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Saturday, September 7, 2013
RBI Governor meets Maha CM; Chavan seeks banking sector help
Cubiclenama | An open letter to Raghuram Rajan
....Third, it is always a good idea, at least in the beginning, to act as if RBI is functioning very nicely indeed and very little needs to be changed. Say things such as: “My job is to merely let this august institution continue to function in the august way this august institution has always functioned augustly.” Avoid saying things such as: “For too long RBI has been a haven of ineptitude and incompetence and I am going to change all that starting this very moment, oh dear,...............
Is Re-based trade settlement a good idea? - Yes
........The decision on invoicing in a particular currency depends on the outlook on the exchange rate; when sentiment is weak on rupee, an overseas seller will not like to have a sale invoice in rupees while the overseas buyer will prefer a foreign currency invoice. This stresses the need to build confidence among overseas entities to invoice in rupees with Indian companies. The need of the hour is to encourage importers, rather than exporters, to invoice in rupees which would reduce the trade gap in dollar terms..............
Is Re-based trade settlement a good idea? - No | Dr.S.S.Tarapore
........The institutional memory of the Government and the Reserve Bank of India (RBI) should have warned us about the pitfalls of rupee-based trade. Again, how would such agreements bear up to India’s 1994 commitment to the IMF under current account convertibility? Rupee-based trade is an accounting device and imports of goods and services by India have to be paid by exports from India of goods and services — in other words, there is no free lunch...........
Banking Ombudsman is here to sort out complaints
......Addressing the annual press conference on Friday, RBI, Patna's AGM Gyaneshwar Pathak and Banking Ombudsman (Bihar and Jharkhand) Patric Barla outlined the highlights of OBO scheme, which was introduced by the RBI in 1995...............
RBI opens I-T remittance centres at leading banks
......Regional director of the Bank, P Kumar in a press note issued here has said that the the rush for remitting income-tax dues through the Reserve Bank of India has been far too heavy towards the end of September and it becomes difficult for the Bank to cope with the pressure of receipts although additional counters to the maximum extent possible are provided for the purpose. As a result assessees have to wait in long queues at the Bank for unnecessarily long periods. “To obviate the inconvenience involved, assesses are advised to avoid last minute rush by remitting their Income-tax dues sufficiently in advance of the dues date, P Kumar added.........
Read - Nagpur Today
The QE that no one noticed
........What is the key take-away from this definition? It is that when the size of the central bank’s balance-sheet increases, it effectively delivers easy/easier monetary conditions — reflected in low/soft interest rates — to the broader economy. With this explanation in mind, look at the following numbers. The size of the RBI’s balance-sheet in March 2002 was close to Rs 3,50,000 crore. In March 2013, it had ballooned to as much as Rs 22,00,000 crore. If this is not QE, what else is?..................
Subbarao’s innings
D. Subbarao richly deserves the compliments paid in “Subbarao’s innings: End of a turbulent tenure (Business Line, September 4.) In standing up to the Finance Minister he has proved that gentleness has a power of its own. Had he been at the helm of the Bank of England or Federal Reserve, his mettle and personality would have received more accolades. It remains to be seen how the powers-that-be recognise his undisputed talents and skills.
C. G. Kuriakose, Kothamangalam (HBL)
Raghuram Rajan: A New Posterboy for Indian Leadership?
.......But ever since he was named the next governor of the RBI, media coverage of Rajan has been equal parts nauseating and bemusing. In article after article, gushing journalists have cited his long list of academic achievements. His preppy, good looks have also received disproportionate coverage. The country’s leading business newspaper, The Economic Times had no less than six photographs and illustrations of Rajan on the day after he took over from his predecessor D. Subbarao, including one that cast him as a cool James Bond-esque figure poised to reclaim the Indian rupee’s “stolen” value and bring the mojo back to India’s spluttering economy (low growth, high inflation, a treacherous current account deficit)........
When Raghuram Rajan took over Rajnikanth on Twitter India
....The Twitterati too wanted to express their happiness as the trend #Raghuram Rajan Facts caught up pretty fast after the close of market hours on Friday. That was the impact of just one speech from the new RBI Governor who is now being hailed as the savior of the country’s economy. His superpowers are being compared with none other than The Rajnikanth!.......
Proxy fame
.......It took a moment for the person to realise what was happening before he considerately told them, "I'm not the Governor." This sent a wave of laughter through the conference hall prompting Deputy Governor Urjit Patel to joke, "We should play this game more often!"
India’s new bank governor has hands tied
..........First of all, the RBI’s suave new governor has no control over what really ails India. Sure, he can try to defend the rupee and get a handle on India’s 10 percent inflation. He can use his international credibility to soothe markets as Ben S. Bernanke and the Federal Reserve withdraw stimulus. Even the most respected central banker, though, cannot stop politicians from spending without accountability. Rajan cannot root out corruption, make the government more transparent, or attack the red tape that is deterring investment and strangling growth...........
RBI chief Raghuram Rajan to hold media interaction post September 20 policy
The Reserve Bank of India's new Governor Raghuram Rajan will address the media after the central bank's mid-quarter policy review on September 20. Previous governor Duvvuri Subbarao had only addressed the media at the end of RBI's quarterly policy reviews...........
Lucky general?
The Napoleonic quote about preferring lucky generals to good ones doesn’t do justice to the great start RBI Governor Raghuram Rajan got off to, but not too many Governors can boast of a 248 paise appreciation of the rupee, 304 paise in the offshore non-deliverable forwards market, 1035 points in the Sensex and a turnaround in the FII market with $581 million coming in on Wednesday and Thursday. All this, without making the obligatory cut in interest rates, the only thing that seems to excite marketmen these days..............
The man for the moment
........What is fascinating is that Raghuram Rajan in his first speech as RBI Governor mentioned that the rupee needs to be internationalised. “This might be a strange time to talk about rupee internationalization, but we have to think beyond the next few months. As our trade expands, we will push for more settlement in rupees. This will also mean that we will have to open up our financial markets more for those who receive rupees to invest it back in,” he said. .........
New RBI boss has made the right noises, making markets smile again
.....The government, as former Governor, D Subbarao, constantly reminded us, must play its part and push through politically tough reforms needed to fix the economy. We are under the constant threat of a sovereign rating downgrade and our credit rating is just one notch above junk status. By the time Rajan makes the first monetary policy statement of his term on September 20, the US Fed would have taken a final call on tapering of quantitative easing. Markets will, meanwhile, keep waiting for what he promised in the first speech — a broader roadmap of reforms. Will RBI reverse the trend and cut policy rates in its next monetary policy review? If that happens, it will be a big step for Rajan in the many long strides he must take to push India’s economic growth.
Appeasement towards few should be Rajan’s policy
......It is the best way for Rajan to begin his term. Appeasement towards few should be his mantra under these trying circumstances. Win the markets and the people over and the rest will follow suit. Importantly, however, he needs to surround himself with a team of able advisors.............
On-tap licence good idea, but are there shortage of banks?
.....Yes, on-tap licenses will take away the hassles of opening a new bank, but what attracts me most are boutique banks. We don't have many specialized organisations having domain knowledge. Any number of boutique banks with a lot of domain knowledge will be a great help. They will be able to bring new products and develop new delivery channels. New mechanisms can be evolved.............
Dhoot counters RBI statement on bank licence application withdrawal
The Reserve Bank of India (RBI) on Tuesday announced that the Venugopal Dhoot-promoted Value Industries, based in Aurangabad, had withdrawn its application for a banking licence application. However, in a curious turn of events, Videocon Industries, promoter company of Value Industries, denied having done so. Venugopal Dhoot, promoter of Value Industries and chairman, Videocon Industries, said: “We have not withdrawn the application and have only sought clarifications from RBI on certain issues.”.........
'Rajan must cut rates; expedite bank licences to boost growth'
......"RBI should lower the interest rates at this juncture to enable a cut in lending rates by banks and thus stimulate corporate investments. Bank provisions for CRR and SLR should also be brought down to ease liquidity," Ficci Secretary General Didar Singh said. The central bank should also strengthen the corporate bond market for long term funding to reduce the pressures on banks for long-term lending and to diversify the debt risk beyond banking system, he added.........
Subbarao put serious pressure on real estate
........By asking banks not to fund such projects and cautioning buyers about the credit rating if the builder fails, RBI is clearly giving a signal that builders need to bring in their own money to buy land. Once the project takes off, they can sell it to buyers to raise money for construction purposes. Bankers said that in this way, RBI is trying to ensure that there is no deviation from Subbarao’s predecessor Y V Reddy’s diktat that banks cannot fund land purchases. Also, it is likely to force builders to complete existing projects and sell them before moving on to the next one. There are already talks that this move could lead to fall in real estate prices. Of course, the performance of Reserve Bank of India governors are normally weighed by ‘inflation containment’ and ‘growth support’ through their interest rate or liquidity regime............
Falling short
This refers to the article, “Cashing in on coin shortage” (Business Line, September 6). Coinciding with the big agenda set out by the new RBI Governor comes a trivial news item that retail traders all over India have been experiencing an acute shortage of small coins. This is nothing but a mismatch between demand and supply. As the report itself has stated, the RBI has been supplying less than the indent thereby creating the shortage. While many of the issues raised by Raghuram Rajan are indeed difficult to tackle, can the RBI not solve this problem? It may seem trivial from a policy perspective but it makes a retail trader’s day quite miserable, not to mention the common man. No wonder middle men make hay by charging a premium on exchange of small coins. Let the new RBI Governor make a good start by resolving this coin crisis.
K. V. Rao, Bangalore (HBL)
Only 3.6% households go in for cashless dealings: Report
......As almost 96 per cent of all transactions in the country are conducted in cash, the repercussions are felt by individuals, businesses and the government, it added. "In 2009-10, RBI incurred an annual cost of Rs 2,800 crore to just print the currency notes, which was 0.4 per cent of the total currency in circulation. This cost, however, does not include the cost of storage, transportation, security, detection of counterfeits, etc," the report said...........
Jago grahak jago - RBI's new tool to stop phishing
.....Another email to phish your banking details reads, "On behalf of the India Government or the Reserve Bank of India, we wish to notify you as a beneficiary of…….certain amount." Further, in order to make the email look authentic, it even bears the signature and photograph of the RBI governor and ends with the message "In us you can trust."..........
RBI enhances limit of funds taken out, brought into India per person
In a bid to provide greater flexibility to resident individuals travelling abroad and to attract more foreign exchange inflows in India, the Reserve Bank of India (RBI) on Friday enhanced the limit of Indian rupees any person residing in India can take outside the country or a person who has gone out of India on a temporary visit can bring into India.......
Corporate debt restructuring cases to come under scanner
.....“There is a thought to scrutinise each case (and the respective company’s performance) which is under the CDR package,” Takru told Business Standard. The details of the timeframe and the mode of review are yet to be worked out. Takru’s message comes just two days after Reserve Bank of India Governor Raghuram Rajan sent a strong message to company promoters in his first media conference. Rajan said promoters did not have a divine right to stay in charge regardless of how badly they mismanage an enterprise, nor do they have the right to use the banking system to recapitalise their failed ventures. He has also asked Deputy Governor K C Chakrabarty to take a close look at the restructuring and recovery process and said next steps would be taken shortly.........
Recapitalisation of defaulting borrowers by banks - Dr.T.V.Gopalakrishnan
.... Unless and until banks introduce a self correcting mechanism through grading of borrowers and levy a penalty based on poor rating in the conduct of loan accounts, this menace of NPAs will be a burden on tax payers, and all other stakeholders of banks and the economy. In this context, the practical suggestion given in the book on Management of Non performing advances which carries a foreword from Dr C. Rangarajan former Chairman 12th Finance Commission and present Chairman, PMEAC is worth an attempt...............
SBI Banks may mop up $5 bn from NRI fund swap facility: SBI Report
An SBI research report today said banks are likely to net USD 5 billion by March, 2014 by availing RBI's special window facility to swap foreign currency non-resident (FCNR) dollar funds -- half of what experts from foreign brokerages have initially estimated. Yesterday, analysts from global financial majors like Morgan Stanley and Bank of America-Merill Lynch had projected that lenders would be able to garner up to USD 10 billion through this route.........
Tirumala gold in safe hands, says TTD EO
The Tirumala Tirupati Devasthanam (TTD) Executive Officer M.G. Gopal on Friday categorically said that the gold being deposited into the temple hundi by the visiting devout is absolutely safe in the hands of the management. Talking to media persons Mr. Gopal ruled out reports in a section of press which stated that the Reserve Bank of India (RBI) had reportedly asked the management to part with its gold deposits as part of its efforts to strengthen the plummeting rupee value........
Concern over RBI's reported move to take over temple gold
...........Raising the matter during Zero Hour, K N Balagopal said the Reserve Bank of India had reportedly sent a letter to temple boards in Kerala seeking gold reserves in state's temples. He said RBI's move proves that the government has become a "pauper" and if they are planning to take over the gold, the antique value of the precious metals in the state's temples should be calculated. When he raised the issue, M Venkaiah Naidu (BJP) said such a move was not acceptable.........
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