....Dr. Duvvuri Subbarao, former Reserve Bank of India (RBI) Governor, speaking at the Association of Professional Bankers-Sri Lanka’s silver jubilee anniversary celebrations on Tuesday (October 8) said that the global financial crisis of 2008 showed that the world was not decoupled. But globalisation and its effects world over from an economic perspective is not a 21st century phenomenon. The effects of globalisation and its economic ramifications thereof may have had been first felt as far back as 84 years ago, in 1929, ie the year in which the world saw the onset of the Great Depression, beginning with the collapse of the New York Stock Exchange..........
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, October 14, 2013
Financial inclusion and the rate of interest - Dr.N.A.Mujumdar
..In its zeal to implement the Basel norms with its attendant risk weightages, the RBI ended up in evolving a highly inequitable interest rate structure – a structure in which small income borrowers subsidised high income borrowers. A small farmer was required to pay 12 per cent interest, while a high rated corporate entity could raise money from banks at 6 per cent. It took the RBI more than a decade to realise this mistake and in the meanwhile, small borrowers suffered. The road to financial inclusion is not always paved with good intentions..............
Financial literacy among urban working young people low: Study
.........The working paper suggests any intervention strategy to enhance financial literacy among the working young must take into account sociological and behavioural aspects. "The influence of the contextual variables suggests the focus of any strategy for improving the financial well-being of youngsters in India would have to be broader than just the individual," it said...........
RBI employee hangs self
Nagpur News : A 50-year-old junior engineer of Reserve Bank of India hanged himself at his Ganguly layout residence in Sonegaon on Friday evening. Kaushalyedra Singh Brij Bihari Singh took the extreme step after he returned home from office on Friday. His son Malka Singh told police that Singh had locked himself in the room since after he came from office around 5.30 pm. “We called him for dinner but he didn’t respond. Thinking that he is tired and want to rest, we didn’t disturb him. The incident came to light next morning when he didn’t open the door in the morning and his body was found hanging after breaking the door,” said Malka Singh in his police statement. Police informed that no suicide note was found. Cops suspect that he was disturbed over his family issues. A police source told that he was depressed over his wife’s illness.
UFBU CIRCULAR - Another Failure Stares Top Union Leaders
....... since there is no satisfactory progress towards revision of wages and it is unduly delayed, the Constituents of UFBU decided to exhibit their dissatisfaction. UFBU has, accordingly, decided to express its dissatisfaction by conducting demonstrations throughout the country in all State Capitals and other Major Centres on 22nd October 2013 demanding expeditious wage settlement. We request all our units/members to conduct massive demonstrations at all these Centre and make it a thunderous success...........
Why are there so few women bankers?
........In the Reserve Bank of India (RBI), it was a 68-year wait for a woman to reach the deputy governor’s post. The central bank traditionally has one governor and three to four deputy governors to formulate monetary policy and run the banking system. RBI’s first woman deputy governor, Kishori J. Udeshi, took over in June 2003. Subsequently, two more women reached this tier—Usha Thorat and Shyamala Gopinath. Against this backdrop, the State Bank of India’s wait of 206 years to get its first woman chairperson has been a bit longer. With Arundhati Bhattacharya, 57, moving into the corner office at the nation’s largest lender, women chief executive officers (CEOs) now control close to 40% of India’s banking industry assets. This is an interesting piece of information as..........
A conspiracy of silence
......Regulators need to first ensure that the basic structures of a financial system are intact. It is because of its no-nonsense approach to core regulation that the Reserve Bank of India is respected worldwide. ..........
RBI term repos - A.Seshan
......... For increasing liquidity, the RBI should raise the ceiling on the amount of repos and/or MSF by 25 basis points of net demand and time liabilities. It will have a greater effect on liquidity than term repos that should be revisited for its effectiveness...............
Smaller better than larger
My View on "Achieving financial inclusion":
Lot has changed from 1975 to now in banking sector from the way it works to the way it perceives the future. Small private banks have proved their proximity to the customer much better than the larger banks. Large public and private sector banks had huge HR problems in deploying their personnel to the rural areas and many branches in such places in the upswing of profit motive were closed down. Even later given preference they would stay off these areas. It is the small banks and the cooperatives that the author talked of that came to the rescue of the small and marginal farmers and tenant farmers, several small businesses, artisans and micro enterprises. It became a herculean task initially in the mid-1990s to take the SHGs to the commercial banks and NABARD struggled a lot. Instead of strengthening the existing rural cooperative infrastructure which the Nabard ceremoniously neglected, without even introducing a common accounting system until Vaidyanathan Committee insisted and with a vast contributory negligence, to plead today for large banks in the name of capital would tantamount to ignoring financial inclusion. Further, to say that small banks would suffer from capital is also not correct. Once they have build trust capital would flow. The size of Capital we are seeking today as buffer is to insure the interests of the depositors on one side and on the other larger side, failings of the banks in risk management. There are also more number of UCBs that outperformed their peers than those that failed. This is one of the reasons to permit the UCBs also as prospective clients in the new bank licensing policy regime.
- Yerram Raju
Future Roadmap
........he foresight and timely action of the RBI and Government of India ensured its merger with Punjab National Bank. Few other problem resolutions and strategic consolidations have taken place in the banking sector amongst about 35 mergers and acquisitions in India, post 1990 economic reforms. However few failures of Cooperative banks could not escape the ultimate closure. This brings into focus well-timed discussions within the Reserve Bank of India, drawing lessons from the causes and factors of domestic and international failures and the complexities of globalisation. A view is gaining ground that the RBI needs to strictly control certain risky tendencies of few banks in the country to minimise shocking surprises as happened in USA,UK and elsewhere. ........
A Hopeful New Phase Called 'Raghuram Rajya'
......As in the Ramayana, it reflected a belief in an ideal cast of characters – the ideal father, the ideal brother, the ideal wife (all subsumed, in contemporary life, into the ideal citizen), the ideal king and the ideal servant (in contemporary life, ideal elected representatives and ideal bureaucrats). While the word “ideal” is curiously old-fashioned and, indeed, sometimes seems almost laughable in current usage, it actually reflects the only true reality of man. For many years of my life (the last few that I spent in New York), I was known as Ideal Boy, so I know what it means. And now, we have another Ideal Boy at the head of the RBI.........................
I am not superman, says RBI Governor on euphoria surrounding him
Big banking sector reforms coming soon: Raghuram Rajan
.....The policy framework for the entry of foreign banks in India, Mr. Rajan added, would be unveiled in the next few weeks. The banking sector reforms, in particular to those facilitating entry of foreign banks in India in a “big way” is part of the five pillars of reforms, including monetary policy framework, which the RBI is going to implement in the next few years, the RBI Governor said. “For foreign banks, if you adopt a wholly-owned subsidiaries structure and we are coming up with details on that in the next couple of weeks, we will allow you near national treatment,” he said, quickly adding that there would be two conditions..........
Policy soon to facilitate entry of foreign banks: Rajan
......The banking sector reforms, in particular to those facilitating entry of foreign banks in India in a “big way”, is part of the five pillars of reforms, including monetary policy framework, which RBI was to implement in the next few years, the RBI Governor said. “For foreign banks, if you adopt a wholly-owned subsidiaries structure and we are coming up with details on that in the next couple of weeks, we will allow you near-national treatment,” he said, quickly adding there would be two conditions..........
RBI puts corporate black sheep on notice
.....Take the two statements, made independently of each other, and it is clear that things do not augur well for the black sheep in corporate India. Actually the strategy is more than just a clean-up operation; it is a way of killing several birds with one stone. By couching the argument with the line that the public needs to know, the governor is seeking to usher in transparency—a key element if India has to continue to make its transition from an exception-based to a rules-based regime. At the same time, he has been careful not to tar all bad debts with the same brush by clearly focusing on projects where promoters have winged it on minimal equity infusion together with a huge overhang of debt..............
RBI shouldn't go by retail prices
.....So, should the RBI continue to use WPI as the anchor for monetary policy? The case against using WPI is that it captures prices only at the wholesale level, rather than retail prices. Further, WPI does not adequately capture movement in the prices of services, which make up more than 60 per cent of the GDP. Former RBI Governor D. Subbarao had rightly pointed out that focusing on CPI reflects the welfare objective of monetary policy better. However, he cautioned against using CPI for monetary policy for three reasons..........
Multi-organ failure - Charan Singh
.....As a citizen, it is clear that the Union
Ministry of Finance and the RBI are aware of the grim situation. But
what is not clear is whether the two have a common view on the
diagnostics of the problem? Is it high interest rates, policy paralysis,
governance deficit or simple uncertainty that is the cause of lack of
demand and slow growth? In the absence of a credible and common
diagnosis, at least in the perception of the common public, how would a
strategic recovery path emerge that inspires confidence in the course of
treatment? It is this lack of direction and forward guidance that
probably is confusing the market...........
Indian Economy Since Independence
......This book initially designed for Delhi University students, was transformed over the years into an unusual book for students of all Indian universities.That eminent economist Dr. V. K. R. V. Rao declared that “ the book was a pioneering effort and was an unusual kind of text- book”. Students of economics find that most of the material germane to their studies are spread over hundreds of journals, periodicals, official documents publications of RBI, NCAER and ISI. Dr. Kapila has successfully compiled in one volume the kernel from these.......
Read - FPJ Book Review by P.P.Ramachandran
India needs Effective Bankruptcy Laws
RBI
Governor Raghuram Rajan wants effective resolution of bad loans that
shows zero tolerance of mismanagement and fraud but makes room for
genuine, surmountable difficulty. This means changing India’s current
laws and procedures for dealing with corporate sickness.............
Read - ET
Read - ET
FinMin sends Raghuram Rajan report to PlanCom for 'necessary action'
........"Following the recommendations of the Finance Minister and pursuant to the directions of the Prime Minister, I am enclosing a copy of the report of the (Rajan) Committee for necessary action," said an official communication from the Finance Ministry to the Planning Commission..........
Fake notes a worry for BMTC
...“Earlier, I never used to come across counterfeit notes, but now the situation has changed. A couple of times I myself had to pay from my pocket as passengers had duped me with fake notes. It is now a common hazard being faced by all conductors,” he said. “It is not easy for anyone to follow these people. So whenever I receive a Rs 500 note, I check it multiple times to ensure that I will not be at receiving end,”............
Fake currency gang busted, 2 arrested
...."The accused would buy steel at Rs 45-50 per kilogram and make 50 to 60 coins out of a sheet of metal," said an officer, adding that the trio would incur a cost of about Rs 1.20 for every coin they made. The accused would pay the workers 20 to 30 paisa for every coin they made. Manoj would deliver the coins and would charge as low as Rs 15,000 when the RBI charges around Rs 25,000 for every bag of coin. ..........
Hunt on for new finance secretary
Even as the Ministry of Finance (MoF) has started preparations for Budget 2014-15, and has asked different ministries to enumerate their estimates of receipts as well as expenditures for the next financial year, the Budget in all probability will be prepared by a new finance secretary and also a new chief economic advisor (CEA) to the MoF. Finance Secretary R S Gujral is due to retire next month, while the post of CEA fell vacant after Raghuram Rajan took over as the governor of the Reserve Bank of India last month.............
Chidambaram questions IMF’s methodology for calculating India’s growth projections
....."For example, India’s growth rate, which was projected at 5.6 per cent (at market prices) in the WEO July Update, has now been revised significantly downwards to 3.8 per cent. I would like to ask, respectfully, what is the information that IMF has gathered between July and September, that we do not have, that has impelled the Fund to drastically change the estimate? We do not share this pessimistic outlook. We also believe there is a need for review of the methodology for growth projections as in the past IMF projections have often been at divergence with final growth numbers," ...........
Gold: The new rules for investing
...........You can also monetise your old gold coins/jewellery by depositing your holdings with the gold deposit schemes of banks. The minimum maturity period for these deposits has been reduced from three years to six months by the Reserve Bank of India. The deposit scheme now offered by SBI allows you to deposit physical gold in jewellery or coin form for a nominal interest payment with the bank. When you make a deposit, the bank melts the jewellery, tests the purity of gold and then issues a deposit certificate which you hold till maturity.............
Bankers cut consumer loans, cry foul on government missive
........“This is a case of directed lending. Directed lending in an economy can inherently result in losses mainly because credit discretion tends to be absent,” said Abizer Diwanji, a partner and head of financial services at global consulting firm EY, formerly known as Ernst and Young. “If lending is directed through incentivization, then the government should ensure that it is being done in a good credit risk policy framework. Risk management is very important,” Diwanji said, adding that directed lending for a limited period may not damage the system..........
This festive season, play your cards right
.....According to the Damodaran panel report, the percentage of interchange/ merchant fee charged by the card service providers for both debit and credit card being the same, a merchant is indifferent to a credit/debit card. Card data indicates that more than 80 per cent of the cards are debit cards and the customers feel that debit card is akin to cash as it directly debits their accounts and does not confer any advantage by way of a credit facility...........
Sebi working on guidelines for social media use in capital market
......That apart, with increasing popularity of platforms like Twitter and Facebook, capital market regulators worldwide are also looking to tap such tools to understand overall trends and also gather market intelligence. A senior Sebi (Securities and Exchange Board of India) official said it would take some time before the regulator finalises guidelines related to social media use...........
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