RBI will definitely hike rates if inflation remains high in Jan: Subir Gokarn

....If that happens, there would be some softening, but overall, the message was that this is not a reflection of the end of the tightening cycle, but just a wait and watch policy and that is the message that the markets need to take. I do not think the markets misread it, because even if the rates were not increased, the tone of the message was almost been as though an interest rate hike was inevitable and if we do see inflation numbers surging in January or remaining quite high in January, one of  .............. 

Read - ET......

RBI policy: Rajan is making same mistakes as Subbarao

..........In these circumstances, Rajan had only one thing to do: deliver a shock to the system by raising repo rates substantially – say by 0.5 percent or even 1 percent – so that the government is forced to act on its core revenue deficit. Now it won't. By chickening out, Rajan has flunked his test. He is making the same mistake made by his predecessor D Subbarao – giving the government too much of the benefit of doubt. He has eroded his own credibility as an inflation fighter.

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Rajan’s holding operation

.......But keeping the key bank rate on hold for the time being suggests that the central bank is equally keen to provide whatever little push it can to growth. Without accelerating the growth engine, it will be hard to tame inflation. If supply side problems account for high inflationary pressures in the economy, the onus to provide correctives would actually lie with the government. No hard economic decisions can be expected...........

Read - FPJ

Rajan's Pause Gamble Muddles Message

......Is this time different? There is little dispute that consumer prices will continue to rise at 11% pace, or more in the months to come. But it may not fall drastically either. Also, Rajan’s belief that savers should have positive real interest rates is still far away. That means either inflation has to cool substantially, or rates may have to move up. Which one will walk how far?...........

Read - ET

A breather

...Inflationary pressure is still the larger trend which RBI has preferred to study further. GDP growth has been pegged 4.7 per cent in fiscal 2014, and the lacklustre growth of manufacturing and services, not to mention the IIP deceleration of over 1.5 per cent, does warrant a vision beyond inflation firefighting. Here, a trim-down of the earlier interest rate hike would have helped industry and banks alike. But the dangers of NPAs spiralling of control and RBI’s proposals to pre-empt delinquencies seem to have gone down well with state-run banks.......

Read - Deccan Herald

A wait-and-watch policy

...............Persistent inflation reinforces inflation expectations. While maintaining that there is no room for complacency, the RBI feels it has enough reasons to wait and watch. For one thing, there is evidence that vegetable prices have started coming down. Second, the disinflationary impact of stable exchange rates will ease the pressure on prices. Finally, the lagged effects of monetary tightening since July should help. The decision not to raise the rates is obviously a debatable one. There is no room whatsoever for complacency...........

Read - The Hindu

Has Raghuram Rajan succumbed to Congress led UPA's pressure?

.......So what has happened to the man who believed, ‘If you can keep your head when all about you...Are losing theirs and blaming it on you...If you can trust yourself when all men doubt you’? What has happened to the man who proclaimed to take necessary decisions even if he does not receive ‘facebook likes’ for them? Has India’s central bank governor succumbed to government pressure to save his position? Does the RBI governor feel insecure? Why is the governor not adamant anymore over economic reforms? What is withholding the former Chief Economist to Government of India (GoI)?.........

Read - Daily Bhaskar

A balancing act

......the apex bank has softened its stance on inflation and Rajan is perhaps losing his credibility in arresting inflation. Sometimes, no decision also amounts to a good decision. Remember, ........

Read | Business Standard

RBI hope on prices not shared widely

.....Defending its stance, RBI said, “There are indications that vegetable prices may be turning down sharply... In addition, the disinflationary impact of recent exchange rate stability should play out into prices.” However, economists still feel WPI inflation would remain elevated in the coming months. “Even if we go by RBI’s presumption of a likely decline in food prices, the remaining impact of rupee depreciation and continuous adjustment in diesel prices will keep the inflation high,”.........

Read | Business Standard

Its too early

My View on  "Limitation of RBI’s monetary policy in taming infl...": 

It may be too early to come to conclusions about RBI’s (Read Dr Rajan’s) intentions while leaving the rates untouched this time. Perhaps, this may be just to give signals to speculators that RBI doesn’t go by market gossip. RBI has never claimed changes in base rates alone or even a combination of traditional Monetary Policy measures in the central bank’s armoury can manage inflation. Every time RBI’s policy statements contain or are followed by ‘expectations’ from GOI on various ‘possibles’ from fiscal policy angle. One of the objectives of truncating RBI and making the central bank an organisation handling only Monetary Policy and Financial Sector Regulation is to take out responsibilities now with RBI which are giving headache to Finance Ministry. 

- M.G.Warrier

India prepared to deal with Fed taper: Chidambaram

.....Markets have already factored in the decisions of the US Federal Reserve, the finance minister said in a statement. To highlight that the government and the Reserve Bank of India (RBI) are working together, the finance minister said he has spoken to RBI Governor Raghuram Rajan on this issue..........

Read - Mint

Cabinet proposal soon to constitute 7th Pay Commission for revising salaries of 50 lakh employees

....According to information available, the government's intention to constitute 7th Pay Commission before going for polls is clear as it has made provision of Rs 3.5 crore in the second supplementary demands for grants in this regard which was approved by Parliament in the just concluded Winter Session. Earlier in September this year, Finance Minister P Chidambaram had announced that Prime Minister Manmohan Singh has approved setting up of the 7th Pay Commission...........

Read - IE

SMEs playing key role in development of social, finance sectors: RBI General Manager

........."The small and medium industries are playing a vital role in the development of financial and social sectors. "Reserve Bank, along with both the state (Andhra Pradesh) and Central governments, is implementing special programmes for encouragement of SMEs," said RBI General Manager (rural planning and credit) R S Das. He was addressing a conference organised by RBI, Hyderabad, here yesterday. Bankers, industrialists and district officials participated in the event. "The loan sanction has been increased to small and medium industries, but the sector is encountering certain issues which are being addressed by the Prime Minister's Advisory Committee and discussions are going on," Das said.............

Read - DNA

PINching the so called safety measure - P.Aravind

Recently RBI have stipulated that we type PIN when we use our Debit Cards at Point of Sale (Shops, Restaurants etc). I accept this is to protect the interest of the customers, but it is also exposing our secret PIN to public. While some shops gave us access to the Swiping Machine to type our PIN in privacy, there are some places like large restaurants, the waiters take our card and also ask for PIN to be given to the Cashier for making payments. In some places the cashier asks us to spell the PIN loudly across the counter while others watch. Now a days we read in newspapers about cloning of debit/credit cards. We are being constantly advised not to share our PIN with anybody, (even with our spouse).  Are we not exposing ourselves for frauds by publicly sharing our PIN?  Is there no other way to protect our interest? Hope RBI will have a rethinking on this so called safety measure. 

- P.Aravind, Former Regional Director

BS Banker of the year: Aditya Puri

........The country's second-largest private sector bank, the jury felt, had benefited hugely from Puri's "common-sense banking" - keep things simple, never allow retail customers to over-borrow, and refrain from lending to companies that have over-leveraged themselves. The jury, headed by Subir Gokarn, former deputy governor of the Reserve Bank of India, also said the bank's greatest strength was its ability to maintain a consistency in quarterly credit growth, across credit cycles..........

Read | Business Standard

Reserve Bank of India to issue new currency of various denominations

.......As per the information provided by the RBI, the organization would shortly issue Rs 100 domination currency incorporating the new rupee symbol and without any inset letter. All the new bank notes would bear the signature of Raghuram Rajan, Governor, RBI, India. The year of printing of the notes would be 2013...........

Read - TOI

IDFC not eligible for bank licence as fgn holding exceeds 50%

..."The Board of Directors on December 19, passed a circular resolution approving postal ballot process for seeking an enabling resolution from the shareholders to authorise the board...To keep reducing ceiling limit of the foreign shareholding from existing 54 percent to 49.9 percent in various stages...," IDFC said in its filing. It further said that in case it does not receive the bank licence from RBI, it "will take steps to reinstate the ceiling on the foreign shareholding back up to 74 percent. The RBI guidelines require that the eligible promoters of a bank should to be 'owned and controlled by residents'.......

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Rising non-performing assets a concern, says Andhra Bank CMD

..........“The NPAs will continue to impact the third quarter. There are some more slippages left on the NPA front in the current quarter. We do not know about the fourth quarter though.” Going by the broad indications of the Reserve Bank of India, the bank was not keen on lending to commercial real estate..........

Read - The Hindu

RBI’s new NPA norms: the spirit is willing, but flesh is weak

.......Perhaps the RBI’s intention is not to just allow restructuring of loans, but the restructuring of companies since it is advocating leveraged buyouts (LBOs). However, even that is not easy for listed companies because of a whole lot of norms put in place by the capital markets regulator. A buyout will not only mean buying the promoter stake, but also that of the public, in which case ........

Read - Mint

Kodagu’s PLP for 2014-15 unveiled

The Potential Linked Credit Plan (PLP) prepared by the National Bank for Agriculture and Rural Development (NABARD) for the year 2014-15 has been put at Rs. 3.035 crore. The PLP was unveiled at the Corporation Bank—lead bank for Kodagu—on Thursday by an official from the Reserve Bank of India, Anand Babu. Credit projections to the agriculture sector are estimated at Rs. 2,666 crore, including Rs. 1,888 crore for crop loans.......

Read - The Hindu

More banks hawk loans gone sour

...........According to Reserve Bank of India (RBI) data, gross NPAs of commercial banks ballooned from Rs 94,121 crore (2.36 per cent) in March 2011 to Rs 236,245 crore (4.2 per cent) by end-September 2013. There are growing signs of banks becoming ready to sell some of the bad loans in their portfolios, to keep on holding these in the hope of realising value. The pace of growth ........

Read | Business Standard

Taxes deflate inflation bonds

........All in all, the tax department takes back a part of the benefits that the government planned to give. One hand of the government gives, and the other hand takes back a part of it. This defeats the very purpose of providing relief from inflation. Inflation affects personal expenses, which are met after taxes have been paid. The net increase in income has to be higher than the inflation rate for the bonds to really protect savings. One wishes that ..........

Read - Mint

Rs2 crore worth blood diamonds sneak into Gujarat from Nepal

In the wee hours of Wednesday, the Directorate of Revenue Intelligence (DRI) sleuths made a shocking discovery when they pounced on a family of smugglers ferrying, blood diamonds worth Rs2.12 crore, near Memco on the city’s outskirts. They also found 1.5 kg gold worth Rs50 lakh with the smugglers. This discovery couldn’t come sooner. For on Wednesday, RBI governor Raghuram Rajan said curbs on gold import would incentivise smuggling of the precious metal, while he was addressing the RBI’s third mid-quarter review of monetary policy...............

Read - DNA