is surfacing time and again. Now Dr Rajan also has admitted this by expressing the view that ‘some definitive steps’ on new bank licences should be taken before Deputy Governor Sinha demits office on January 18, 2014.  His concern is genuine, as the other person who was responsible for initiating the process necessary for issue of fresh bank licences, Dr Subbarao, would have already moved out, once he takes charge. The environment in which Dr Rajan and his ‘new team’ will have to decide on 5 to 10 ‘in-principle approvals’ from the 26 aspirants has been made more complicated by the time-frame (first quarter of 2014) already announced by the Finance Minister in Lok Sabha and the announcement of ‘All Women’s Bank’ as also an application from Postal Department. FM cannot be blamed, as his anxiety to have something ‘tangible’ before the elections are announced is understandable. One wishes, banking was considered as another business or vocation and individuals or organizations(including corporates) were allowed to enter subject to potential for business and viability of the individual projects, in a well-regulated environment. 

- M G Warrier, Mumbai

Forex crisis - A.Seshan

........But what has happened in the last few days that led to the current crisis? The market knows that the Reserve Bank of India (RBI) cannot make any effective intervention since its reserves are equal to just a few days' turnover. Of the total turnover, about one-fourth only are accounted for by real transactions. ................

Read | Business Standard

When umpires turn players

.............. But this unimaginable news of today may soon become a reality tomorrow. Well, if not in the case of the RBI, at least of a few other central banks. Indeed, it is already a reality in the advanced world of finance that has set the model for the rest in the last two decades. Shocked? Read on...............

Read - HBL

Coming days will be more tough...........

My View on  "Losing credibility": 

Very true. Restoring credibility is an uphill task. RBI has been functioning in an uneasy environment for some time now mainly because FM and some officials in his ministry have been asserting GOI’s ownership rights on the central bank. RBI’s work culture and the maturity shown by the RBI Governor and his team, in a way, avoided an open clash in the recent period. The coming days will be more tough from the relationship angle for Mint Road and North Block, as the new RBI Governor has not been through the ‘IAS’ diplomatic experience. 

- M G Warrier

RBI's FY13 income grows by 39.8%

The Reserve Bank of India’s (RBI’s) gross income by 39.8% to Rs 74,358 crore for year ended June 2013 from Rs 53,176 crore in Fy12 on sharp increase in earnings from domestic assets. The revenues from domestic sources rose by 60.7% from Rs 33,366 crore in Fy12 to Rs 53,611 crore in Fy13. And, foreign operations saw mere 4.7% growth at Rs 20,746 crore in 2012-13 from from Rs 19,810 crore in 2011-12. ...........

Read | Business Standard

Good monsoon will help growth, RBI says in annual report

The Reserve Bank of India (RBI) on Thursday said growth prospects are looking better for the Indian economy in the current fiscal year on a good monsoon and steps by the government to revive domestic investment. It is also important to reduce high consumer prices to revive demand, said RBI, in its annual report, released on Thursday. It added that monsoon rainfall this year bodes well for both the kharif and rabi crops, and power generation..........

Read - Mint

Explore new avenues for revenue, RBI tells govt

The Reserve Bank of India (RBI) warned on Thursday that the government may find it difficult to stick to its fiscal deficit target in the current fiscal year, given the impact of the economic downturn on tax collection and the depreciation of the rupee on the import bill, and called for alternative sources of revenue to be tapped. RBI suggested strategic planning, including larger dividend payouts by cash-rich public sector units and stake sales in state-run companies that are likely to receive investor interest and attract higher prices...........

Read - Mint

RBI Comes to the Table on Food Bill, says it’ll Eat into Finances

RBI has weighed in on the ongoing debate on the viability of the proposed Food Security Bill, warning the government would find it difficult to contain spending on the proposal within the budgeted amount even in 2013-14. Further, the central bank, which released its annual report on Thursday, also asserted that the rise in the quantum of subsidies would hamper investments.........

Read - ET

RBI increases size of war chest

MUMBAI: Reserve Bank of India (RBI) appears to have had an inkling of the volatility in the foreign exchange markets that was to follow later during the year. In its balance sheet for the year 2012-13, RBI  has increased the size of the war chest that it has built up for times of volatility in the financial markets.......

Read - TOI

RBI sounds caution on ballooning bank debt to infra sector

The Reserve Bank of India has called for sorting out infrastructure issues as they have potential to adversely affect asset quality of banks. Stress is building up in the infrastructure segment, the RBI said in its annual report released today. Outstanding bank credit to the infrastructure sector, which stood at Rs 7,243 crore in 1999-2000, has jumped over 100 times to Rs 786,045 crore in 2012-13..............

Read - HBL

Reserve Bank study sees red in currency futures trades

Currency futures trading in the domestic market and a foreign exchange derivative instrument traded overseas may be partly responsible for the volatility in the rupee and the currency plumbing new depths over the last few days. This was suggested by two studies in the Reserve Bank of India’s Annual Report..........

Read - HBL

Have Indian banks gone to the dogs?

.........RBI deputy governor K.C. Chakrabarty admits Indian banks are under stress, particularly the public sector lenders, but says the situation isn’t alarming. Chakrabarty cites precedents—back in March 1994, gross NPAs at Indian banks made up as much as 19.07% of total advances. For the next seven years, until March 2001, they remained in double digits as a percentage of the total loan book. “If the banks could survive that phase, they would definitely come out of the current crisis, too, particularly when they are adequately capitalized,” Chakrabarty argues..............

Read - Mint

New boy Raghuram Rajan has his work cut out as rupee nosedives

..........The pre-Rajan RBI has moved in the opposite direction by limiting Indians' ability to sell rupees, which investors will interpret as a last-ditch effort to maintain the currency's value at an artificially high level. In Argentina, similar measures recently led to a black market in pesos and further undermined confidence in the country's economic policies. For Mr Rajan, reversing course will be job one.............

Read.........

Growth prospects better but rupee fall to spike inflation: RBI

.........“The emerging macroeconomic scenario for 2013-14 is challenging, amid the wide current account deficit, risks to fiscal targets, persistence of high consumer price inflation, risk of exchange rate depreciation feeding into inflation, slowing growth and deteriorating asset quality,”...................

Read | Business Standard

RBI lists the highs and hiccups

The Reserve Bank of India today had some good news amid the carnage in the rupee. The central bank said the current account deficit (CAD), blamed for the rupee’s slide, would be less than the historic high seen in 2012-13 because of policy measures such as the curbs on gold imports................

Read - The Telegraph

FM IS CALM IN THE RUPEE STORM

..............He also underscored that there was no cause for panic in currency markets and said communication was getting lost in the din. ‘’ Stakeholders must not distort our messages,” he said.The panic, he added, was feeding into other markets. The press conference came after a three- hour long discussion Chidambaram had with RBI Governor Subbarao, governor-designate Raghuram Rajan and other key officials. Both Chidambaram and Subbarao sought to address concerns of foreign investors saying there is no intention of capital controls and that the issues would be revisited as soon as the rupee stabilized.............

Read - FPJ

Awaiting panacea

.............There is a feeling that Rajan takes over his job in Mumbai with one hand tied to his back. But compared to many of his predecessors, Rajan is a young economist, who has no baggage of long government service as it had happened to most Governors.  Subbarao and his predecessors like Bimal Jalan, Y V Reddy were secretaries to the government. There is huge expectations from Rajan that he would wave the magic wand so that the economy would start sprouting growth signals in the next six months as the countdown for a general election has already begun......................

Read...........

The only way out

The Reserve Bank of India (RBI) and the government have painted all of us into a terrified corner as the draconian measures they have been announcing almost daily have failed to halt the continuing traumatic collapse of the rupee. The collateral damage in the bond and equity markets is there for all to see...........

Read | Business Standard

The fallacy of 'dollar = rupee' in 1947

........When I encountered this message, my main objection was that the exchange rate of a currency is not really an indication of its strength. I am sure it is nobody's contention that India of 2013 is worse off than India of 1947. What was funny about the 1 USD = 1 INR posts was that it was justified with an argument that since India had no external borrowings, its currency was at par with the dollar. If low borrowings made up for strong currencies then North Korea might have been a front runner..............

Read...........

Chidambaram meets RBI chief amid rupee crash: report

Finance Minister P Chidambaram has met Reserve Bank of India or RBI governor D Subbarao, according to reports, after the rupee breached the 65 mark on Thursday, hitting an all-time low of 65.56..............

Read.......

Life @ 70

..........While RBI has informally told foreign banks to desist from making any predictions on the Rupee, others are openly betting on the Rupee at 70 becoming a reality soon. A big four CEO says that it’s just a matter of time. His advice is to make sure that companies hedge even if they have not done it so far.............

Read - ET

Forget dollar, Re 1 = 1.5 cents. Why India needs a new rupee

.......................At 1.53 cents to the rupee, clearly the dollar is the wrong unit to compare the currency with. We should now benchmark against the US cent. Seen this way, the rupee is stronger than the US currency by at least 50 percent. So cheer up..............

Read...........

Banking services restored at Indian Overseas Bank

.............Considered one of the largest public sector banks with 3,000 branches nationwide, the glitch "largely affected" transactions, hampering day-to-day operations, they said. IOB Chairman and Managing Director M Narendra said services were affected on Monday and restored on Tuesday............

Read | Business Standard

Aadhaar: Does it serve any purpose now?

..........In other words, there is no uniformity in recognizing Aadhaar number as a valid instrument. In a separate development, Reserve Bank of India (RBI) has proposed to credit card-issuing banks that they should consider Aadhaar number for authentication, when shops accept credit cards for transactions. Such a move, if made mandatory, will involve huge investments for upgrading the credit-card swipe machines.  Banks will resist this move and may..........

Read - Moneylife

PIL questions gold schemes by jewellery firms

.....The PIL has sought an enquiry into gold saving schemes, alleging that they are no different from deposit-taking schemes. The PIL also alleges that there is “no mechanism (to recover money) if any jewellery shop owner or company has gone into liquidation” and such schemes “need to be banned”. While RBI, Sebi and the police have responded to an earlier Right to Information (RTI) application filed by Agrawal stating that the schemes do not fall under their purview, the PIL has sought a fresh enquiry into the schemes by the regulators. RBI has, however, maintained that since Tanishq and similar jewellery firms are not registered with it as non-banking finance companies, the schemes do not fall under its purview. The banking regulator clarified that schemes like Golden Harvest “do not amount to acceptance of deposits”............

Read - Mint

HDFC Bank to almost double two-member branches

............The two-member branch, which is a 250-350 sq ft facility with all the amenities available at other branches, provides the entire bouquet of its services, including phone and Net banking and international credit cards. This concept has been introduced as part of its target of bringing 10 million families (or 40 million Indians) within the banking fold...................

Read - HBL