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Thursday, December 19, 2013
Raghuram does a Rajan
RBI gets its priorities right - A.Seshan
........What is important is the strong message coming through, both in the press release and in the interaction of the governor with the media, that the RBI is not soft on inflation. There is a reassuring statement that, if the expected fall in inflation does not take place, the central bank will take appropriate action even before the next review. Though growth is mentioned, there is not much focus on it. In fact, comfort is indirectly derived from the fact that slower growth should contribute to some relief in inflation!..................
Raghu Leela...
We
are trying to calibrate monetary policy primarily to target inflation
in an environment when the economy is weak. So, when we take action, we
have to be convinced. That’s why we were waiting to take action. When
there are a lot of uncertainties, you want to wait for more data to get a
sense… This is precise calibration of action. Rate decision does not
depend on a particular indicator but a variety of indicators. We need to
see substantial softening of headline inflation as well as some
momentum in the right direction of food........
Read - ET
Read - ET
Philanthropist Chaurasia wants to start a charity hospital
NAGPUR: Jaiprakash Chaurasia, a retired employee of the Reserve Bank of India, for whom philanthropy is passion, is now proposing to start a charitable hospital for the needy. "I have identified a land on the outskirts of the city, on Kamptee Road, and want to start a medical facility where doctors from the city could offer services," he said. Talking to TOI on Tuesday after returning from New Delhi where he received the Rashtriya Seva Ratna award from a non-profit voluntary organization Vishwa Sewa Parishad on Sunday, he spoke about plans to start a hospital. ............
Ooty to host workshop on mountain development
........On the occasion, the Deputy Chairman will present the Nilgiri Conservation Award to Dr. K. C. Chakrabarty, Deputy Governor of RBI and Dr. M. Narendra, Chairman and Managing Director, Indian Overseas Bank for implementing the unique and successful financial inclusion plan for the primitive tribes of Nilgiris.........
Aspects of foreign exchange, export discussed
...........Speaking on the occasion, Chief General Manager in charge of Foreign Exchange Department (Central Office), Reserve Bank of India (RBI), Mumbai, RN Kar said such awareness programmes in the name of town hall meetings must be taken as an outreach programme for making effective policies. Kar spoke at length about the various aspects of foreign exchange business and the incentives available to the exporters across the state. Regional director, RBI (Bihar and Jharkhand), MK Verma, while speaking on the evolution of foreign exchange business and various liberalized measures and facilities available to the exporters and manufacturers in Bihar, said the RBI being the regulator and supervisor of the Indian market is entrusted to oversee it...........
Against the current
......The policy decision indicates that the RBI's internal models do not expect this to happen soon. The internal assumption must suggest that demand will stay low and will not rise for another couple of quarters, by which time monetary policy contraction will have had an effect. When the RBI adopts a proper monetary policy framework, which Rajan has asked Deputy Governor Urjit Patel to work on, we can expect to see a clear inflation target and a way to get there. .........
RBI holds rate for now but warns of future hike
Bankers rule out rate cuts
.........“It really hurts the depositors, and we would not like to do (cut rates) that. Our rates are still higher than what they were on July 15, I see no immediate response towards the rate cut.”.............
Don’t Expect Central Bank’s Breather to Last
......Indeed, the phrase Mr. Rajan used in his remarks was “wide bands of uncertainty.” The RBI said it will act if there isn’t a “significant” reduction in headline inflation in the next round of data, or if core inflation doesn’t fall. In that case, the policy response will be “appropriately calibrated,” Wednesday’s statement said. No guesses as to what “significant” and “appropriate” will actually mean for the central bank’s purposes. Consumer and wholesale inflation data for December are scheduled to be released Jan. 13 and 14, respectively. Recent data releases have included sharp upward revisions to previous months’ inflation figures. The RBI’s suspicion is that price pressures are close to abating on their own. Recent high inflation largely is due to high vegetable prices, which in theory aren’t that affected by central-bank policy..............
RBI ready to act on off-policy dates: Guv
RBI
Governor Raghuram Rajan shied away from acknowledging that his decision
to leave things unchanged was a brave move, pointing out that in the
British comedy “Yes Minister”, ‘brave’ was the euphemism used by
bureaucrats to describe a foolhardy move............
Red - TOI
Red - TOI
Gold import curbs will spur smuggling: RBI
..........“I would have been happier if we had the current account deficit (CAD) that we have without significant curbs on anything, including gold. I think that is our aim. I think, we should aim to have a sustainable CAD without any distortions, like removing incentives for smuggling of gold [the 10 per cent import duty on the yellow metal has led to a spike in gold smuggling],” said Dr. Rajan. He was addressing a press conference to announce the RBI’s third mid-quarter review of monetary policy.......
Sensible pause
Given that the signals on inflation are very conflicting, RBI has done well to decide to wait for another month or so before it takes any action on hiking either the repo rate or CRR level—the latter is more likely to result in borrowing costs rising. As..........
India Inc lauds Rajan, says 'brilliant forward reading'
......."RBI's decision to keep the repo rate unchanged after two successive increases comes as a welcome breather. Ficci has been urging RBI as well as the government to bring the focus back on growth which has taken a serious beating.",....................
Why waste a rate hike?
.....Since weak growth momentum has restricted RBI’s degrees of freedom in using interest rates to fight inflation, it is also important to use the limited room to synchronise domestic policy action with evolving global dynamics. With possibility of tapering by the US Fed remaining high in January, a rate hike around the same time offers tactical advantage by bolstering India’s preparedness for the unwinding of liquidity stimulus. So, why waste a rate hike now?
Equity, bond markets cheer ‘Santa’ Rajan
Equity and bond markets saw in Wednesday’s RBI policy review a veritable Christmas gift and in governor Raghuram Rajan a lovable Santa. Equity markets that had been on a downward ride for the last six straight sessions and were anticipating a third straight rate hike, were pleasantly surprised by RBI’s no-hike policy. After ..........
Raghuram Rajan takes a calculated gamble by not hiking rates
........By every yardstick, RBI’s decision to hold on to the current policy rate despite rising inflation is a close call. Instead of going for an all-out attack against inflation and bottling inflationary expectations by being proactive, Rajan has preferred to play a game of catch-up. Not too many analysts are expecting a significant reduction in inflation numbers—both retail as well as wholesale—in December. If indeed that is the case, Rajan is merely delaying the inevitable. An action-less policy at this point is not in sync with his stated stance against inflation. Moreover, the time was ideal as there would not have been an iota of political opposition to a rate hike at this juncture............
Limitation of RBI’s monetary policy in taming inflation
..........The RBI measure to increase inflation in the past has only retarded growth. The RBI needs to understand that even if inflation comes down in near future, it may be because of factors such as better supply of foodgrains post-kharif crops. Given the policy measures adopted by the government during recent years, it is better that we learn to live with new normal inflation or rethink our policy measures. .......
Governor’s Master Stroke Defies All Expectations
.....The
hike in interest rate was expected as inflation has been stubbornly
high. Let us understand why it makes a lot of sense despite high
inflation and desperate need to tame it. The primary contributor to
price rise is food inflation which has been in double digits for 20
months now. The Achilles heel is vegetable prices, hurting the common
man. The other large contributor to inflation has been fuel prices. Yet,
the fact is RBI’s monetary policy can achieve nothing as far as food,
vegetables or fuel prices are concerned...........
RBI to keep vigil on inflation
...The
central bank admitted the decision to maintain the status quo had been a
close-run thing but that the situation merited a pause in the policy
tightening war on inflation. RBI will be vigilant on the inflation front
and won’t hesitate to take action whenever it deems necessary. “Current
inflation is too high,” it said in a release on Wednesday. “However,
given the wide bands of uncertainty surrounding the short-term path of
inflation from its high current levels, and given the weak state of the
economy, the inadvisability of overly reactive policy action, as well as
the long........
Read - ET
RBI kept key rates unchanged to push growth, says Montek Singh Ahluwalia
......."Keeping in mind, the need to give the economy stimulus and not wanting to take too hasty a step, the (RBI) Governor has surprised the markets. Markets were expecting a hike," Ahluwalia told reporters here. "He (RBI Governor Raghuram Rajan) is expressing confidence that price inflation will come under control and let's hope that he is right. If he is right then definitely in retrospect it will be proved to be very good decision,"..........
PSU banks' staff go on strike; operations hit
Divide to rule
My View on "CURSE OF ’13 OFFERS A FEW LESSONS":
Institutional reforms are not easy come by in a world ruled by hypocrisy. Banking sector is in dire need of governance reforms. It is time to see whether the CMD posts in PSBs need separation of Chairperson. Time to see how the SBI and other private sector banks with non-executive chairmen are performing with division of functions between the Chairman and Managing Director and draw lessons. It is also time to see the effectiveness of the various committees of Board in Banks are functioning in terms of their roles and responsibilities.
- Yerram Raju
Making NPAs perform
......... Though some part of this exists even today—such as the provision to transfer part of the borrowers’ equity to the banks or to put it in an escrow account to allow for change in management control—RBI is strengthening the provisions by, in some cases, codifying them. Wilful defaulters—and it is up to the banks to classify lenders in this fashion—will not be eligible for restructuring and, if an exception is to be made, each and every bank in the consortium has to approve this. Here’s the added twist......
RBI should have given spl push to engineering exports: EEPC
........“RBI should have given a special dispensation of interest rates to exports, which are key to maintaining stability on the external sector parameters like current account deficit,” EEPC India chairman Anupam Shah said...........
Bilateral Currency Swap Arrangement Between Reserve Bank of India and Bank of Japan
......The terms of the Agreement have been agreed between the Indian and the Japanese side in this regard. The Government of India has authorized Reserve Bank of India (RBI) to sign the agreement..........
Government to conduct debt switch mostly with insurers
..........RBI Deputy Governor H. R. Khan said the central bank was considering dealing directly with insurance companies, which are traditionally buy-and-hold investors and would not be as much affected by falls in bond prices. "A large number of long-tenure bonds are held by insurance companies," Khan told analysts in a conference call on Wednesday. "So they will be the ones who will be switching, and not the banks so much.".......
RBI surveys households in Bhopal on impact of inflation
....... "We have been provided with a questionnaire by the RBI for the door-to-door survey in Bhopal". Also, RBI wants to know impact of existing inflation and how it would affect all in three months from now. A few of the questions asked by the surveyors were how much your expenditure has gone up? and what is the difference in your foodbill and expenditure?...........
Tightening rules
....Asset deterioration of banks has been perceptible for some time now and by specifying the formation of a lenders committee, the RBI is clearly requiring a timeline from borrowers to settle their outstanding debt. While it would be officially acceptable to call the situation stable for now, the RBI has been pre-emptive in tackling any inherent instability in the banking system by changing the solution for ..........
‘Please tell me your ATM PIN’
........Retailers to restaurateurs, traders to merchants and most importantly customers are finding it difficult to incorporate the change. The most glaring problem is that of debit card holders being asked to share their PIN at merchant outlets where the cashier’s counter is not easily accessible..........
The GenNext currency
..........Bitcoins got visibility in India when bitfilm used it for the voting process and as prize money in its 13th International Digital Film Competition in Bengaluru. Reports talk of 30000-strong Indian BTC and e-wallet owners participating in TOR forums on BTC. CoinMonk organised India's first bitcoin conference in Bengaluru (December 15) where investors/enthusiasts/bankers gathered to convince the government and regulators that the bitcoin ecosystem would be a valuable economic innovation for unbanked India and for remittances. They talked of India's laxmicoin, the Rs.1.20-crore bitcoin transactions, and hoped RBI would form policies about it......
Shunted out of top 10 banks list, 'displeased' HDFC Bank wants rankings overhauled
..........HDFC Bank also sought to differentiate large or commercial banks with cooperative or small banks while working out rank for any bank as later normally have less presence or branch strength. "Cooperative banks should be put in separate category (for ranking purpose),"........
Bitcoin’s challenge
......Bitcoins can be mined by anyone who owns a computer and devotes machine time to running an algorithm which computes data blocks representing value. Like conventional currencies, it is built on the notion of scarcity. In this case, the difficulty of computation and the physical limitations of computer hardware create scarcity. ..........
Over 6,000 financial frauds in 2013: RBI
The Reserve Bank of India has reported 6,034 cases of frauds involving credit cards and debit cards in 2013, Milind Deora, minister of state for communications and information technology said Wednesday while answering questions on cyber crimes in Lok Sabha.......
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