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Monday, December 16, 2013
Pitching for limiting Reserve Bank of India functions
Clipping RBI's wings
The UPA government ruined the economy. They have also sown the seeds to kill the otherwise Sound Financial system of the country by appointing FSDC and FSLRC to take away the powers of RBI which has systematically and meticulously built up the Financial System against all odds and earned the well deserved recognition from all over the world to keep the financial system insulated from global financial crisis. If RBI 's powers are clipped further, one can see the collapse of the Financial system at the earliest and the damage cannot be easily repaired . Political agenda if allowed to overlook and supersede the economic agenda, the country can have only a very bleak future.The financial system particularly the banking system is very healthy strong and sound only because the Reserve Bank's approach to have a strong financial foundation keeping in view the growth of the economy and make it a super economy on par with other advanced economies.
- Dr.T.V.Gopalakrishnan
This refers to the report
“Pitching for limiting Reserve Bank of India functions”(December 15). FM’s
hurry to go ahead with measures to implement FSLRC report, sans legislation, is
understandable in the context of the political developments last week. The
motive, namely to complete a pending agenda before a LS Election with
unpredictable results, cannot be faulted.
Coming to the details, the
observations
“It(RBI) is the monetary authority and it will
be a regulator of banks, but all other functions I think should be revisited
and we should ask ourselves whether RBI is the best authority to discharge
those functions or is there any other authority in the system which can take
over those functions or is it necessary to create a separate authority,”
and
“What the FSLRC says is that some
functions of the RBI can be better done by the government and some functions
can be entrusted to new bodies. I think it is a well-argued thought and
well-reasoned thought,”
lack clarity and need further
elucidation.
If RBI has failed as an
institution, why FM is favouring revisiting only select functions RBI is
mandated to do? If the FM’s perception is correct, the need of the hour is
first reforming RBI, or examining the need for such a reform. As regards FSLRC report, the
implementation should follow due process of deliberation and legislation and
proceeding with implementation hurriedly may end up in controversies much
larger in magnitude than those surfaced after such bull-dozer approach in the
cases of NPS and AADHAAR.
- M G WARRIER, Thiruvananthapuram
The origin of runaway inflation - A.Seshan
................I was also one of the authors of the Liberalised Exchange Rate Management System along with OP Sodhani and PB Kulkarni. I was a member of the Policy Group on External Debt Statistics in a two-man committee along with Y V Reddy, then joint secretary in the finance ministry. Second, when the project to prepare the document was initiated, I was approached by RBI authorities to head the History Cell, a prestigious assignment from the professional point of view. Unfortunately, I could not accept owing to other heavy commitments. It is possible to review this massive volume in two parts only selectively. Overall, it is a chronicle well told by a team of experienced officials with good documentation and guided by a distinguished advisory committee of experts. I only wish they had had access to the finance ministry archives also, ................
Reforming Regulatory Environment Need of the Hour - M.G.Warrier
........It’s high time that rating agencies, or for that matter whosoever judges the performance of economies changed their parameters to factor in the inherent strengths and weaknesses of nations. Countries like India with huge resources including human resources and much less consumption needs as compared to developed’ countries and nations which.............
Corporate Ethics and Corporate Governance – Who will guard the guards? : Dr. (Smt) Deepali Pant Joshi
Speech delivered by Dr. (Smt) Deepali Pant Joshi, Executive Director, Reserve Bank of India at the National Institute of Securities Markets, Kolkata on 11th December, 2013
..........Banks constitute the largest financial intermediaries globally and possess stupendous powers of leverage. The RBI plays a direct role in Bank governance through the regulation and supervision of Banking Institutions. This role assumes greater salience viewed in conjunction with the need to ensure systemic and financial stability. Banks enjoy the benefit of high leverage with the downside protection of deposit insurance which weakens their incentives for strong management. They also remain ‘Too Big to Fail’ (TBTF). The current Basel accord lays even greater stress on...............
All that glitters... Dr.Subir Gokarn
............First, all the handwringing about gold that has gone on over the past couple of years has, of course, been motivated by the enormous surge in the current account deficit, to which gold imports were a significant contributor. The reality is that imports accelerated sharply about five years ago and, while they were certainly a factor, the massive widening of the deficit in 2011-12 and 2012-13 was more the consequence of .........
Streamlining policies, procedures and operations relating to NRIs and foreign investors: Overseas looking Glass - Dr.S.S.Tarapore
........With the easing of exchange controls after 1991, there has been a perverse effect as the monolith regulation has given rise to multiple regulators as the powers have devolved from RBI to banks and further with the delegation of powers within each bank. In the upshot the bank customer faces a myriad of regulations which are not standardized. In May 2011, the RBI set up a Committee to review the Forex procedures for individuals both resident and non-resident with Ms. K.J. Udeshi (former Deputy Governor RBI) as Chairman. The Committee submitted its report in August 2011 and a number of procedural hurdles were eased. Nonetheless, there are still a number of unnecessary procedural impediments which need to be remedied........
Raghuram Rajan has failed to curb inflation
Reserve Bank of India Governor, Raghuram Rajan, who was touted as the next "big" thing for the Indian economy, has come in for scathing criticism for failing to tame inflation after taking charge in September. Inflation in the consumer price index rose to 11.24% in November primarily because of a 14.5% rise in food and vegetable prices. "The RBI must realise that in the changed scenario where the various government schemes have raised the purchasing power of rural India, CPI and food inflation are not going to be tamed by making loans costlier...........
FM meets RBI Guv before policy; rate hike near certain
........“We discussed the economic situation and a variety of issues. The meeting was good, cordial. (there was) Exchange of information. Finance ministry and RBI are always in communication,”......
Read - FPJ
RBI pip XYZ to enter semis
RBI Sports and Recreation Club of Ahmedabad piped XYZ Football Club 3-1 in the penalty to make it to the semifinal of the Times of India Baroda Open T20 Soccer Tournament currently underway at MS University Pavilion ground. RBI got fair opportunities to score but they failed to capitalize any of them resulting in the goalless finish during regulation time.........
Interpreting Financial Policies for the Common Person
.........The book is for the “ Aam Aadmi” who has not specialized in finance and economics but is keen to know what makes the economy tick. The author believes that the common person should have a working knowledge of the nature and significance of financial policies. The lay citizen must not be trampled by the juggernaut of jargon. So Tarapore explains important concepts and terms in simple easy- to- comprehend language.......
Obituary
This is to inform that Shri Roshan Lal Sharda, AGM (Retd) left for his
heavenly abode on 10th December 2013. Tiye ki Baithak was held yesterday. He
joined RBI in 1963 and has worked in Jaipur, New Delhi and Ahmedabad
offices of the bank.
- Arora Shori Lal
- Arora Shori Lal
RBI to issue new currency notes
....The new series of Rs 500 notes will also be launched with domination currency notes incorporating the new rupee symbol and without any inset letter. The Rs 500 notes will bear the signature of RBI chief Raghuram Rajan. The year of printing of the notes will be 2013.......
Biggest Ever Slap on Face of Bank Management and IBA
.........I am not sure, how many of our colleagues will benefit from this judgment as the same is loaded with few complex interpretations. However, it is tribute to our senior bank colleagues and their families that they have been fighting tooth and nail. Once again this case belongs to a widow of a banker, who decided to not leave the Bank of Baroda Management and fought upto Supreme Court...............
Read.........
Read.........
Harsh Bhanwala is new Nabard Chairman
....Bhanwala, who had earlier worked as an officer at Nabard, succeeds Prakash Bakshi, who retired as Nabard Chairman in September............
Seminar on banking
The M.B.A. Department at JB Institute of Engineering and Technology (JBIET) conducted a day-long seminar on “Strategies for Sustainability in Banking and Insurance Sectors” last week. The seminar was organised to create awareness among students, academicians and professionals to encourage participation, and promote research in the field, a press release said. Professionals from banking and insurance sectors including RBI Deputy General Manager Rakesh Kumar Rajput, IRDA member M. Rama Prasad, NIRD professor Bijay Kumar Swain and editor of IRDA Journal U. Jawaharlal participated in the seminar and shared their insights with the students and academics. The event was coordinated by MBA Department head P. Kameshwari.
The Hindu
Bank licences to take a while
...........RBI governor Raghuram Rajan had said the banking regulator will try to issue new bank licences within, or soon after, the term of deputy governor Anand Sinha, who is 'shepherding' the process, expires in January 2014. However, the sources said since the process includes the RBI's scrutiny and a screening by an external panel led by former RBI governor Bimal Jalan, the ministry now feels that the issuance of licences may spill over to the new fiscal or could even be after the formation of a new government at the Centre (following general elections in April-May)...........
The widening cracks in India’s banking system
.......How deep is the problem? A full-blown banking crisis seems highly unlikely. But there is reason for concern if economic conditions continue to deteriorate. The results of the latest stress tests conducted by the banking regulator should be released in its forthcoming report on financial stability; they will make for interesting reading...........
Bankers’ leaps
..............The Reserve Bank of India realized its levity, and has renamed the accounts Basic Savings Bank Deposit Accounts. It recognizes that the name is a mouthful, so it has allowed the use of the acronym BSBDAs. It had earlier banned from recruitment as banking correspondent anyone who was in business or who made a profit. It has now realized that no one in a village would..................
Managing the too-big-to-fail
......Banks in India have a number of options to comply with the new loss absorbency requirement. These include capitalising retained earnings (assuming profitability is maintained), raising new equity, or reducing risk-weighted assets, which means reducing trading activity and lending. Banks will also probably try and keep lending off their balance sheets, either by helping Indian companies to issue bonds, or through securitisations. The capital surcharge could therefore......
And now, a desi digital currency in the offing
...........There is even a ‘laxmicoin’, India’s very own digital currency, in the making. Sample this: at least three different companies are in talks with Indian banks and other financial institutions to set up a domestic exchange that will allow the purchase and sale of bitcoins. The most prominent among the companies is U.S.-based Buttercoin, a free bitcoin exchange backed by investors such as Google Ventures. However, according to a senior banking official, this would require, at the least, a number of approvals and a ‘no-objection’ certificate from the Reserve Bank of India as well as co-operation from State Bank of India........
Pesky price rise monster
.......From his corner office on the 18th floor as the RBI Guv overlooks the bulging megalopolis below, he weighs the old debate of growth versus inflation once again. The debate at one level is nearly as old as the Western Ghats, for India's policy mavens have been unable to come up with any worthwhile supply-side interventions. All that the Governor Raghuram Rajan is left with is monetary tools and I am sure he will have to use this instrumentality yet again on December 18 when he comes up with another policy review...............
Global bitcoin conference calls for RBI recognition
....Globally, there are concerns of bitcoins being used as a money laundering channel. In October, the US government clamped down on Silk Road, an online marketplace that sold drugs for payments made in bitcoins. "Anything can be used for illegal purposes. If RBI forms a framework, this will be one of the easiest systems out there that can be monitored by government agencies and there is no way one can destroy the trail of the currency," ...........
RBI to unveil norms for early detection of stressed loans
..............A high-level working committee of RBI officials, reporting directly to the governor's office, will issue a discussion paper on corporate distress and financial restructuring. The move follows a sharp rise in non-performing assets (NPAs), as well as debt restructuring, mostly for public-sector lenders over the past couple of years........
Inflation not reacting to interest rate hikes: K. V. Kamath
.......Delivering the third Ravi Mathai Memorial Lecture at the Golden Jubilee Celebrations of the Hyderabad Alumni Chapter of Indian Institute of Management-Ahmedabad (IIM-A), he said inflation had not reacted to the medicine of repeated interest rates hikes. The Reserve Bank of India is scheduled to announce its mid-quarter monetary policy review on December 18. The untamed inflation would lead us to the basic question of the nature of problem affecting the economy, Kamath said,.....
The high price of food
It is strange that RBI governor Raghuram Rajan has blamed the Agricultural Produce Marketing Control Acts of different states for high food inflation. The APMC Acts certainly need to be looked into, and drastic reforms are needed to the non-transparent way in which auctions are carried out at mandis, but to say they are responsible for high food prices does not make sense...........
Chidambaram blames banks for going 'soft' on loan recovery
..... "Why do you leave blame at the door of the government? The responsibility and therefore the blame should stop with the board of directors. If the NPAs and restructured loans are combined, the distressed loan ratio is close to 10 per cent, or around Rs 5,50,000 crore, as per the figures from the Reserve Bank of India...........
How ‘wilful defaults’, write-offs cost banks Rs.1.6 lakh cr last decade
......Most defaults were “technically settled” at a fraction (sometimes one-fourth) of the principal sum lent out. The rest was written off under oral instructions “from above”. Even though the RBI was in the dark about the quantum of such happenings, the finance ministry was quite aware of this. Its own department, – the Central Economic Intelligence Bureau (CEIB) – kept track of such borrowings, and it was from the CEIB that this correspondent got several details. However, no action was taken against the bank managers, the companies or their officials. Multiply such stratagems several-fold, and you can then appreciate the numbers presented by Chakrabarty in his talk on November 11 this year (see table). It can be seen that just 181 companies accounted for almost 78% (`10,596 crore) of big frauds (of over `50 crore) and involved a period of at least five years for “crystallisation” of the loans as bad debts. Of these,..........
Will the easing pressure on liquidity persist?
...........In any case, RBI seems predisposed towards a neutral liquidity kind of scenario, said a fixed income and bond markets strategist from a foreign bank. The central bank is set to inject Rs.10,000 crore into the system through its 14-day term repo auction on Friday. That said, liquidity might again start to tighten a bit once the new year is underway.........
Microfinance Bill set to lapse yet again
........A lack of consensus has held up the proposed law. The Reserve Bank of India (RBI) is not comfortable with the proposed regulatory structure for microlenders suggested by the legislation and the ministry of rural development believes it is designed to protect microlenders and will seriously hamper the country’s self-help group (SHG) movement...............
Aadhaar-based authentication not mandatory
........Chandrasekhar had asked the ministry, and also raised the issue to RBI governor Raghuram Rajan on 10th October, whether government was proposing to direct all banks to absorb these increased cost of banking due to Aadhaar requirements, and not to pass these costs to consumers in order to safeguards their interests. Chandrasekhar said even earlier experiments with Aadhaar-based biometric ATMs during 2004 and 2007 had failed, as it proved to be a high-priced proposition for implementation.....
Premium on continuity
Much of what Finance Minister P. Chidambaram and RBI Governor Raghuram Rajan said at the Economic Conclave 2013 is not new. There is, however, a special contextual significance. It is for the first time after the recent State Assembly elections that top policymakers of the UPA government are seen reiterating the broad contours of the government’s economic agenda and policy goals. Considering that the Congress party heading the UPA lost heavily in the elections and faces an equally grim challenge in the general elections barely six months away, the purpose of such reiteration is not quite clear. .........
Cheque forgery: Bank told to pay victim 7.2 lakh
.....In his complaint lodged with the forum in 2009, Ramker Jaiswal said some unknown person had withdrawn Rs 1 lakh from his account by encashing a forged bearer cheque at the Ambernath branch of Canara Bank. He said that the cheque was cleared though the signature on it looked different from his own, which was available in the bank records. .......
Nine reasons for getting an income tax notice
.......In recent months, thousands of taxpayers have been served notices after discrepancies were noted in their tax returns or their TDS details. This sudden rise in the number of tax notices is not because people have stopped paying tax or filing their returns. It’s just that the tax authorities now have an integrated database on taxpayers and can track all financial transactions. Here are some common reasons for getting a notice. ..............
Read - TOI
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