.....Specifically, the increasing divergence in WPI-CPI inflation rates has prompted the RBI to attach more significance to the latter in monetary policy formulation. While the central bank continues to anchor inflationary expectations to WPI inflation, its policy rate has increasingly tracked core CPI . Analysts believe that the new CPI is currently in a transition phase and it’s only a matter of time before the RBI formally switches to it as inflation anchor. Notwithstanding the inherent appeal in targeting retail price inflation for monetary policy purposes, should the new index be taken at face value, presuming the data series are robust?........
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, September 24, 2013
A focus for the RBI - Ila Patnaik
.......Rajan will have to work hard to build the RBI's credibility as an inflation targeter. He will need to get rid of its multiple objectives and many instruments. He will have to focus on defining the objective of monetary policy and its instrument clearly, building credibility, being consistent and communicating his policy stance to the public. The success of his term will be measured by how well he is able to anchor inflationary expectations and bring down consumer price inflation. ..........
Rajan Walks Subbarao's Path
........Rajan is walking in the footsteps of his predecessor Duvvuri Subbarao, when he said, 'the focus has turned to internal determinants of the value of the rupee, primarily the fiscal deficit and domestic inflation.' And he is exercising his authority a lot more than his predecessor who might have talked the same language, but hesitated to raise interest rates. Subbarao admitted, in hindsight, that he should have raised interest rates a lot earlier, and quicker. Rajan has taken a leaf out of Subbarao..........
This RBI guv’s a Rock Star economist
...Since his appointment, he's been talked about for his stellar credentials just as much as for his handsomeness. Ladies have been fangirling over his dreamy eyes on Twitter for days (in fact, an entire Tumblr blog has been devoted to pictures of "Raghuram Rajan staring at things"), and many jokes about him rejecting the Batman role and starring in Dhoom 4 have surfaced. In a nutshell, Rajan's appointment has everyone following the economy closely........
Decoding Rajanomics: Tame inflation; govt must boost growth
.......To glean Rajan's next step we need to understand whether he will focus on CPI or WPI. It appears he will prefer CPI. His statement dwelt more on CPI for one; sample this : "What is equally worrisome is that inflation at the retail level, measured by the CPI, has been high for a number of years, entrenching inflation expectations at elevated levels and eroding consumer and business confidence. Although better prospects of a robust kharif harvest will lead to some moderation in CPI inflation, there is no room for complacency."......................
If govt doesn’t do its bit, Rajan’s attack on inflation will hurt
......When I prodded him in the press conference as to whether he will watch out for CPI or WPI, he shied away from clearly admitting his bias for CPI. He said he would wait for the Urijit Patel committee report. But he gave himself away when he argued that the WPI does not have any component of services.............
Rajan honeymoon over for banking stocks
.........The RBI commentary’s tone has also meant that economists are now predicting further increases in the policy rate (or that they will remain at the current level), as opposed to forecasts of a rate cut earlier. As a Citigroup analysis of past rate changes shows, banking stocks do well when the repo rate falls, not when it rises. The overarching problem for the banking sector—asset quality—also intensifies as the recovery cycle is extended and growth gets little support from the central bank. In such a scenario, the only attraction of banking stocks remain their relatively low valuations.
India’s top banker needs to steer through chaos
.........The skills required for the two responsibilities are totally different. Rajan, in his previous roles, may have been used to more organised and disciplined fields of play, but his new role will be about navigating between chaos and disorder. Rajan is surely a new generation central banker, but the parameters within which he has to operate are all of the old generation, making the match even more challenging.
The banality of buzzwords
......No useful economic or social purpose is served by central banks pledging complete transparency and predictability of the policy framework and policy decisions. On the contrary, when there is too much policy transparency, the financial sector takes on too much risk, thinking that the path of policy rates is well flagged. A competitive financial sector landscape, executives’ and investors’ obsession on return on equity (RoE), and the perception that the transparency has eliminated policy risk framework is a very potent mix for excessive risk-taking in the financial sector................
RBI organizes Quiz Competition at Jammu
.......The audience for the programme constituted, besides the participants, hundreds of students from different schools of Jammu who thoroughly enjoyed the quiz that they found informative as well as entertaining. A.K.Mattu, General Manager, RBI, Jammu gave away the prizes to the winners and all the quarter finalists at the conclusion of the Quiz. The programme was conducted by Ravinder Kaul.
VITALINFO at sunrise............
Are on VITALINFO at sunrise,
This comes as no surprise,
As dear Mangesh believes in the saying::
'Early to bed, early to rise,
makes a man Healthy, Wealthy & Wise'.
- Frank R
Misquith, Bangalore
Dear Mangesh
Once again congratulations. Excellent. Your work
has been appreciated by our Hon'ble Governor Sir. Getting appreciations from
respected Governor Sir is an indeed a great achievement in your life. Keep it
up. Wish you all the best.
R K Gujar, Ex- PS
May I request you to add the name of Sarojini Venkatachalam to your list of retirees who receive your communications. I had the privilege of working with Sarojini in the then CPC for many years. Warm regards,
- S.S.Tarapore, Former Deputy Governor
Dear Mangeshji,
You deserve the
appreciation for the yeoman service rendered by you.
- Srinivasan,
Cochin
Mangesh,
Kindly include B.K.Pal, our former Executive Director in the mailing list of VITALINFO.
- K.D.Savkur, Ex-CGM
Dear Mr Tarambale
Kindly include me in your VITALINFO List. Regards
- S.Venkatachalam, CGM, Estate, MRO
Thank you for your effort in putting
these news items together every day. It is very informative. As I will be
retiring as at the end of September I request that the material be sent to my
personal email id. Thank you. All good
wishes as you continue this great work. Regards
- Sujatha Elizabeth Prasad, CGM and BO Chennai
United Forum meets Governor
.......Governor informed that meanwhile he had met Sri Rajiv Takru, Secretary, Department of Financial Services, Ministry of Finance, who referred to the Government's proposal to statutorise RBI Staff Regulations under Section 58 of the RBI Act 1934 and desired that it be done at the earliest. On pension matters Sri Takru still sticks to his earlier stand of external comparabilities.........
‘Indian banks unprepared to mitigate risk’
......Speaking on risk-based supervision in Indian banking at a meeting organised by the Bankers’ Club, Dr. Chakrabarty said that the global financial crisis had shown that banks that were doing well were also the ones that bore greater risk. “After the global crisis, there is no such thing as risk-free returns, only returns-free risk,” he said. “The focus area, from a supervisory perspective, should be to identify institutions that are bearing greater risk,”...........
'Most bankers unaware of number of customers'
RBI Deputy Governor K C Chakrabarty, known for his candid remarks, on Monday took a dig at top executives of major banks on lack of information sharing and discrepancy in data submitted to the RBI. Speaking at the Bankers' meet organised by Vijaya Bank here, Chakrabarty said that one account is classified as NPA in a bank and the same account does not fall under NPA in the other bank.........
Repo rate hike cannot act as an effective measure in taming inflation
..........The second flaw in RBI’s approach towards inflation is the conviction that repo rate is an effective tool to contain inflation. Does repo rate always help in containing inflation? Is inflation a purely demand-push factor? Can it be controlled without managing supply side constraints? How can repo rate be effective if international crude prices go up? Also, with ever-increasing wages in rural areas supported by government policy measures and in urban areas because of ongoing business activities, is it possible to arrest the rise of inflation? Can RBI control inflation, when the government decides to give semi-annual dearness allowance hike of 10% to its more than 50-lakh employees, thereby adding substantially to purchasing power?...........
RBI's stance on consumer inflation bodes well for investors
Retail investors could see better real rates of return in the coming months the Reserve Bank of India increases its focus on tackling consumer price inflation. In the new policy framework, the RBI has clearly targeted inflation as its top priority and is likely to assign a higher weight to consumer price inflation (CPI) as against only targeting the wholesale price index (WPI)............
Mayaram finds out 'systemic failures' in NSEL crisis
...........The report details long term measures, Economic Affairs Secretary Arvind Mayaram, who headed the Panel, told reporters here. Meanwhile, according to sources, the NSEL report has found "minor systematic" failures in the functioning of the exchange. The panel had met on Friday and finalised the report on National Spot Exchange Ltd (NSEL) - a commodities bourse which is grappling with Rs 5,600 crore payment crisis. The findings are based on reports of two working groups -- Enforcement Directorate and Reserve Bank.........
Avoid the gold loan route
........First, the RBI imposed restrictions on gold imports and barred banks from bulk purchasing gold. Secondly, it restricted banks from lending against gold to less than 50 gram per person, and completely barred financiers from lending against gold mutual funds and exchange-traded funds. To make matters worse, gold prices have fallen over seven% in the last one year. That means existing borrowers would have to pay up more collateral. And newer borrowers will have to contend with a lot less in loan value...........
Government to review FCCB, depositary receipt rules
...The finance ministry on Monday said: "It has been decided to constitute a committee to review the scheme comprehensively keeping in view the new company law and the recent legislations in the financial markets, the current state of the macro economy and the financial markets, the needs of the Indian companies and foreign investors and the need for simplification and legal clarity of the scheme." Apart from Sahoo, the other members of the committee are G Padmanabhan, Executive Director, RBI, S Ravindran, executive director, Sebi, Ajay Shah, NIPFP and PR Suresh, consultant, PMEAC, among others. .......
Finance ministry, RBI in talks on easier rules for infra debt funds
New Delhi: The finance ministry is in talks with the Reserve Bank of India (RBI) to liberalize the rules to allow newly created infrastructure debt funds (IDFs) to take over, or assume, more loans from banks without having to set aside money if they later restructure the loans. At present, if IDFs extend the tenure of such debt instruments, the central bank categorizes them as restructured loans, increasing the provisioning requirements........
RBI hunts many bears
.........RBI’s assessment of the economy is largely gloomy. On the domestic front, growth has weakened with continuing sluggishness in industrial activity and services. Consumption is beginning to weaken in rural areas and consumption of durable goods has been hardest hit. While some pick-up of activity is expected on account of agriculture and the upturn in exports, the pace of infrastructure project completion has been subdued. ...........
Current economic scene doesn't allow optimism: Bimal Jalan
Capital Local Area Bank makes hay in Punjab's virgin market
....."Getting approvals from RBI was a tremendous task. The pocket we zeroed in on was an NRI (non-resident Indian) belt of Punjab that is presumed to be an affluent block of the state. Nevertheless, there were unbanked villages and suburbs there, and commercial banks (both public and private) did not open branches there due to the low volume of business. Being a small player, we found it viable to set up branches there,"................
RBI now against 0% EMIs for consumer goods, banks withdraw finance schemes; festive sales likely to be hit
.........RBI feels consumers have been fooled by zero per cent or discounted interest rateschemes into believing that bank funding comes for free, and wants them stopped. Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances. ............
NPAs: RBI opposes Sarfaesi protection to US Exim Bank
The Reserve Bank of India (RBI) has said it is against empowering the US Exim Bank to invoke India’s Sarfaesi Act to recover bad loans even as the matter is slated to be discussed during the US visit of Prime Minister Manmohan Singh this month...........
RBI announces committee to provide roadmap for financial inclusion
........Other members of the committee include Prakash Bakshi, chairman, NABARD, Vikram Pandit, former CEO of Citigroup, S. S. Mundra, chairman and managing director, Bank of Baroda, Shikha Sharma, managing director and CEO, Axis Bank, Sunil Kaushal, CEO, Standard Chartered Bank, India from the banking fraternity. From non banking financial companies ........
Needed, a ‘self-regulatory organisation’ for MFIs
.....A self-regulatory organisation for microfinance institutions will play a complementary role to the Reserve Bank of India, according to a top industry official. “The microfinance industry is highly distributed and has many small players. The RBI has limited presence on the ground,” said Alok Prasad, CEO, Microfinance Institutions Network (MFIN), an umbrella body of over 40 microfinance companies in the country..............
Tackling the eventual taper - Charan Singh
.......There may be a need to sequence the difficult reforms in these difficult times of both, the domestic and the global economies. For now, the guide-post for policymakers could be the words of Rabindranath Tagore— “If they answer not to thy call, walk alone”. In this context, Raghuram Rajan’s statement with the mid-quarter review seems very resolute.
Montek for more efforts to revive economic growth
......."I do not believe by the way that the critical constraint on revival of the economy is to tinker with short-term rates. "I know that nothing would be better for growth than for the long-term interest rate to come down but the idea that the RBI Governor can lower the long-term rates by lowering the short-term rates, no matter what is happening in the macro economy. It is just plain rock,"..................
Getting a job in Sebi is 10 times harder than in Google
A hundred thousand candidates have applied to the Securities and Exchange Board of India (Sebi) after it advertised for new officers to join the market watchdog. This puts the number of candidates at over 1,300 for every opening, according to two people familiar with the matter — one Sebi official and the other a person who gave the exam; neither wanted to be identified. There are only 75 posts available.......
Expert expects India to allow Islamic banking
...The existing Banking Regulation Act (1949) of India hinders the establishment of Islamic banking as it does not allow banks to operate on a profit-loss basis and forbids murabaha, or, the buying, selling, or barter of goods.“I strongly believe India soon will take some positive steps, either to amend the laws of the Reserve Bank of India (the country’s central bank) or promulgate ordinance to make way forward to establish Islamic banking system by 2014,” said Dr Manzoor Alam, President of Indo-Arab Economic Cooperation Forum, and also an expert of Islamic banking............
Vijaya Bank FI Outreach
Dr K. C. Chakrabarty, Deputy Governor of Reserve Bank of India (RBI), will inaugurate Vijaya Bank’s Financial Inclusion Outreach Programme at 10 a.m. on September 24 at Adichunchanagiri in Mandya district..........
Federal Bank MD
The Reserve Bank of India has approved a three-year extension for Shyam Srinivasan, Managing Director & CEO of Kerala- headquartered Federal Bank. The extension would be with effect from Monday, a press release said here. Mr. Srinivasan first took charge as MD and CEO on September 23, 2010. ........
Moody's downgrades SBI's rating to 'Baa3'
......According to SBI’s managing director and chief financial officer Arundhati Bhattacharya, the rating action will have no impact on domestic or international business. Moody’s said the decision to lower senior unsecured debt rating reflects two negative factors affecting SBI’s credit profile. First, SBI’s standalone credit profile continues to face negative pressures in the context of a slowdown of the Indian economy. These pressures were reflected in the change in the outlook on financial strength rating. .............
Chaudhuri leaves SBI merger for successor
.......He said as there would be a shuffle of top management jobs after his retirement, it was appropriate to leave the decision to his successor. SBI's top management consists of the chairman and four managing directors, one each looking after the balance sheet, international operations, domestic operations and subsidiaries & associate banks. Chaudhuri said he'd prepared the groundwork, economic logic and momentum for the system to pick up. "The report is ready…the factors which are to be considered are ready but which one to pick... I think there is generally a unanimity in this view but I should leave it to my successor."...............
Bhattacharya, Contractor frontrunners for SBI top post
.......Once the finance minister signs off, the note will go to the cabinet and the Prime Minister’s office for final clearance. Four managing directors of the nation’s largest lender were interviewed on Saturday by a panel comprising financial services secretary Rajiv Takru and Reserve Bank of India (RBI) Deputy Governor Anand Sinha, among others...........
SBI Buffeted by Tight Liquidity
Is
the country's largest lender, State Bank of India (SBI), battling a
liquidity crunch? So goes the murmur among senior bankers who got a
whiff of an unprecedented decision taken by SBI last week. SBI has
directed its offices to stop discounting letters of credit (LC) other
than those opened by SBI and its associate banks, which together command
25% of the local banking business. The move could hurt business because
LC discounting is the lifeblood of local and cross-border trade........
Read - ET
Read - ET
Young Bankers Are Really Fast Learners............
I learnt that bank life and dreams can never meet..
Because when they meet,
both will lose their meaning.....
Read.........
Because when they meet,
both will lose their meaning.....
Read.........
Supreme Court says Aadhaar not necessary for essential services
.....In a significant development, the Supreme Court on Monday has ruled that Aadhaar or the unique identification (UID) number, the United Progressive Alliance (UPA)'s ambitious scheme, is not mandatory to avail essential services from the government. Various state governments have been insisting on making Aadhaar compulsory for a range of formalities, including marriage registration, disbursal of salaries and provident fund among other public services............
TRAI cautions banks, financial institutions against unregistered calls
.........The TRAI has named such banks and financial institutions which have been flouting the aforesaid regulation by marketing their products and services through unregistered telemarketers. These banks or financial institutions are - Axis Bank, Citi Bank, HDFC Bank, ICICI Bank, Kotak Mahindra, Punjab National Bank and the State Bank of India...............
Sahara, Peerless repaid depositors Rs 20,000 cr since 2007-08
.....The RBI had fought a pitched legal battle with the RNBCs over what it termed their “inherently unviable business model”, expressing concern over the mushrooming growth of financial investment companies that were offering staggering rates of interest to depositors. Between 1987 and the mid-1990s, the RBI was engaged in a running battle with Peerless after it issued orders barring the RNBC from accepting fresh deposits. While the Supreme Court allowed Peerless to continue its business, it told the RBI to take steps to “prevent exploitation of ignorant subscribers”...............
Insiders’ role in online thefts: Experts
...... “The insider within a bank may provide the fraudster with information such as the ‘fattest’ account in the
bank, the account number, user ID, the registered mobile number and
even the prospective victim’s KYC documents. The fraudster now knows the
mobile company whose services the victim is using and arranges for an
insider in that company to get the victim’s KYC details. Without these
insiders, such crimes are not possible,”.............
Read - TOI
ICICI Bank launches security features loaded credit card
..........We have always leveraged technology to make banking both convenient and secure for our customers. Our continuing adoption of innovative technology is part of our commitment to strengthen our relationship with our customers. The ICICI Bank Carbon, powered by Visa CodeSure, is another step in this direction. We are happy to launch this card in association with Visa, for the first time in Asia and I am sure that this will be as popular in India as it is in some of the European countries. This card will be one of the safest available for online and standard use and also comes with an EMV chip for added security against counterfeiting.”..............
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