....The Urjit Patel Report on ‘Strengthening the Monetary Policy Framework’ has provided yeoman service by taking an unequivocal stand that the first step is to shift the monetary policy indicator to the Consumer Price Index ( CPI). The criticism of the report is that food items have a 50 per cent weightage in the CPI and that the RBI, by focusing on the CPI, is using an indicator it cannot control. The critics miss the point that the CPI better tracks the consumption pattern of the masses. Moreover, it is not generally appreciated that food inflation invariably degenerates into generalised inflation. Generalised inflation is, and always is,......
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.
Monday, May 19, 2014
Here's what Modi and his men must do after assuming power - Dr. Subir Gokarn
...............One of the biggest problems faced by the common man at the moment is the high inflation. The Reserve Bank has been focusing on Consumer Price Index (CPI) for some time now, which is still at a sticky 8 percent plus. This in turn will make it difficult for the RBI to lower rates, contrary to the wishes of the govern
Three national missions - Dr. Subir Gokarn
.......This is exactly what any government would have required if it were to come to grips with the structural issues that now threaten the Indian economy's growth prospects. Of all the many problems that can be put on a priority list, I believe that three are most critical. No attempt to put the economy on a higher growth trajectory will succeed unless these three problems are solved. Further,.......
Wage Revision for Bankers : "Kya ache din chalye gaye?"
..........UFBU delayed this to gain more levy but have hugely dented the bankers future wages. Now with Left front being routed (with hardly 10 seats in whole of India) and totally out of political scene, the Bank unions led by left, are likely to be ignored by central government, as they will become much weaker than what they were a few years back. Moreover, poor bankers may be forced to go on frequent strikes by UFBU (resulting in salary deductions) on issues other than wage revision............
PMEAC Chairman Rangarajan likely to resign
..........All the PMEAC members are likely to submit their resignations shortly as their term in co-terminus with that of the Prime Minister. The new BJP-led government headed by Narendra Modi will take within a few days. Dr. Rangarajan has been the Chairman of PMEAC since 2005. He is a well known economist and a former Member of Parliament...........
Fix the economy, don't target big business
........Perhaps the system as it exists today and the institutions that service it simply cannot catalyse a broad-based socioeconomic transformation. Take the example of the Reserve Bank of India (RBI). Despite the RBI's best efforts at enabling capital creation, there is a severe investment deficit in the country. Household savings are not channelled towards productive assets due to low levels of financial inclusion and a systemically unworkable model of universal banking that the RBI has held sacred ..
Sense of belonging
My View on "Governor's reply to a 10-year-old girl":
This letter from RBI Governor sends out two clear messages. (i) RBI handles other people's concerns with utmost care, and it responds in time (ii) The letter written within a fortnight of Dr Rajan assuming office, shows the individual's 'belonging' to the institution he is heading and his anxiety to protect the prestigious image of RBI.
- M G Warrier
RBI’s early warning signal suggests Rs 66,000 cr NPAs
............ Following a fiat from the Reserve Bank of India (RBI), banks have put in place a mechanism to spot troubled loan accounts early in the day, classifying these potentially troublesome exposures as “Special Mention Accounts” (SMAs). On a rough reckoning, loans that are not being serviced on time at four public sector banks are estimated at around Rs 66,000 crore. While ..........
Govt to gain the most from PSU bank reforms
...........Incidentally, weeks after the Nayak committee was constituted in January, RBI wrote a long letter to then financial services secretary Rajiv Takru on what ails the public sector banks. Many of the issues that have been raised by the Nayak panel—ranging from tenure of the chairman to composition of a bank board and government ownership—were highlighted in the RBI letter. Takru got back to RBI, defending the government’s stance on almost each and every issue. He even took the blame for rising non-performing assets of the public sector banks as the government pushed these banks to give many project loans in the wake of the North Atlantic financial crisis in 2008-09. The central bank has subsequently written back to Takru’s successor, G.S. Sandhu, refusing to accept the government’s arguments ..........
Bank unions to protest against privatisation on May 21
The United Forum of Bank Unions (UFBU) has called upon all unions of bank employees to organise protest meetings/demonstration after working hours on May 21 to condemn the recent recommendation of a Reserve Bank of India panel in favour of privatisation............
Fixing PSU Banks
..................And given that the government is in no position to contribute, it would be prudent to shed stake. The financial position of state-owned banks is fragile, which is partly masked by regulatory forbearance, and the capital of state-owned banks has eroded with the proportion of stressed assets rising rapidly—the PSU banks are losing their market-share to the private sector banks.........
PJ NAYAK PANEL'S SUGGESTIONS CAN BE GAME CHANGERS
..........Among the gamechangers could be the committee's recommendations such as cutting the government's stake to below 50%, and a new Bank Investment Company (BIC) to which the government will transfer its holdings in state-owned banks managed along the lines of a passive sovereign wealth fund aimed at ensuring good returns on investments, empowering the boards of these banks and ensuring that they are run professionally...........
Read - ET
The Economist to Modi: Be more strategic and ruthless, tackle rotten banks
...In the latest editorial, however, the magazine suggests three tasks to Modi to kick-start the economy – tackle rotten banks, break the destabilising cycle of stagflation and create more decent jobs. “Bad debts have soared as the economy has slowed and infrastructure projects have got snared by red tape. Banks have chosen to “extend and pretend” loans to zombie firms. The cost of cleaning up banks’ balance sheets could be as high as 4 per cent of GDP — slightly larger, in relative terms, than Wall Street’s bail-out. But until the banks are fit enough to finance a new cycle of investment, no recovery will happen,” it says..........
Interest rates unlikely to dip despite BJP win
Despite the BJP's manifesto objective of bringing down interest rates on coming to power, cost of funds is unlikely to come down in the short term as the government is expected to announce an oversized borrowing programme in its forthcoming Budget. The Reserve Bank of India is also expected to keep rates on hold in its June policy as it waits to see the impact of monsoons on food prices......
Managing money under Modi
......Second, increase the annual tax deduction of Rs 1 lakh to Rs 3 lakh. This popular deduction of Rs 1 lakh for various investments/expenses, like PF, PPF, and insurance premium, etc has not kept pace with the rising inflation. It is pertinent to note that this deduction helps people in taking investment decisions and encourages them to save for their long-term requirements...........
RBI to banks: Alert customers on fraud remittance schemes
To ensure that customers do not fall prey to fraudulent schemes promising cheaper funds from abroad, the Reserve Bank of India wants banks to consider prominently displaying messages cautioning them about the schemes on their websites as well as branch/ATM locations. The central bank also said banks could consider incorporating a column on “reason/ purpose for payment” in pay-in slips so that officials could advise customers not to remit money to fraudsters who float fraudulent schemes.............
Spending alone won't fetch you credit card rewards
.... "Be vigilant about minimum redemption amounts and blackout dates. Card holders must also pay attention to what categories of rewards they sign up for and if signing up for bonus requires them to redeem in several increments, and so on,''..............
ICICI Bank to charge customers for redeeming points on cards
.......Industry experts believe this could be a result of the waiver of the charges on inoperative accounts. The Reserve Bank of India (RBI) has now made it mandatory that banks will not be permitted to levy penalty on non-maintenance of minimum balance in any inoperative account. As a result, bankers said, consumers would have to pay more on other services. Experts believe this charge on cards is one of the alternatives that banks are now exploring........
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