| ......................"May you live in interesting times. I can hardly complain on that count. I had come into the Reserve Bank five years ago as the ‘Great Recession’ was setting in, and I am finishing now as the ‘Great Exit’ is taking shape, with not a week of respite from the crisis over the five years."...................... |
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, September 2, 2013
D Subbarao to say goodbye to Mint Street after 5 stormy years
A swansong with a few sober thoughts: Modern finance calls for unified regulation
The RBI should be as zealous about rendering accountability as it is about guarding its autonomy, said RBI Governor D Subbarao in his swansong. He is wholly correct. Greater accountability without undermining its independence will bring transparency in the functioning of RBI and make regulation more effective. Subbarao's suggestion to have an institutional mechanism wherein the governor presents a report on the RBI's policies and outcomes before the Parliament Standing Committee on Finance twice a year and also answers questions from the members of the committee makes eminent sense...........
Raghuram Rajan takes over RBI amid crisis
India’s new central bank chief Raghuram Rajan takes over the helm this week as the nation grapples with its worst financial crisis in decades, sparked by a plunging rupee, a record trade gap and a sharp economic slowdown. Rajan, a high-profile former International Monetary Fund (IMF) chief economist renowned for predicting the 2008 global financial collapse, moves into the Reserve Bank of India’s office on Thursday, replacing his retiring predecessor Duvvuri Subbarao..........
Indication for Dr Rajan, from where to start
With the exception of a couple of newspapers, the print media refused to convey the content of Dr Subbarao’s August 29 speech. A reference to ‘walk alone’ comment made in the middle of the speech to wake up the audience has been flashed as if the speech was built up on a theme targeting FM. I agree with the observation ‘It would be far better, therefore, if the speech is seen for what it is: a call to respect institutions and institutional independence. The strength of a democracy lies in the strength and independence of its institutions. Governments come and governments go; institutions go on for ever.’ The speech ‘sets the records straight’ and gives an indication for Dr Rajan, from where to start.
- M.G.Warrier
RBI to postpone mid-quarter review
...........The mid quarter review of RBI was originally scheduled on 18 September. Now, it will happen a few days after the US Federal Open Market Committee (FOMC) meeting, which is scheduled on 17-18 September, RBI sources added. The mid-quarter review would also be the first policy announcement by Raghuram Rajan who takes over from D Subbarao on September 5..............
A Governor and his legacy
......But all this is history. The RBI Governor’s parting shots at the Government, or the present Finance Minister’s not-so-veiled criticism of his predecessor’s inaction, may generate a useful debate about what led to the present crisis. But it will not help in dealing with the problem at hand, which is not inflation as much as a deepening growth and investment slowdown.....................
Hair today
........ "I know you are all waiting for one statistic, which is how much did the governor pay for his haircut so that you can compute the governor's haircut index of inflation. I have decided not to reveal that number for two reasons,".............
Reactive Bank of India
.........Even as RBI traces the origins of the crisis to global factors, it has never tried to use the global or regional network of relationships to solve the problem. Put simply, RBI has been reactive, unimaginative and insular. The result is that the central bank continues to stick to antiquated, short-term, measures aimed at micromanaging markets that are proving to be ineffective...............
Videocon chief Dhoot may not join RBI board
Soon
after Aditya Birla Nuvo applied for a banking licence on July 1, parent
group Aditya Birla’s chairman Kumar Mangalam Birla stepped down from
the RBI board to avoid a possible conflict of interest. But that hasn’t
stopped the finance ministry from identifying Videocon’s Venugopal Dhoot
as a possible replacement for GMR’s G M Rao, who recently stepped down
from RBI’s board. A list published by the central bank shows Dhoot’s
Aurangabad-based company Value Industries (formerly Videocon Appliances)
as one of
the aspirants for starting a bank in India. However, since the stakes
are high for the Videocon group, there are indications that Dhoot may
not join RBI’s board at this stage.
TOI
Principal issue - A.Seshan
........ Unfortunately, the return prescribed under Section 42 of the RBI Act, 1934, does not provide for a separate reporting of principal and interest on domestic business, although it is available for foreign currency liabilities and assets. It may require an amendment of the Act to get the bifurcation of the total into principal and interest for domestic business but.........
Parrikar to preside over NPA bank meet
..........At the suggestion of the Reserve Bank of India (RBI), the meeting has been convened by the State government in collaboration with lead bank State Bank of India (SBI), with 21 banks including 11 nationalised banks, seven cooperative banks and three private banks, whose mining-related NPAs have crossed Rs. 10 lakh, said an SBI official on Saturday. RBI Regional Director, Maharashtra and Goa J.B. Bhoria will attend the meeting where bankers and government officials will make submissions, raise concerns and suggest measures to give relief to the borrowers unable to repay their instalments after the mining ban from October 5 last year...............
CBI wants vigilance staff to watch over loan recast
......The CBI has also suggested that bank frauds can be curbed if the CVOs participate in all cases of consortium lending in which their respective bank is a member. With banks shifting the blame to one another, it is becoming difficult to fix accountability, the investigating authority believes.............
The Joker in Rajan’s Pack
.........The reason is that the RBI is not only the country's monetary authority but also the supervisory authority for its banks. In the brouhaha over the falling rupee, the steady deterioration in bank balance sheets, especially public sector banks, has been brushed under the carpet. In many ways, it's like a slow time bomb ticking away in the background, even as all eyes are on the rupee. But troubles never come in halves!..............
Toss it higher !
The sliding rupee has a spawned a veritable rupee joke industry. Here is one doing the rounds: A journalist, fed up with asking questions about the Indian economy, decided to seek Manmohan Singh’s view on sports. “Which game do you like best?” he asked. The PM replied: “Cricket when played in India.” The journalist went on: “Which part of cricket do you like, batting or bowling?” Said our economist Prime Minister: “I like the toss at the beginning of the match in India.” The bemused journalist asked why. Manmohan smiled and said, “Because it is the only time I see our rupee going up!”
Symbolic issues
The historic slide of the rupee has inspired many jokes in the social media but in the Indian financial world, where a lot of money rides on superstition and auspicious timing,............
Is not the coordination between RBI and the Govt inevitable? - Dr.T.V.Gopalakrishnan
....The crisis of confidence has led to economic crisis. The economy has all potential to come back on track and the only solution is for the Government and the RBI to come together and act without having any ego on supremacy............
Read.........
Read.........
RBI withdraws supervisory restrictions on MCC Bank
.........Chairman of MCC Bank Melvyn D Cunha expressed his happiness over the withdrawal of these restrictions by RBI and pointed out that the Bank had made tremendous progress in the last five years after his team was elected to take control of the management. He said, “These restrictions were like a major hurdle in our efforts to chalk out any growth plans. Despite these stringent restrictions the bank was able to have a turnover of over Rs 426 crore in the last five years. This was possible because we were able to streamline the administration.”...........
Futures market begs a second glance - DR. N. A. MUJUMDAR
..........While structured credit products became fashionable in America and Europe, there was a lost of pressure on the Reserve Bank of India (RBI) to permit the introduction of such products in India. When Dr. Reddy, the then Governor RBI resisted these pressures, he was dubbed as a conservative. In hindsight, it is now recognised that it is his conservatism that saved India from the global financial crisis of 2008!....
Investment In Indian Agriculture - Book review by P. P. RAMACHANDRAN
............The general performance during the last two decades lifted our economy from a low growth to high growth trajectory, making India one of the fastest growing economies. Service Sector growth has been strident. The major challenge has been to identify the sectors, regions and socio- economic groups where the pattern of “ inclusive” growth could lead to broad- based growth. Agriculture is identified as one of the major areas of focus for making growth more inclusive. The deceleration in the growth of agriculture is one of the major national problems. It is obvious that there is an imperative need for a solid enhancement of research extension, education, infrastructure and natural resource management...........
RBI move on PACS ‘anti-farmer’
The RBI’s move to convert Primary Agricultural Cooperative Societies (PACS) as Business Correspondents of Central Cooperative Banks in the districts concerned has come under fire. The All-India Cooperative Bank Employees Federation (AICBEF) has not only opposed it tooth and nail, but is also gearing up to protest this “anti-farmer and anti-people” move, said its General Secretary P. Balakrishnan.’..............
Two scams, identical roots
..............It was one man's high jinks, but others, including foreign banks, were playing a similar game with him - they were taking advantage of the Reserve Bank of India's laxity as the regulator and supervisor. (The role remains blurred even today when it comes to consumer finance issues.) It was more a banking scam than a stock market scam...............
ICICI Bank organises Coin Exchange Mela
......The ceremony was inaugurated by M.K.Rastogi, Assistant General Manager, RBI and Rita Maheshwari, Manager, RBI...........
Soon, ATMs will be more than mere cash dispensers
......The operators of these ATMs, or Automated Teller Machines, will have tie-ups with multiple banks and, apart from regular features, will also offer value-added services such as remittances, air, train and bus ticketing, and third party advertisements. This means that these players, which include Tata Communications Payment Services (TCPSL), Muthoot Finance and SREI, will act as financial services kiosks and make money from services beyond mere cash withdrawal. And that’s the way RBI has envisioned them — one-stop shops for major financial transactions............
Is it money, honey?
.........So, next time you hand me a currency note and I pull out my magnifying glass and ultraviolet torch, do not be surprised. I'm just checking. After all, who knows what a counterfeiter or one who has been cheated by a counterfeiter really looks like!
RBI says no plan to monetise temple gold
................“There have been some news stories in the media in the past couple of days about the Reserve Bank of India (RBI) discussing or considering options of converting idle gold, including that available with temple trusts, into bullion,” an email from an RBI spokeswoman read, adding, “The Reserve Bank clarifies that no such proposal is under its consideration at this juncture.”.........
Gold Standard
My View on t "Govt plans to set up bullion bank to mobilise idle...":
It was reported in the media during July 2012 that, observing that gold imports are contributing substantially to India's current account deficit (CAD), an RBI panel was looking into the aspects of devising some alternative routes like bringing out the gold which already exists in the country. The panel was also to examine whether domestic stock of gold can be brought into the mainstream by devising appropriate financial instruments.
People’s emotional attachment to gold in metal form will come down only if the government is able to infuse confidence about the effectiveness of ‘paper gold’ (someone corrected me recently, it should be ‘electronic gold’!) as a store of value with easy liquidity. Awareness should also be created about the loss involved in abuse of gold for show-off purposes like gold-plating of roofs, statues and flag-masts or even in frequent re-making of ornaments.
India has every reason to unearth and put to productive use, the country’s gold stock scattered and hidden in households, religious institutions, moneylenders’ lockers and with people who conceal their wealth for various reasons. Present move, if accompanied with standardization of gold stock (with institutions and individuals) is capable of saving India from many of its forex-related problems.
Reports indicate that RBI could at last persuade GOI to understand the significance of the domestic treasure of gold lying idle in the country and though the process is slow and reluctant, the powers that be is waking up. If we are able to put at least some 10 per cent of the domestic stock of gold to productive use in the next 5 years, the country’s gold import bill will come down by 50 per cent. This can be achieved by fast-tracking the initiatives for:
• Introducing gold-backed financial instruments which are not dependent on imported gold (The tiny instruments now available in the form of Gold ETFs and gold coins are indirectly dependent on import and have not attracted significant investor-interest)
• Bringing a portion of household gold stock by offering some instrument like ‘Gold Bond’ backed by government guarantee to return solid standard gold at the time of redemption which could be, say, after 10 years and a small return in the interregnum
• Infrastructure, technology support and linkages for gold refining and certification facilities of international standard
RBI and GOI could consider even deficit financing for procurement of domestic gold as this could be the beginning of partial ‘Gold Standard’.
- M.G.Warrier
Banks approving loans on condition borrowers don't buy gold
........Banks have placed the condition that borrowers should not use even personal loans to buy gold, a senior official of a private sector bank said. The measures follow directions from the Reserve Bank of India to banks and NBFCs that are aimed at reining in demand for the yellow metal. The RBI and the government have taken steps to curb demand for gold after imports of the metal widened the current account deficit. As per existing guidelines, no advances can be granted by banks for the purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds..................
The price of not stocking forex
.........Looking back, the one cardinal error committed during Duvvuri Subbarao's tenure as Reserve Bank of India (RBI) Governor has been not to sufficiently stock up the country’s foreign exchange reserves when the situation permitted it. This is unlike previous Governors, especially Y.V. Reddy and Bimal Jalan, who utilised every available opportunity to add to the reserves, which could serve as insurance against speculative attacks mounted on the rupee. The absence of such a war-chest has never been felt as much as now, when all that the Government and the RBI can do is to watch from the sidelines as the rupee is being subjected to an unprecedented bear attack.............
No question of going to IMF: Rajan
........Rajan, who will bid farewell to North Block this week and take over as the Reserve Bank of India (RBI) on September 4, said there were enough dollars with India to deal with the situation. “There is no question of that. We have enough reserves,” he said...............
Mayaram meets treasury heads of foreign banks
.........“What is significant is that the RBI does not have any control on this market. In the RBI’s annual report released recently, it has admitted that there is deeper correlation between the rupee movement in the onshore and offshore market...........
Montek Singh Ahluwalia rules out approaching IMF over economic woes
............"Our current economic situation does not warrant it. I do not anticipate it in the near future," Ahluwalia said, adding "India's reserves are comfortable." Ahluwalia was asked to comment at a news conference whether India would seek outside help like approaching the IMF for assistance against the backdrop of a wave of poor economic news for the country........
Why Sri Lanka is losing sleep over the Rupee
KOLKATA: Sri Lanka's central bankers are probably more worried about the accelerated fall in the Indian rupee in the past four months than the Reserve Bank of India Governor Duvvuri Subbarao. And that's good news. The worst performance of the Indian rupee in Asia Pacific this year at 16% depreciation to the US dollar is probably doing more good in boosting exports than the numerous policies from the government...........
The Indian economic mess
The Indian economy is in a deep mess. It has lost momentum, retail inflation remains high and the rupee has tumbled. Despondency has replaced the all-round hubris of the boom years. It is worth examining what went wrong in the first place. Here is the story in 10 charts...........
PM, Chidu and Montek ‘ failed’ economists: BJP
....While holding the prime minister responsible for “ unabated slide of rupee”, senior BJP leader Murli Manohar Joshi also termed Finance Minister P Chidambaram and Planning Commission deputy chairman Montek Singh Ahluwalia as “ failures”. “ As far as economy is concerned, Manmohan, Montek and Chidambaram have failed........
Earn at least 6L/yr for SBI car loan
The
State Bank of India (SBI) has tightened the eligibility criteria for
its car loans and will now extend finance to only those earning over Rs 6
lakh per annum. The bank has cited inflation as the reason behind the
move, but, sources say, that the bank is being cautious given the
slowdown in the economy..............
Read - TOI
Read - TOI
Melwyn Rego elevated to Deputy MD of IDBI Bank
Melwyn Rego has been appointed by the Government as Deputy Managing Director of IDBI Bank. He took charge on August 30. Prior to his elevation, Rego was Executive Director............
Samvidhan Chowk: The Jantar Mantar of Nagpur
.........Former traffic commissioner Jeevraj Dabhade, however, opines that there should be certain designated places in the city for such protests but he does not deem RBI square fit for the position. "Several times, the number of people who turn out for such dos are much more than the given number as many join in impromptu. Since it is flanked by many important government offices, RBI and the railway station, RBI square is a vulnerable and sensitive spot..............
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