.......So, if I were you, I would go ahead and do a 50 bps rate increase in the monetary policy meeting next week and in the January meeting. That does not sound that radical, I think. I was tempted to recommend a 75 bps increase next week but even I am brave enough only to be a “practical (arm-chair) revolutionary”. India needs a Raghuram Rajan-Paul Volcker, to force genuine structural reforms on India’s public and private sectors. With politicians distracted and powerless for now, you have a unique opportunity to hasten reforms with monetary policy. ..........
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, December 17, 2013
How Rajan asserts his autonomy
............The inflation we are experiencing is not amenable to monetary policy instruments, let us recognise that. It is primarily the responsibility of the government to contain price rise. It might be difficult to have quick fix on that. But let there be a beginning for a reasonable solution. Raghuram Rajan is of course aware of this.........
Change for the RBI regime?
............Greater transparency and communication policies: As recommended by the Committee on Financial Sector Reforms (2009), the RBI could develop and make public its inflation model to give some guidance to market participants on monetary policy decisions. As price stability becomes the RBI‟s primary mandate, it could produce its own version of the inflation report, which provides detailed economic analysis and inflation projections, on the basis of which interest rate decisions are made. Detailed minutes of the RBI‟s monetary policy committee may also be publicly released. That said, it doesn’t seem unreasonable for the RBI to move and then let everyone else catch up............
Banks have national responsibility to extend liberal credit to J&K: Rather
.......Speaking at the 91st meeting of the State Level Bankers Committee (SLBC) at Jammu today the Finance Minister impressed upon the Financial Institutions to remove the persisting impression that banks in J&K are interested only in deposits least concerned about advances. He asked the Banks to improve Credit Deposit Ratio (CDR) which is yet for below the National Bench Mark adding that there should be no flight of capital from the poor state like J&K. Chief Secretary, IqbalKhandey, Chairman J&K Bank, Mushtaq Ahmed, Principal Secretary Planning and Development, B.R. Sharma, Principal Secretary Finance, B.B. Vyas, Regional Director RBI, K.K. Saraf, Chief General Manager NABARD, DR. B.G. Mukhopadhay, Representatives of various National Banking Institutions, Administrative Secretaries and heads of various departments were present in the meeting...........
Obituary
Mr.N.Ramaswamy, (Ex.RBI/NABARD) Passed away peacefully on 12.12.2013.Deeply mourned by Wife: Lakshmi Ramaswamy Son: Narayan Rukmani Kartik Daughter: Saroja Ravichandran Rahul Brothers, Relatives & Friends
TOI
'Gold'en will
My View on "All that glitters... Dr.Subir Gokarn":
The inherent fear to touch or talk about the huge domestic stock of gold in India gets interwoven even in such a well-articulated and well-researched article by a person like Subir Gokarn. The fear of gold was captured by K U B Rao in his report on Gold Management repeased in January, 2013 in the following words:
“Indians’ obsession for large investment in physical gold is the outcome of the confluence of numerous and divergent factors. Given the complexities involved in the lure for gold in India, a holistic strategy that deploys a combination of demand reduction measures, supply management measures and measures to increase monetisation of idle gold stocks needs to be put in place. Creation of an alternative asset class that may provide returns comparable to return on investment in physical gold with similar flexibility is important. A necessary pre-condition for reducing the excessive demand for the precious metal is to ensure benign inflationary environment along with achieving and maintaining macroeconomic stability.”
If there is a will, there should be some way, to exploit productively at least a small portion of the domestic stock of gold which will minimize the need for gold import. There is no escape from standardizing a major portion of non-jewellery surface gold and making it available for productive purposes. When every other asset can be accounted, government cannot be apologetic only about gold.
Establishment of the Bullion Corporation of India proposed by the Working Group can play a major role in recycling and pooling of domestic scrap gold. In this context, the Committee’s following observation is relevant:
“ Temples in India holds large quantities of gold jewellery offered by devotees to the deities. There is also significant amount of scrap gold in the country. Some estimates say that scrap gold that comes into the system is nearly 300 tonnes per annum. It would be worth trying to channel the existing supplies of scrap gold in the country into the financial system, so that the unproductive nature of the gold asset is turned into a financially-productive medium.”
- M G WARRIER, Thiruvananthapuram
VITALINFO - Restless if don't get................
I get restless if I don't get to read VITALINFO
before I start my day. Best...............
- Rabi Mishra
EXPERT, FINANCIAL STABILITY UNIT,CENTRAL BANK OF
OMAN
Dear Mr.Tarambale, Good Morning. I hope all is fine. I have not received
your mail for the last couple of days – was just wondering whether all is fine.
Regards
- Nilima
Ramteke, General Manager, DPSS
Mangesh, You are doing a great job.
– Jagan Mohan Rao, Ex Chief General Manager
Hearty
congratulations to you! I cannot believe that the three years have gone by so
fast. Here is wishing a very happy birthday to VITALINFO.
-
Mrs. L.F. Fernandes, Private Secretary
'VITALINFO is very very very vital in true sense. With warm regards,
- M. Y. Bhat, AGM, RBI, Belapur, Navi Mumbai
I would like to receive the informative articles sent by you. You
are kindly requested to include my email id to your mailing list. Thanks and Regards
- Purnima Lakra, AGM, DGBA
ICSI conference with NISM
The Institute of Company Secretaries of India (ICSI) in association with the National Institute of Securities Markets (NISM) organized a conference on ‘Ethics and Corporate Governance’ on December 11, 2013 in Kolkata. The Conference was inaugurated by Anand Sinha, Deputy Governor, Reserve Bank of India.......
Forensic audit of ministries, too?
.......If RBI wanted to convey the message it means business, it has gone home. Last week this correspondent met the chairmen of two public sector banks where the discussion was just about this audit. RBI has followed it up barring lending of above Rs 10 crore by the bank to a single entity and also blocked it from restructuring stressed loans............
Promotions in Public Sector Banks
Government of India has published a new policy for the promotion of employees & officers in public sector banks. Detailed notification is attached below. Pls have a look if you are aspiring to get a bank job...........
Jalan panel holds 2nd meet to shortlist bank licence awardees
The advisory committee headed by former Reserve Bank of India (RBI) Governor Bimal Jalan for vetting applications to establish new banks held its second meeting on Monday. The committee is to eliminate applicants which do not meet the ‘fit and proper’ criteria for getting a licence. It is expected to complete the entire process in three months.........
Banks may not accept scribbled notes
......Indian currency notes, arguably, the dirtiest, most soiled and most perforated ones in the world. The Reserve Bank of India (RBI) is reversing the trend by pursuing aggressively its 'clean note policy.' The Central bank has asked all the banks that in the present system of mechanized processing of banknotes, 'inscriptions or scribbling on any part of the banknote would render it to be classified as unfit for reissue from January 1...............
Insurance plan of seven banks hits hurdle
Seven commercial banks are in danger of being tripped up by a tough Reserve Bank of India guideline that stipulates only those lenders with net bad loans below 3 per cent will be eligible to become insurance brokers. The central bank had recently come out with its draft guidelines relating to banks looking to enter the lucrative insurance broking business..........
A mission to secure currency for bitcoin
.......“In India, bitcoin can help solve the problems of the unbanked rural population. It is also a potential remittance tool. We are working with lawyers to draft possible policies that we could present to the RBI and other government agencies by next month,” said Sunny Ray, Director of Business Development at Buttercoin, a free bitcoin exchange that is backed by investors including Google Ventures..........
Fait accompli
..............Coming to policy decisions - the next of which is due on Wednesday - Reserve Bank of India Governor Raghuram Rajan has already made it clear that inflation control will be his priority and that he will attach significant weight to the CPI. These numbers do not seem to make enough of a case to deviate from the path that he started going down with a repo rate increase in September. Thus, .........
Despite high inflation, India Inc for 'accommodative' stance from Raghuram Rajan's RBI
.........Voicing similar concerns, Assocham Secretary General D S Rawat said the increase in WPI inflation released today before RBI's monetary policy review on Wednesday is certainly a big dampener for India¿s macro picture. "Still, the RBI should take a contrarian call this time around and hold the interest rates, if not drop them, since the data suggests that inflation has largely come about riding on a steep rise in prices of food articles, particularly fruits and vegetables," Rawat said..........
Cereal offenders - Ila Patnaik
The RBI governor, Raghuram Rajan, has a difficult task this week. He has to decide whether to keep interest rates constant or raise them — bearing in mind the possible taper of the US Fed's bond buying programme, a decline in industrial production and a rise in inflation. The sharp increase in consumer price-based inflation, to more than 11 per cent, has significantly added to the RBI's headache. The increase in inflation is mainly due to the nearly ................
Curbing inflationary expectations to take precedence
........Taking into consideration the evolving growth and inflation dynamics, RBI may be constrained to raise the repo rate by at least 25 basis points in the next policy review, to anchor inflationary expectations. Agriculture sector growth and increased clearances to infrastructure projects may result in better second-half growth numbers. With concern about the external sector............
RBI has little choice but to raise rates after inflation data
.....Note also that Rajan has said several times that the source of inflation is not important, it’s their effect on inflationary expectations that counts. He has also consistently stressed the need to provide positive real returns to savers and bank deposit rates are still lower than retail inflation. With both ..........
Year 2013: Unexpected reversal of interest rate cycle
.......What wasn’t foreseen was a plunge in the rupee; it fell to an all-time low of 68.85/dollar on August 28. “Despite growth being a concern, with inflation remaining significantly stubborn for most of the year, the policy stance had to shift and calibrate, in terms of addressing inflationary expectations. A large part of this inflation came from supply constraints. In addition, RBI mounted an interest rate defence to impart stability to the highly-volatile currency. A hint of taper from the US Fed...........
Taper not a worry as RBI better prepared
....As far as RBI is concerned, looking at all the inflation data and all the facts, it needs to act to control the inflation but interest rate hike may not be something which will have the desired effect. This is because if you look into the banking system you will find that the deposit growth rates are higher than the credit growth rate. Also, the FCNR deposit that has come into the country has resulted in huge amount of liquidity with the banks and so, the rate hike may not be transmitted...........
The Phailin effect
..... As with any policy that is not reactive, RBI needs to look at what future sources of inflation will be. While private consumption expenditure grew a faster 2.2% in Q2 versus 1.6% in Q1, this is dramatically lower than the 9% levels just six quarters ago; government expenditure, given that 84% of the fiscal deficit target has been used up by October, is going to slow dramatically, indeed this is already visible with government expenditure contracting..........
Time to signal monetary easing
.....Under the circumstances, monetary policy must combat rather than exacerbate the effects of fiscal consolidation. A reversal in its tight stances at this point will relieve both producers and consumers somewhat and contain the spreading fragility. This may sound ludicrous to inflation hawks, but surely monetary policy must be anticipatory and move ahead of the economic cycle? Indications are that the depreciation-caused inflation pressures, which appeared in the past two-three months, have subsided. ........
India’s latest political problem: inflation
....The Reserve Bank of India (RBI) appeared to be the lone voice warning about the perils of inflation even as it faced tremendous pressure from both the finance ministry and industry lobbies to maintain an accommodative pro-inflationary bias. To its credit, RBI did not entirely give in to such pressures but it remained behind the curve for quite a while. In his last public speech as the RBI governor, D. Subbarao pointed out that the economy would have been better served if the fight against inflation “had started sooner and had been faster and stronger”. Now that the tide of public opinion seems to have turned sharply .....
High CAD just Might Return
This
refers to ‘Gold Import Curbs may Go as CAD Falls Dramatically’ (ET, Dec
16). As long as there’s demand, it will be difficult to restrict import
through illegal channels. People will invest in gold as long as high
inflation is seen and easy liquidity is available for the commodity.
Though inflation cannot be controlled in the near term, the RBI may ban
loan against gold jewellery by banks. If import curb is removed without
bringing down inflation or reducing the appetite for gold, we may see
uncomfortable CAD again.
- S KALYANASUNDARAM, Chennai (ET)
- S KALYANASUNDARAM, Chennai (ET)
RBI Alone Can’t Curb Inflation
This
refers to ‘RBI Likely to Increase Repo Rate by 25 bps’ (ET, Dec 16).
RBI alone cannot control inflation since it is an indivisible economic
phenomenon affected by growth and governance. Inflation is bound to rise
because of 2014 general elections and repolling in Delhi. Elections mean exorbitant expenditure and use of black money. The RBI’s quantitative
controls cannot control such resources. Also, inflation should be seen
not only in terms of price rise but also in terms of decrease in quality
and size of products and services.
- A L AGARWAL, New Delhi (ET)
- A L AGARWAL, New Delhi (ET)
Moneylenders come under police scanner
............City Police Commissioner P. Vijayan said the intelligence wing had conducted a preliminary audit of the functioning of these institutions following a spate of complaints from the public, mostly the urban poor and also aged and indigent persons. Most of the errant institutions operated on licences obtained from the Commercial Taxes Department. They charged an usurious rate of interest from their customers, often up to 20 times more than that set by the Reserve Bank of India (RBI), he said..........
RBI's new PIN rule boosts sales of payment solution companies
......The new PIN mandate would affect more than 350 million debit card holders in the country. A recent study by industry body ASSOCHAM showed that the debit card users, growing at an annual rate of 18 per cent, were clocking sales of 69 billion rupees using POS terminals every month. The number of POS terminals in the market has grown significantly in the recent years. As of the end of September, there were 965,000 terminals in use across the country, 46 per cent higher than the 661,000 devices in March 2012, according to data provided by e-payment services provider Worldline India..........
ATM density still low in India
Do you often find yourself standing in queue at the ATM (automated teller machine)? Well, the reason could be there are just 25.4 machines in every 1,000 sq. km in India. This translates into 8.9 ATMs for every one lakh population, one of the lowest densities in the world, according to RBI data outlining global financial inclusion indicators for 2011. In contrast, bank customers in China have access to 2,975 machines in the same geographical expanse, with 49.6 ATMs per one lakh population...............
PIN at your own risk...
....“Though it’s a good rule, it’s not totally fool-proof,” he feels. “Some of my customers actually send their cards, along with the PINs, with their servants,” he exclaims. Ask him if it’s safe to use the PIN in a crowded store and he replies, “It’s difficult to notice it. Most people hide the keyboard and press the number.”...................
What RBI’s NPA move really mean: Govt control on banks should go
..........The report says the RBI will force banks to profile a borrower at the very first instance of a default. Further, a panel of lenders’ consortium will vet decisions taken on loans of Rs 100 crore or more. This move is expected to curb restructuring. Another step being considered is giving incentives to banks which identify potential NPAs early on. The norms being mulled are pre-emptive in nature. They are aimed at encouraging banks to spot an NPA early on and taking necessary measures. But that is not all. They also have pointers to the government..........
Read............
Public sector banks may have to set up insurance broking arms by February
.....What this means is that banks cannot push products of their own group insurance companies beyond 25 per cent of the total annual sales. Most major public sector and private sector banks, such as State Bank of India, Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have promoted insurance companies. The Reserve Bank of India has also released stringent draft guidelines on banks becoming brokers. It stipulated that their net non-performing assets (NPA) should be below 3 per cent......
How 'wilful defaults', write-offs cost banks Rs 1.6 lakh cr last decade
.........RBI numbers showed that the banks added Rs 494,836 crore to their bad loans between 2007 and 2013. During the same period, they reduced NPAs to the extent of Rs 350,332 crore. This was possible because loans worth Rs 141,295 crore were written off; another Rs 90,887 crore were upgraded to repaying loans; and a small part — Rs 118,149 crore — was recovered from defaulters. As Chakrabarty explained, after a technical write-off there is no incentive to pursue recovery...........
Beware of Insurance Agent’s ‘Triple Benefit’ Sales Pitch
This
life insurance product is available for a limited period. It won’t be
available after December 31. Don’t miss the opportunity to get triple
benefits of savings, insurance and tax-saving.” Recognise the sales
pitch? No? Well, you are most likely to hear those lines from an
insurance advisor before the end of the year. The advisor is right: the
three-in-one policy that he tries to sell won’t be available after
December 31, since that is the deadline set by insurance regulator IRDA
to withdraw the existing traditional endowment products. What he doesn’t
tell you is that there will be better ‘customerfriendly’ products
available from the New Year.........
Read - ET
Read - ET
Subscribe to:
Posts (Atom)