THE CURIOUS CASE OF RAGHURAM RAJAN

........However, the “man of the moment” has his plate quite full and absolutely scrambled. Though his intention to further open up the financial sector is in consonance with his academic and professional credentials, he also now has to reconcile with the existing focus on inflation in the central bank. Last three Governors of the RBI (D.Subbarao, Y.V.Reddy and Bimal Jalan) were known to be cautious in their approach to open up, but whether Rajan would break the tradition (true to his background) towards a more liberalised monetary sector or not – remains a question of immense interest in near future. Meanwhile, his posturing is generating fair amount of curiosity in the minds of everybody involved and interested in the monetary affairs of the country.

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Ignore the IMF, Go with Rajan on Growth

On India’s growth prospects, RBI Governor Raghuram Rajan is more correct than the International Monetary Fund (IMF). The Washington-based multilateral lender, which released its World Economic Outlook on Tuesday, has trimmed India’s growth forecast down from 5.6% to 3.8%, calculated at market rates. This is the steepest fall in terms of.................

Read - ET

RBI vs GoI

........While RBI is signalling a hike in interest rates, the finance ministry has said it is willing to give banks more capital provided they used this to lend more in certain areas and at lower interest rates. If the finance ministry gives banks Rs 100 of additional capital, banks can lend up to Rs 1,000 given the current capital adequacy norms. And since banks will now have to raise less funds in the market, either through CASA or bulk deposits, their cost of funds will fall and can be passed on to consumers. ............

Read - FE Editorial

Rajan effect working well for currency

Raghuram Rajan seems to be a perfect talisman for the rupee. Ever since he's taken over as the governor of the Reserve Bank of India, the currency has appreciated by 8.76 per cent and is now stabilising between Rs 61-62 against the dollar. Not surprisingly then that Rajan has opted to cut the marginal standing facility (short-term rates) by another 50 basis points, barely weeks after he cut it by 75 basis points on September 20. Incidentally, his predecessor had opted to tighten short-term rates to bring more stability to the rupee, and Rajan's rollback indicates that the currency crisis is over for now.........

Read | Business Standard

Bank Tarzan meets Jane(t)

Washington, Oct. 9: President Barack Obama nominated Janet L. Yellen as the US Federal Reserve chairwoman, one of the most important economic policy-making jobs in the world. The nomination will put Yellen, 67, on course to be the first woman to lead the world’s most influential central bank in its 100-year history. She will also be the first woman to head a central bank in any Group of Seven industrial nation. The elevation of Yellen, who has been the Fed’s vice-chairwoman since 2010, will provide some relief to global markets, including that in India, which will expect her to tread carefully in winding down the US economic stimulus........

Read - The Telegraph

Technical committee to look at ways to boost mobile banking

.......The committee will also look at any other solution that could expand the reach of mobile banking and, accordingly, draw up a roadmap to implement the solutions. B Sambamurthy, director, Institute for Development & Research in Banking Technology, will be the chairman of the committee and Vijay Chugh, chief general manager, RBI, the member-secretary. The committee members will comprise officials from State Bank of India, ICICI Bank, HDFC Bank and Axis Bank. It also includes Anthony Thomas, chief information officer, Vodafone India.......

Read | Business Standard

Sound Move, Reserve Bank

With the concrete measures now taken by the RBI, the rupee is beginning to settle at around 60-61 against the dollar, much to the relief of exporters. Against this backdrop, the RBI has preferred further easing of liquidity by cutting the marginal standing facility rate. The ongoing festival season that is to stretch up to March next year is expected to create a rise in demand, leading to credit expansion. The  lending and deposit rates of banks to that extent might require some alignment. In a nutshell, it is a welcome development by the RBI to make conditions more conducive for banks to operate, which will contribute the growth of the economy. The important thing is that Dr Rajan has successfully tried to restore much needed confidence in the markets, which is a right beginning to take the economy forward to high-growth terrain.

- SRINIVASAN UMASHANKAR, Nagpur (ET) 

Making the job easier...........

The Finance Minister could have named the group which should own these seven banks, making the Jalan commitee's job easier. He could then have the upper hand in dictating the future of the pending applications.

- T K E Das, Ex-General Manager

Priority for non bank finance companies in bank licenses: K C Chakrabarty

MUMBAI: Government will give non-banking financial companies (NBFCs) priority when awarding new commercial banking licenses as they already own an existing network of financial services in the country, central bank deputy governor K.C. Chakrabarty said on Wednesday..........

Read - ET

Ban has come at the right time: Chakrabarty

.....On the timing of last month’s directive to banks asking them to desist from offering zero per cent EMI schemes through credit cards, Chakrabarty said the timing is absolutely right. “During the festive season, mis-selling is at its peak, so wrong things should not happen when more people come (to buy). Whatever you (banks) are doing, convey it to the customers,,” he said. “There is no ban on giving loans on credit cards. What we are saying is don’t charge customers. Don’t charge more per cent by saying zero per cent,” he added.......

Read - HBL

Credit card loans: RBI says has no issues if done transparently

....."There is no ban on giving loans on credit cards. Don't charge 12 per cent actually and claim that I am charging only zero per cent interest," RBI Deputy Governor K C Chakrabarty told reporters here. It could be noted that RBI had last month banned zero per cent interest schemes offered by various bank to credit card holders saying the scheme lacks transparency. The move is likely to dent banks festive season sales........

Read - FE

Obituary

E.P.VEERARAGHAVAN (81) Retired Officer, RBI, Chennai expired on 5-10-2013. Ph: 22604902.

Hindu

This week, withdraw from an ATM, get crisp new notes

.........Such complaints may now reduce, as the Reserve Bank of India, Chennai, has instructed various banks in the city to provide fresh notes to its customers, particularly through ATMs. Starting last week, RBI officials initiated the process and directed banks to feed new notes, particularly of those under the denomination of Rs. 100 and Rs. 500, into their ATMs................

Read - The Hindu

Contentful questions.......

My View on "Growth, Low Inflation to be RBI’s Priority": 

This interview gives in one place Dr Rajan’s perceptions on RBI’s role, RBI-GOI relationship and the need for skill development in RBI, among other issues. Team ET has asked right questions and where there was ambiguity in questions, the answers were elaborate to make things clear. It was a refreshing experience reading this, as, in some interviews in the recent past with heads of some organizations, published in the media, the questions had more ‘content’ than the answers. 

- M.G.Warrier

Former Chief of Reserve Bank of India meets CBSL governor

Former Governor of the Reserve Bank of India, Dr. D. Subbarao has visited the Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal on Tuesday............

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Unrealistic appeal

This refers to “Cheap loans: By how much can you cut rates, FinMin asks banks” (Business Line, October 9). Asking commercial banks to disclose information regarding the possibility of cut in lending rates, has been viewed from two angles can be seen asa stimulus measure to expand the demand for consumer durable goods in the short run. It also seems like a poll campaign in disguise. Whatever the motive, it will ultimately nullify the constructive measures taken by the RBI to contain inflation. How can a bank lend money to the extent of 10 times its deposits just to get one-tenth of it as additional capital from the Centre? 

- S. Lakshminarayanan, Cuddalore (HBL)

Cash-ferrying companies flout rules on weapons

.......The Internal Security Division, in a September 10, 2013 letter, sought information about this matter from the Reserve Bank of India (RBI) but is yet to get a reply. Information has been sought on, among other things, carrying bulk cash, guidelines on type of vehicle (security levels) to be used for transportation and model copy of contract document between private security agencies and banks for cash in transit.

Read - TOI

Seminar on banking

The College of Cooperation, Banking and Management of Kerala Agricultural University is hosting a two-day national seminar on ‘Contours of Indian Banking’ on October 23 and 24 at the University Central Auditorium on the main campus.........

Read - HBL

Bitcoins: Exciting, anarchic and risky

...Bitcoins are an anonymous, decentralised digital currency. In contrast to electronic money, no company controls the bitcoin, nor ever could: all the rules about how it works are embedded in the very operation of trade, including the rate of inflation and how to verify transactions. For most users, the easiest way to get bitcoins is to buy them. But due to strict anti-money laundering controls, even that is tricky...........

Read - HBL

Globalisation vs the rupee

.......Some economists say that we have not had enough ‘reforms’ to keep India attractive for foreign investments; others point to the enormous increase in our Current Accounts Deficit as the import bill has increased substantially; yet others blame the recent upswing of the American economy and other global factors. Caught in the crossfire of facts and opinions is the poor resident of the non-stock-market-investing Bharat, struggling to obtain even basic necessities like food and shelter. Do our decision-makers understand that this citizen is suffering not due to inadequate ‘development’, but because of an inappropriate model of economic growth? Faith in this model has privileged cold growth (GDP) statistics over meaningful indicators of human well-being, sharply increased inequities.......

Read - DNA

Some more liquidity, please

By rolling back a steep increase in short-term rates, opening the floodgates on FCNR deposits, and infusing liquidity through bond purchases, the Reserve Bank of India has been signalling to banks and the bond markets that it isn’t entirely anti-growth. But for these measures to be really effective, the central bank needs to do much more..................

Read - HBL

RBI couldn’t care less about corrupt UPA

.......It is indeed a relief to see Governor Raghuram Rajan at the RBI beginning to ease up on the liquidity. This is essential for growth, even as the IMF expects barely 3.8 per cent growth in GDP this year, down from its earlier estimate by a dramatic two per cent points, but going up to 5.1 per cent next year. Of course, even five per cent odd was a 10 year low when it happened last year, and therefore, the current dip estimated is all the more significant. It shows the Government’s economic policies are just not working...........

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From anxiety to complacency in six weeks?

......The tide began to turn in early September with the new Reserve Bank of India (RBI) governor's confident and well-considered initial policy statement on September 4, including the announcement of swap facilities to banks for foreign currency non-resident (bank), or FCNR (B), deposits with maturity of three years and over at a rate of 3.5 per cent per year. This quasi-exchange rate guarantee soon triggered fresh inflows. Within days of this initiative, ..........

Read | Business Standard

India Inc needs stronger bankruptcy legislation for efficient revival process

....If Reserve Bank of India Governor Raghuram Rajan's plans to expedite loan recast and speed up the resolution of unviable businesses come through, India's economic recovery from any slump in the future could be as quick as that of the US, unlike Japan, where companies linger on like in India..........

Read - ET

CAD, growth and the rule of law

The Second Quarter Monetary Policy Review is due end of this month. We are currently in a scenario of the higher Current Account Deficit at 4.9% of the GDP than both the previous quarters, as well as Q1 2012- 13. India would do well to use the breathing space that has been provided by the US deferment of tapering, to fix its Current Account Deficit ( CAD) and resuscitate growth. While it is the Current Account deficit and deficit in output growth rate which are garnering maximum attention, there is a third deficit - a Rule of Law deficit, equally important due to ......

Read - FPJ

Beyond the taper talk

....In India, though RBI has raised the repo rate and is increasingly been seen to be moving away from the Wholesale Price Index towards the Consumer Price Index as the key operating variable, this transition may not be easy as the interest rates will have to be increased by a fair amount in order to undertake this policy shift. However, raising interest at this point will affect sentiments and expectations around growth. Notably, RBI will also have to reassess its position on the exchange rate and capital flows, as focus in last few months has been on external sector management...........

Read - Mint

Why you need to be careful when your bank changes your home loan rate

.....A simple online search on home loan complaints will throw various cases where banks have goofed up with customer’s home loan agreement. It is thus wise to figure out what can go wrong in advance, so that you can be cautious and avoid having to face an unpleasant situation...........

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Public sector banks will score this festive season

Has the recent Reserve Bank of India dictate asking banks to stop zero per cent equated monthly instalment (EMI) schemes, as well as the rising prices of electronic gadgets, spoilt your Diwali shopping plans? If so, you may still have a chance of buying the iPhone 5 or the LED TV you have been eyeing!...........

Read | Business Standard