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.
Friday, November 1, 2013
Duvvuri Subbarao: On India, technology and the importance of authority
Inflation tilts the balance - Dr.S.S.Tarapore
........While the Urjit Patel Committee will no doubt throw fresh light on strengthening the monetary policy framework, it would be useful if it were to give attention to the business cycle and the imperative need to take policy action before the upper turning point of the cycle is reached. In India, unfortunately, action is invariably taken after the upper turning point is reached, and if, corrective measures are delayed, the downturn gets aggravated. Again,...........
How the RBI can be made more accountable—Part 3
......... In other words, unless the RBI becomes the change that it wants to see on the ground in the financial sector, I am afraid that there will be very little action on the ground in terms of accountability! So, what needs to be done to help move the RBI to a more accountable entity, from a long term perspective? We discuss this briefly in this final article in the series on RBI’s accountability!..........
Exclusive Interview: Raghuram Rajan - Good thing about democracy is that it pushes the system to find solutions
.......I don’t take credit for markets movement. What we have to focus on is a stable macro economic environment. We have to bring inflation down. That is the best way we can help growth. We can help growth in other ways. Let us try and increase the reach of the financial sector to every village. We can give people good instrument for saving like inflation indexed bonds. ...........
Dearness Allowance Increase for Bankers from November 2013 to January 2014
............Based on the above calculations the new DA will be @ 96.15%, for the months of November, 2013 to January 2014. [The DA for August 2013 to October 2013 was 88.95%] i.e increase of 7.20 %. (increase of 48 slabs) We give below the DA for November, 2013 onwards vis a vis.............
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Financial Inclusion Makes 2.5 Lakh Villages Bankable
....“In
India, we believe that financial inclusion has the potential to bring
in the unbanked masses into the formal banking system, which could lead
to increased savings, eventually leading to economic growth,” RBI
executive director G Padmanabhan said last week in Paris during a panel
discussion at the Joint European Central Bank and Banque de France
Conference. ...............
Evaluation desirable..........
My View on "Financial inclusion is not a new dispensation - Dr...":
The presentation is a status report on Financial Inclusion with a good analysis. However there are a few points that need closer attention;
1. The low per capita credit to Basic Savings Deposit account holders is worthy for a detailed look and this will provide the actual risk under FI that the banks would be willing to take under the score. The penetration is still very low.
2.The Aadhar linkage: Direct Benefit Transfer - it is more on the instruction than implementation. My individual survey indicates that 60 percent of cooking gas subsidy linked to aadhar has not been credited even after two months of delivery of the cylinder in the urban areas due to the NPCL not crediting or delayed crediting of the subsidy to the linked account of the concerned bank; where credited the banks have been taking anywhere between 7 and 15 days for extending credit into the accounts. When this is the scenario of urban clients the rural areas where the clientele are less literate the problems would be much more complex. Further, the Supreme Court has ruled that the linkage cannot be insisted and it does not have legal sanction. Now it is in a limbo. How do NPCL and Banks streamline the whole process and assure proper delivery of the intended DBT? A deeper probe and analysis is required.
3. The FLC programmes require an annual evaluation not as to the number of programmes rolled out but to what extent the trainees have secured the benefit out of these programmes and how it translated to better the FI efforts.
- Yerram Raju
A wider mandate needed
My View on "Bank licence: RBI may miss deadline":
The process for opening some more banks in the private sector was set in motion with the release of a discussion paper on the subject by RBI more than three years back. Like allowing commencement of any other business which is not prohibited by law of the land, ideally, it should have been possible for any individual or organisation to apply for a banking licence and RBI should have been in a position to grant or reject the application based on the need for a bank and the eligibility of the applicant to run a bank. The impression being created is that policy in this regard will be decided by North Block (read Finance Ministry) and Mint Street (RBI) based on their perception of eligibility of applicants for licences, which perception changes on an ongoing basis.
Clarity is only on one point which seems to be the government’s anxiety ‘that some licences are awarded before next year’s Lok Sabha election’; if possible, by the end of the financial year (March 31). On August 27, 2013, Reserve Bank of India has released a Discussion Paper on ‘Banking Structure in India – The Way Forward’. The Discussion paper has identified certain building blocks for the reorientation of the banking structure with a view to addressing various issues such as enhancing competition, financing higher growth, providing specialised services and furthering financial inclusion. It has also emphasized the need to address the concerns arising out of such changes with a view to managing the trade off for ensuring financial stability. It would be in the fitness of things if the Jalan Committee appointed by RBI to vet new bank licence applications is expanded and given a mandate to take into account the issues raised in the RBI Discussion Paper of August 27 and give the committee’s views on the eligible candidates from the 26 applicants conforming to the performance needs envisaged in the Discussion Paper and suggest structural changes in the banking system for further policy initiatives.
- M G Warrier, Mumbai
Only merit matters
In response to a query at a news meet, Raghuram Rajan had to reiterate “I am an Indian citizen” (Business Line, October 30). Merit is the only consideration in such appointments; issues like citizenship should not even be raised. Let us not forget that the first Governor of the then newly-constituted Reserve Bank of India in 1935 was an Australian. Recently, the British Government appointed a Canadian, Mark Carney as Governor of the Bank of England, to succeed the well-known Sir Mervyn King, as the government wanted the kind of experience the former had. Many Indians hold a Green Card to live in the US and gain wider experience and better work ethos.
- K.U.Mada, Mumbai (HBL)
Situations vacant
The economic division of the finance ministry has been headless since September when Raghuram Rajan moved to the Reserve Bank of India as governor, and a replacement looks unlikely anytime soon. Meanwhile, the division has suffered another vacancy..........
MBA arrested for selling 'RBI bonds'
.....In one such case, Kulshreshta promised Sanjita Hadimoni a role in a film, provided she gave him Rs 22 lakh. He told her he would invest the money in bonds. Hadimoni, who is from Dubai, gave him the money and the accused made fake gold bonds and posted it to her. The documents not only contained the name of the woman, but also bore the stamp of the Reserve Bank of India (RBI). When a relative who worked at the RBI told the woman that the documents were fraudulent, she asked for her money back. Kulshreshta allegedly harassed and threatened her. The victim then lodged a complaint at the Dindoshi police station...........
Four Nigerians get 3-yr RI for online fraud in unique ruling
............The accused had created email IDs resembling that of prominent organisations like the Reserve Bank of India, Bank of India and Coca Cola, and used to send emails to people informing them that they have won lotteries and if they want to encash it they would have to deposit certain amount in a bank account number provided by them (Nigerians).......
Banking on safety
In the light of volatile fluctuations in the stock market, precious metals, real estate, and so on, small investors have limited investment opportunities, especially in rural India where people do not have adequate knowledge about diversified investment avenues such as mutual funds, corporate deposits and the stock market. Bank deposits are considered the best investment option. Lakhs of senior citizens prefer only bank deposits, which guarantee them assured returns on their investments, to see them through life. Though bank deposits are safe, the returns are not so attractive when compared to other investments such as SIPs, corporate deposits, and so on. TDS deduction on interest will further reduce the returns. On an average, the depositor will get a maximum of only 8 per cent return (after TDS) on bank deposits. Hence, TDS should be discontinued. Alternatively, the present interest limit of Rs 10,000 for TDS should be increased to at least Rs 50,000; the benefit should be extended at least to senior citizens, who depend totally on interest income.
- Udaya Sankar (HBL)
Euphoria of the 5 per cent
.............What difference will the central bank’s estimates of a marginal spike in GDP make to our perception of economic growth? For those who consider India an emerging economy such as South Korea, Japan or even Iceland, perhaps a GDP of 5 per cent would be wonderful. But in order to think this way they would have to also deal in and perpetuate a fiction in which the expansion of one part of the national economy suffices to determine the destiny of the whole..........
Repo as key rate
This is with reference to the editorial “A mixed bag” (Business Line, October 30). All this while, RBI governors prioritised inflation over growth. As a result, the apex bank has been forced to reduce the growth forecast to just 5 per cent for the current fiscal. While the RBI governor’s move to envisage ‘repo’ as the key policy rate is welcome, he needs to cross-check whether this will bring the desired outcome. The RBI has failed to hold back food inflation even after successive rate hikes. This is mainly due to the rise in fuel prices, particularly diesel. This is a peculiar situation that exposes the lack of coordination between the government and the RBI. On the one hand, the government is increasing fuel prices every month and, on the other, the RBI continues to sacrifice growth by putting the blame on inflation. Both these entities should work in tandem to put the slowing economy on track.
- Vivek Mathai George (HBL)
CPI raps Rajan for 'opening up banking sector' remark
..............On Rajan's recent statements about major reforms being in the offing that would allow foreign banks to enter India in a big way and even take over domestic lenders, he said while 80 percent of banking activities were carried out by state-run banks, "foreign banks have never contributed to the development of the Indian economy." "Some of these banks have also been responsible for serious unethical practices," he said and also criticised the government for earlier allowing private sector to open banks.......................
India: Rajan steadies the ship
.........The government has been spending too much, and been too slow to deregulate the economy to encourage investment. Rajan has steadied the ship, but the government must get its act together if the recovery is to last.
Industry is obsessed with interest rates: C Rangarajan
NEW DELHI: Prime Minister Manmohan Singh's economic advisor C Rangarajan hit out at Indian business for its criticism of the central bank's latest monetary policy, saying that industry was obsessed with interest rates and backing governor Raghuram Rajan's push to rein in inflation. He also said that India's growth this year would be...........
Rajan shows no innovation
.....However, governor Rajan’s two policies are in fact too cautious. These do not reflect any proactive approaches that were expected from a person with global exposure and financial elan. Maybe, the fault lies more in expectation than in the execution of a policy in the current situation. But surely this is not the kind of approach that will bring a spring back into the economy.
FOMC meet outcome: Bernake takes over from where Rajan left off
.......However, party for the Indian stock markets, which have already been on an upward spiral since the Reserve Bank of India (RBI) governor Raghuram Rajan reviewed the Monetary Policy on Tuesday, could continue for some more time as a result US Fed’s stance as this would keep the FII flows coming into emerging markets (EMs) like India. For the markets, Ben Bernake has taken over from where Rajan left off..............
Muthoot Finance aims to become financial supermarket
Kerala-based Muthoot Finance, which has applied for banking licence, is aiming for an image makeover to transform itself from being just a gold loan company to a financial supermarket. "Muthoot is the only company from Kerala which has applied for banking licence," Chairman M G George Muthoot told reporters here................
Bank washes hands of Mamata's savings scheme
......... State-run Allahabad Bank, one of the four 'collecting banks' for the scheme, on Thursday dissociated itself from it saying that the bank was included without consent. While the scheme has already generated a 'lot of interest among people', the bank has declined to be a part of it saying that it needed further clarification from the Reserve Bank of India (RBI).......
Is New RBI Bond as Good as Gold?
.........On Tuesday, the Reserve Bank of India said it will issue the instruments, which will have a ten-year tenure, starting November or December. The rate of interest on the bonds will be a fixed rate plus inflation. Although world over such bonds have been used as a way to attract small investor savings, India is only now issuing them. Mr. Rajan’s Diwali gift is more than a kind gesture. It is squarely aimed at weaning Indian investors from buying gold, which is traditionally viewed as a safe hedge against inflation........
His dream a joke, sadhu now says give me 10 hrs, I will give you gold
.........Speaking at his ashram in Buxar, Sarkar said he knew the "exact location" of the gold. Demanding that the Army be roped in for the excavation, Sarkar said he could deliver the treasure within 10 hours. However, he said, the government would have to accept his terms — deposit 80 per cent of the gold in the Reserve Bank of India and use the remaining 20 per cent for the development of the region...........
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