..............Independence of the central bank is something clearly close to his heart. Asked for his advice to the next government about its relations with the Reserve Bank of India, Bernanke said he didn't know much about India's political dynamics, but what was critical for any country was that its central bank's independence be guarded. He was speaking at the second Kotak Presidium, a forum for global leaders to share ideas that shape the future. "You have an excellent central bank governor in Raghuram Rajan, who has been my long-time colleague as an academician in the US. As the Indian economy matures, an independent and responsible central bank is really central to its success," .........
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.
Wednesday, April 16, 2014
Targeting inflation key for central bank, says Ben Bernanke
...........“Monetary policy benefits from clarity and transparency,” Bernanke said. “In a country where inflation is high, it is important that the market knows what you are doing.” To be sure, even with a single mandate, a central bank has to pay attention to growth to some extent, he said. Bernanke’s statement will boost the Reserve Bank of India’s efforts to target inflation in a more dedicated manner. A central bank panel headed by RBI deputy governor Urjit Patel had recommended that the bank should make inflation-targeting its central purpose. RBI is yet to accept the recommendations fully..............
Ben rejects Rajan’s charge on QE impact
..........Bernanke made it clear that there were academic’ differences between him and Rajan over the issue of quantitative easing. “Raghu Rajan and I go back a long way. I have for a long time admired his work as an academic. He has made predictions of financial stress before the crisis and was very good during the crisis in promoting capital injections by the government. We discussed the spillover from monetary policy and we have somewhat different views. Basically, I am more optimistic that quantitative easing and similar policies can and have been effective. That is two people differing on academic issues,” said Bernanke...........
Read - TOI
Mor(e) questions than answers
My View on "Mor Committee Recommendations – An analysis - Dr S...":
The author deserves congratulations in the first place for the succinct analysis of the Report. After the Supreme Court indicted AADHAR instrumentality for deliverance of benefits from any institution Mor Report that relied wholesale on this instrument at once loses its relevance.
Second, the Committee failed to recognize the existing institutions in rural areas and the measures to make them effective in delivering intended benefits to the rural poor.
Third, it has not analysed the ills plaguing the BC instrument and the Banks that engaged them have issues; BCs have issues with the Banks; clients of BCs have issues: all these have not been dealt with in detail.
ATMs – white or color, no matter – are poorly fed even in urban areas. Several ATMs have labeled that they are fed with only Rs.500 and others with Rs.1000 and others with both. Rarely you get Rs.100s out of them. How many of the poor have such denominations and how many can in fact afford them. How can financial inclusion objectives be served with such instruments.
Technology should be a servant and not the master. As the critique put it reliance on lowly populated nations’ experiences and using them as instruments of convenience without examining the risks attached in detail is fraught with danger. Mobile technologies for payments and settlements have serious embedded risks right from passwords to web-enablement and in the context of increasing cyber crimes, how does Mor Committee ensure that the interests of the poor are protected with such introduction?
There are more questions than answers in Mor Committee Recommendations. RBI would actually do well to set aside the recommendations and use for academic purposes.
- Dr.Yerram Raju
Relationship - Needs to be nurtured
My View on "Jalan says flexi-targeting, coordination with govt...":
If an ex-RBI Governor of Bimal Jalan’s stature, who is still closely associated with policy formulation in government and financial sector says, “…The utmost importance should be put on cohesion and coordination between policy makers in critical spheres”, it doesn’t need super-intelligence to infer that the observation comes in the context of the goings on in relation to the recent frictions between the political leadership in New Delhi and the Reserve Bank of India. As Dr Jalan and a few more Ex-RBI Governors who are part of or very close to the power centres in New Delhi know, RBI has always gone more than half way to accommodate GOI perceptions. Inadequate reciprocity from the other side and policy compulsions emenating from some of the roles not commonly handled by other central banks assigned to RBI, sometimes brought embarrassments to RBI Governor in public eye. As rightly observed by Dr Jalan, there is no escape for GOI and RBI from working in cohesion with broad national priorities in view. And here, solution does not lie in shifting public debt management from RBI to finance ministry or GOI fixing targets for management of inflation by RBI. In the Indian context, Finance Ministry and the central bank have a relationship which has to be nurtured and maintained without affecting harmony, even when difference of views may arise, as in the past.
- M G Warrier, Thiruvananthapuram
Arvind Mayaram appointed as new Finance Secretary
.............."The Appointments Committee of the Cabinet (ACC) has approved that Arvind Mayaram, secretary Department of Economic Affairs, may be designated as the Finance Secretary," an official statement said today.............
Obituary
Shri N.Ramachandran passed away inn Mulund, Mumbai on 12th April, 2014. He was 88 years old. He had served as the Private Secretary to several Deputy Governors of RBI nd finally retired from IDB I--where he was the P.S to the Chairman. He is survived by his wife--also ex-employee of R B I and two sons. We pray that his soul rests in peace.
- P.P.Ramachandran
“Get More Customer-friendly”, says Rajan
.....................If Dr Rajan is serious about a fair deal for consumers, he has to fix the mis-selling of third-party products first. The Banking Ombudsman Scheme has to be modified to examine mis-selling of insurance and mutual funds and other products under ‘wealth management’. If Dr Rajan can open a dialogue with the central vigilance commission (CVC) to ensure that bankers are not traumatised by vigilance inquiries into legitimate decision, he should find it easier to get the........
The Deferred Burden
............According to Mint Road, the total additional equity capital requirement due to Basel III is to the tune of Rs 1,75,000 crore. Former RBI governor Duvvuri Subbarao raised two questions. He asked whether the market could provide capital of this size and what the burden of recapitalising state-run banks would be on the central government? ...........
Read...................
High interest rates responsible for rising bad loans: Moody's
........."The government has encouraged lending in an effort to support development of the country's inadequate infrastructure, but although these intentions are positive, delays to projects and other regulatory issues have weighed on revenue, and thus, developers' ability to repay debt," it said. According to the report, the government and the Reserve Bank of India are tackling the issue now to ensure non-performing loans don't become a bigger problem. ......
Bank Licenses May Be On Tap, Will Anyone Tap?
.........The fundamental question that will arise is that if a universal bank license is granted to one of those which failed in the latest round, how is that it turned `fit and proper’ in Jan. 2015, when it was not so in 2014 April. What is that that could make the rejects palatable to RBI? To be sure, the RBI, typical of its tradition, has not said why it rejected many, and why it chose the two. Many of the issues behind rejection could remain for years. The differentiated bank licenses may be an opportunity, but that may not be attractive for many in the current crop. The one idea that drove everyone ............
New Banks, Different Banking Agenda?
.............The proposed agenda of universal, differentiated banking can hardly be achieved by licensing two banks every ten years and PSL asset creation possibly requires more NBFC-like than bank-like framework. The Mor Committee report does suggest this direction, but by overhauling the licensing framework. Interestingly, while the Indian economy has grown to be highly iniquitous, banking policy has aggressively pushed equity. Given the challenges of ............
A vicious inflationary circle
..........There is a vicious circle at work here. The Reserve Bank of India (RBI) is working on the basis of the dominant monetary paradigm that a tight stance is required to quell inflationary expectations. However, if these expectations are being driven not so much by monetary policy actions but by the daily ground reality of rising food prices, the question logically arises: is the current stance going to make any difference at all to inflation? And, if not, should the RBI now accept the logic that it is better off focusing on growth by lowering interest rates rather than sticking to its current position? ............
Corporate America committed to investment in India
..............The industry representatives heard from Rajan the challenges RBI faces in taming inflation while promoting the growth necessary to keep the engine of India's economy thriving, all in the midst of factors beyond the respected institution's control, USIBC said. USIBC members noted their strong support for RBI's financial sector reforms including actions to further deepen India's debt capital markets toward long-term infrastructure development and manage risk, it said...........
State Bank launches digital banking facilities
.........The sales staff of SBI will visit the customers at their door step and using the tablets get the formalities completed for account opening like details of KYC and photographs of applicant. In the case of..........
State Bank of India to review branch policy in metros
...........The group plans to create profiles of potential centres for network optimisation. It is bringing in an external advisor for the exercise. Bank officers will work alongside the study team. These officials would later work to help implement the plans vetted by the bank...........
Give benefit of differential rate to micro and small enterprises sector: RBI to banks
.........."We advise that while pricing their loans to MSE borrowers, banks should take into account the incentives available to them in the form of the credit guarantee cover of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)," the apex bank said in a notification............
How the credit information system can be made more efficient
.............The Reserve Bank of India (RBI) constituted a committee in March 2013 under the chairmanship of Aditya Puri, managing director of HDFC Bank, to examine reporting formats used by CICs and related issues. The committee, comprising representatives from various stakeholders including the CICs, public and private sector banks, foreign banks, has presented its report to the RBI. Its recommendations, if accepted, would have huge impact on stakeholders involved -- CICs, credit institutions and the consumer. Some of the recommendations will require changes in the law...........
Check account & credit card statements every month
Have you ever thought of the possibility of your bank or credit card company charging you erroneously for something you didn’t have anything to do with? Are you among those who do not bother to check their bank statements regularly? Do you pay your credit card bills without glancing through the expenses listed? If you are one of these, it is time you woke up ............
Banks override credit card PIN need
...........a bank official said that in several places merchants have not yet managed to put in place the infrastructure necessary to facilitate PIN authorization. All restaurants have to put in place mobile point of sales terminals (card swipe machines) so that customers can pay by card without leaving their table. Swipe machines are not accessible to customers at some shops. In many busy outlets, merchants are finding that PIN authorization slows down the queue as many customers do not remember their number. To ensure that business is not affected, banks have bypassed the requirement of PIN in some machines. .........
Read -TOI
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