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.
Monday, August 26, 2013
Paradigm shift in gold policy - Dr.S.S.Tarapore
Taper tribulations - Dr.Subir Gokarn
Economy hit by European crisis: Jadhav
Non-performing managers
......... Dr Chakrabarty did full justice to his reputation at a gathering of bankers recently when he said that the reason for higher NPAs in public sector banks was "non-performing administration": poor project appraisal techniques, herd mentality, lack of accountability, post-disbursal supervision, etc. In short, decision making in public sector banks has been impressionistic rather than information-based. ........
'Note' - coming days will be tough
My View on "The new note on Mint Street":
This is an excellent role analysis for Dr Rajan, the RBI Governor-Designate. 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. Dr Rajan’s challenges lie in (a) how fast he will be able to ‘unlearn’ the IMF lessons and (b) how quickly he will get convinced about the historic dual role of RBI to ensure distributive justice and supporting economic growth and will be able to reframe his arguments to convince North Block that after all RBI has been on the right path and get the necessary support from GOI.
-M.G.Warrier
Subbarao and the hot seat
Usually, most people think they are stepping in to end a crisis. But the self-effacing outgoing RBI Governor D. Subbarao hopes the end of his tenure will make a difference to the state of economy. Speaking about the macroeconomic environment at a public meeting in Hyderabad recently, Subbarao said: “Many people ask me when the economic crisis will end. Actually, the latest round of crisis began when I took over. Hence, it should end when I demit office in September.’’ But, then, economics works in mysterious ways. Subbarao is all set to move from the hot seat, but is the economy ready to change tack? Doesn’t seem so.
History would etch his name in gold
The well-deserved appreciation of Dr Subbarao’s tenure as RBI Governor in this article echoes the sentiments of thousands of RBI-watchers. Coming from a person who has been breathing, drinking, talking and writing monetary policy, inside and outside RBI for about half a century now, this is a well-deserved honour, which will add strength to Dr Subbarao’s convictions, making him fit and confident for further valuable contributions which will guide India’s economic development when the country is crossing through a tough transition. The mention of the purchase of 200 tonnes of gold in 2009 to diversify the forex reserves as one of Governor Subbarao's outstanding achievements and the assertion that ‘history would etch his name in gold’ will remain as a Guru’s guidance to future RBI Governors.
- M.G.Warrier
If Dr Reddy, his predecessor from the same cadre has attracted global attention, Dr Subbarao, like none of his predecessors has been attracting the columns of the media domestically. Unfounded criticism of his policy pursuit that happens to be the basic vanguard function of the RBI against rising inflation is highly regrettable. The falling rupee is in fact, a market correction and it is very likely to stop at the current level of Rs.65 a dollar even amidst the real of Brazil similarly performing among the BRIC nations and even China showing decline in growth rates against not so rising interest rates or inflation. In fact, Dr Subbarao's regime faced both policy paralysis of the government and unstable global financial situation accentuated by the huge sovereign debt of Europe and Greece furthering the recessionary impact. His posture of upholding the independence and autonomy of the RBI as the regulator would be remembered in the economic history of India as only a savior.
- Yerram Raju
D. Subbarao’s mixed record at RBI
...........Subbarao has been in charge at a very difficult time, with global instability as well as growing domestic economic problems. Our view is that his record has been a mixed one and has to be understood against the complicated times in which he was managing the monetary affairs of the nation.
Transparency in policy - Its Subbarao's legacy
It is too early to pass judgments on Dr Subbarao’s tenure as RBI Governor. Former RBI Deputy Governor S S Tarapore described the purchase of 200 tonnes of gold in 2009 to diversify the forex reserves as one of Governor Subbarao's outstanding achievements and said that ‘history would etch his name in gold’. Initially, it is common knowledge that, he was picked up under the presumption that he would be “North Block’s representative” at Mint Road. But he quickly started talking with elegance and dignity that have got deeply scripted in RBI’s tradition and did not hesitate to change his own views which were based on the information given to him by ‘Babus’ in North Block. The academic background coupled with IAS grooming helped him have his way when intuition told him that the central bank’s policy has implications much beyond immediate political gains or the 2014 Election prospects. Among other things his tenure as Governor will be remembered for the transparency in policy perceptions, the message that government and central bank can have different perceptions on inflation and growth and still co-exist, bringing back the focus on financial inclusion and ‘knowing when to stop’.
- M G Warrier
The talent pool in Macro and Finance
.....Dr. Subbarao's appointment as RBI Governor shows up, unfortunately, the bankruptcy of a bureaucratic career system that permits outstanding IAS officers like him -- an accomplished urban economist -- to be parachuted into a situation which requires a lifelong acquired feel for monetary policy and the numbers behind it. From the many central bankers I have known around the world and in India (many of whom I had the privilege of working with, and others whom I came to know socially), and have observed closely over the years, I conclude that central banking is still more an art (that requires extraordinary prescience, instinct and judgement) than a precise econometric science........
Central banking turned upside down
..........The author acknowledges the "rare clarity" in Raghuram Rajan's presentation at the Jackson Hole Conference of 2005. He "had an astute understanding of the ways in which the financial industry, with misguided compensation policies that encouraged risk taking, was making the world a more dangerous place." The author has done a comprehensive survey of all the developments during the crisis, including what happened in confidential negotiations to resolve the problems facing the US and Europe...............FAULT LINES - Review of Dr.Raghuram Rajan's book
India finds economic leader in Chicago
........... Though the Chicago School of economics generally frowns on government intervention in the marketplace, Rajan contends that deregulation went too far in recent years. That enabled financial powerhouses to promote their interests at the expense of free-market competition. Rajan is taking a leave from his tenured post at Chicago's Booth. We expect his message from India will be the same as it was from Chicago: Sober up.
With Rajan at Mint Road, is sovereign bond option back on the table?
..........Rajan, the governor-to-be, has always considered sovereign bonds as one option to finance the widening current account deficit (CAD). A change of guard at Mint Road on September 5 might reflect this new thinking at RBI, which is considered orthodox in its approach on such issues..................
The missing dream team
.............First, let us look at the common players in key policy-making positions then and now: Manmohan Singh, who was then the finance minister, is now the prime minister; P Chidambaram - commerce minister then and now the finance minister; C Rangarajan- deputy governor of the Reserve Bank of India (RBI) and a little later RBI governor then and now the chairman of the prime minister's economic advisory council and; Montek Singh Ahluwalia, who was then secretary in the commerce ministry and later in the finance ministry and is now the deputy chairman of the Planning Commission. Even Duvvuri Subbarao, at present the RBI governor, was a joint secretary in the finance ministry then, though he was not seen as part of the top policy-making team dealing with the 1991 crisis...............
Bank staff wage revision V/s Central Govt staff wage revision........................
...........For updating bank staff and negotiating team we are providing here some banking professional projection of salary based on 4440 point DA (60.15% means 401 slab) merger and gin of central govt staff in 6th pay commission. We also obtained projected gain in 7th Pay Commission..........
Bank unions call for all-India strike on September 25
..............“It is naked double standard and dichotomy that while private sector banks are being encouraged and allowed to be expanded, public sector banks are sought to be consolidated and merged. “This is totally against the objectives of public policy under the nationalisation of banks envisaged and committed by the Government,” ....................
Public sector banks faces shortage of 56,000 employees
............"This year, public sector banks are expected to add 10,000 branches of which 2,000 are to be by Regional Rural Banks. Correspondingly, there will be recruitment. In fact, all the banks put together are expected to recruit some 50,000 persons in the current year,..............
Banks plan to open 2,361 branches in next 2 years in Odisha
The domestic scheduled commercial banks plan to open 2,361 brick and mortar branches in Odisha during 2013-15. As per Reserve Bank of India (RBI), the number of functioning branches of scheduled commercial banks in the state is 3,472. "As reported by the State Level Bankers' Committee (SLBC), banks plan to open 2,361 of brick and mortar branches during 2013-15," informed Union Minister of State for Finance Namo Narain Meena...........
No intention of grabbing private land: CM
........"There is no intention of the State Government to grab private lands in Mantripukhri for the purpose. The officials of RBI did arrive here at Imphal to check suitable site for setting up a branch. The RBI officials along with the State Government officials inspected some of the areas to the north of the IT Park at Mantripukhri and had asked whether it could be feasible to open a branch of RBI in the area. But there was no discussion among the officials to confiscate the land of the area..............
Inter-State counterfeit currency racket busted
...........Explaining the modus operandi, the police said that the accused would open an account using fake documents in various banks and push fake currency in bulk in the form of deposits during peak hours, to avoid undue attention of the bank staff. The accused would deposit less than Rs 50,000 since any deposit more than Rs 50,000 would require PAN card details from the depositors, as per the RBI norms. Once the money was deposited in the account, the accused would withdraw the amount and escape, the police said.............
Getting rid of golden fetters
.........There are other options that RBI could consider to make the GDS more attractive for the banks, allowing them to use gold deposits to fetch dollars. Gold holdings with the private sector are estimated to be in the range of 7,500 to 10,000 tonnes. Even if a small part of these reserves are channelled into the banking system, they could help bolster RBI’s foreign exchange reserves and increase the pool of financial savings..................
White-label ATM rollout in a limbo
.......“In-principle approval to 12 others does not mean much. The idea is to trigger them into action. Maybe, they are waiting to see whether Tatas white-label business makes money and then start their operations,” the RBI official said. However, these companies have another grouse – the RBI has not yet granted them their demand to extend the licence period to 5 years from the current one year. The companies say this initial authorisation of one year is too less to plan long term and attract equity...............
ATM challenges in India: power, environment and security
......We also do cash management. We have tools, which help us identify what amount of cash is required to be put in each ATM based on data that we collect from ATMs. It is not efficient to have a large network of ATMs stacked with cash without transactions. The data helps banks take a conscious decision on how much cash to put in a particular ATM so that it neither reaches a cash-out situation, nor does it remain stacked with idle cash. We also coordinate with cash-in-transit agencies, which put cash in the ATMs whenever required.............
Finance Ministry all ears as banks line up plans to boost forex inflows
..............While the dollar supplied by the banks would add to RBI's forex reserves, the arrangement would entail RBI bearing the exchange rate risk and offering a cheaper hedging arrangement than what banks have to otherwise pay if they cover the exchange fluctuation risk in the open market. "This would be attractive for banks which can use the money to buy government bonds and lend. Also, their overseas branches can offer leverage to NRI clients," said a treasurer with an MNC bank...............
Food security plan to increase govt's fiscal stress: Bimal Jalan
....Jalan, who spent time in Parliament as a nominated member after stepping down as RBI governor in 2003, said that while the food security idea was noble and had his support, it was important to launch it when the government can manage the large costs associated with it. "If he (finance minister P Chidambaram) is trying to contain the fiscal deficit and control expenditure, it is important to look at the costs of financing such a programme, especially when the economy is not in a good shape,".......
Govt appoints panel for land deals under FEMA
........The committee would be chaired by joint secretary debt management unit, government of Goa while member secretary would be state registrar-cum-head of Notary services and members are officials of Reserve Bank of India, under secretary revenue and debt management unit and deputy collector North and South Goa..............
The joke is on the rupee
....“The dollar is on an escalator and the rupee is on a ventilator” goes one witticism. “I heard the rupee is falling, please tell me where I can collect it?”, one network user wants to know. “Finally it has happened…After decades, beer is now cheaper than petrol! There will be a new slogan: Just Drink, Don’t Drive!” and “A kg of onions can now be bought at the Dollar Store.”...........
Rupaiah goes for a song
When I see the rupee tumbling, I turn nostalgic and try to hum Kishore da’s song in Chalti ka Naam Gaadi, “paanch rupiah baara aana”. I used to wonder why only “paanch rupiah baara aana” when our rupee was trying to stand on its own feet against the adolescent dollar in the 1950s? The rupee those days was coy and kept a distance from getting weak-kneed by outside cupid currency overtures and held its ground.............
Rupee Was Bound To Fall
The Indian rupee has been driven to a new low of Rs 65 to a dollar, largely by the uncontrolled current account deficit
and the decline in economic growth. RBI and the finance ministry are
now running helter skelter. But their attempts at controlling the
exchange rate appear to be measures that treat the symptoms rather than
the disease...........
Read - TOI
Read - TOI
Fears for the rupee hold back tears for the onion
...........As the Nobel prize-winning economist Robert Mundell pointed out a long time ago, a government, through its central banks policies, could either control the quantity or the price of its currency but not both. A central bank which fixes the price of its currency in terms of one or a basket of foreign currencies, in other words, operates a fixed exchange rate system, loses control over the quantity of money that circulates in the economy and, therefore, loses control of the inflation rate..........
My View on "The fallacy of 'dollar = rupee' in 1947"
In 1947, India had surplus sterling balance which ,unfortunately, we soon frittered away. Although hints were dropped to Shri B.K.Nehru, then Under Secretary in Ministry of Finance by the Treasury of England that "If we (INDIA) shift our forex balance to US$account as we (England) may devalue its £ or words something to this effect I do not remember" (Ref Nice People finish second by B.K.Nehru). The net result was our Re weakened vis-a-vis $, currency of predominant power whereas £ was continually on decline due to ravages of war. B.K.Nehru says he was given training in ECD, RBI, Mumbai in 1940 (He was 1935 batch ICS) and he took up the matter with Finance Secretary who failed to understand anything. However, the net result was we lost considerable amount of forex reserves.
- Sitendra Kumar
Rupee slide temporary: Adi Godrej
.....“The rupee going at 65 is ridiculous. But it doesn’t mean a collapse of the system. I am glad that the Reserve Bank of India has intervened. There should be more interventions . If we do that, and with the good monsoon, the economy will return to 8 per cent growth in the not-too-distant future,” .......
Why Indian rupee will go to Rs19 vs Dh1
.......At least two major global investment banks are maintaining that the beleaguered Indian rupee, which is already down about 15 per cent since the beginning of 2013, could see a further deterioration of about 10.5 per cent in the near future and slump to Rs70 against the US dollar. That would equate to a level of Rs19 against the UAE dirham, and if attained, this exchange rate is likely to prompt a surge in remittances by expat Indians in the UAE and across the Gulf and indeed the world............
Want to save rupee? Think outside the box, say experts
The rout of the rupee has caused angst and panic in the country. The many measures announced by the Government and the RBI seem to have barely worked. Are there out-of-the-box solutions that can support the currency?............
Inside Information behind the collapse of rupee
........According to the research done by an analyst and his associates of sensitive data, "The run on the rupee began four months ago after market players got private assurances that neither the Finance Ministry nor the RBI would react vigorously to a steep fall in the value of the rupee." Since then, the officer alleged, "These speculators have been in daily contact not only with intermediaries but often with policymakers themselves to get inside information on measures to be followed." But officials of the Finance Ministry, RBI and the Commerce Ministry are clear that this charge is false, and that "no senior official would ever leak sensitive information except to an authorised source"........
Light at the end of the tunnel?
........At a time India’s policy-makers are clutching at straws, the news that the rupee has some good company in its decline, can be considered a positive. Albeit in a cynical way, currencies of many emerging markets, the Malaysian Ringgit, the Indonesian Rupiah and the South African Rand — among others, have been battered along with the rupee. The common factor behind the decline — fears that the U.S. Federal Reserve would soon indicate the phase out of its stimulus programme.........
Danger zone
..............Nepal as such can do very little on its own to stabilize its currency against the dollar, let alone reverse the alarming decline. It is in no position to remove the peg with the Indian rupee and even if it is removed, there is no guarantee that the Nepali rupee would halt its slide against the greenback. A decline in the value of currency is a mixed blessing.................
Jalna cops book 29 cooperative bank members
..........Accepting the plea, the government appointed a special auditor class-II, who after auditing, made five reports of each year and submitted his 28-page report on December 29, 2010 and recommended registering criminal cases against the violators of RBI norms. A copy of this was also submitted to the divisional office. "On June 5, 2013, the divisional joint registrar of accounts directed the police to lodge a complaint, but still no complaint was registered. As a last resort, the matter was brought to court, added Kakde. "The amount misappropriated can only be established after a re-audit by the government. The deposits kept by the customers were distributed without even maintaining basic documents. Most of the RBI norms were violated in the distribution of loans," Kamtikar said............
Remit tax dues in advance: RBI
............The Reserve Bank of India (RBI) has advised income tax payers to pay tax dues in advance taking into consideration the heavy rush for remitting dues in the RBI towards the end of September.............
IOB clarifies
This refers to Ajoy K Das' letter "IOB's glitch" (August 23). The author claimed that when the Bank's operations came to a standstill, the chairman and managing director (CMD) was out of station inaugurating the Bank's 3,000th branch. In fact............
Rahman Khan to inaugurate IIM Kashipur's course on Islamic Banking
..............The two day programme will be inaugurated by K Rahman Khan, the Union Minister for Minority Affairs and Prof Gautam Sinha, Director, IIM Kashipur will address the valedictory function. Rahman Khan has recently written to the Reserve Bank of India to allow Islamic banking in the country. "The program is the first such executive course offered by a leading management school in the country on Islamic banking, which is considered the largest alternative financial system in the world today, growing at double digit growth rates with a presence in 75 countries and a total size of approximately of $2 trillion", Program Director and Chairperson (Planning & Development) Prof Baharul Islam said in a statement...........
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