......"Going forward, with the formation of a stable government, the prospects of recovery appear bright," the RBI said in the report. "However, supply side constraints need to be addressed to complement the Reserve Bank's efforts to contain inflation expectations." Those constraints largely refer to bottlenecks in food supplies..............
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.
Friday, June 27, 2014
Both Srikrishna, Guv are Wrong - P K BISWAS
This refers to `Why Rajan is Wrong' (ET, Jun 26). Historically, society has always shackled innovation and change through legislation. B N Srikrishna should realise that universal medicine by way of legislation does not cure all ailments. Legislative restrictions directly or indirectly curb the need to innovate and, consequently , deprive society of fresh thoughts and approaches like a river being deprived of supply of fresh water. On his part, Raghuram Rajan should realise that autonomy does not grant licence to act as one likes, and any action is always subject to scrutiny . Deeds must be evaluated in terms of motives and achievements, and actions should not be washed away in the name of independent thinking. The balance between the two approaches decides the success or failure of an institution.
- P K BISWAS Former Executive Director , RBI Mumbai
ET
- P K BISWAS Former Executive Director , RBI Mumbai
ET
Views can change with positions
My View on "Why Rajan is Wrong?":
In a fast changing world, it is futile to scare people by quoting the positions they might have taken in a different context in the previous decade. This applies to economists and politicians too. One should go by the spirit of the following observation made by Dr Rajan in his June 17 speech:
"More broadly, the FSLRC seems to have a somewhat idealistic view of the benefits of reorganization. It seems to believe that once activities are combined in an organization, synergies can be fully exploited while if they exist in separate organizations, synergies will not be exploited. I too shared such a view, but I now believe it is too extreme. Silos within a large bureaucratic regulator may prevent synergies from being exploited, while frequent inter-regulatory meetings can allow regulators to capture many of available synergies between their activities. Indeed, one particularly useful proposal by the FSLRC is to put the Financial Sector Development Council on a firmer footing. It is a good venue for inter-regulatory cooperation, and its benefits are further augmented by personal interactions."
- M.G.Warrier
Beyond Rights and Wrongs
Raghuram Rajan, in his June 17 speech, had focused only on RBI, but `Why Rajan is Wrong' has used Sebi experiences and sanctity of “rule of law“ to conclude that he is wrong. The statement, “We reject Rajan's claim that the regulator must continue to have discretionary powers and should not be answerable,“ doesn't go well with Rajan's observation, “Am I arguing that no checks and balances are needed? Certainly not! But there are already checks and balances in place, including re view by con stitutional courts like high courts through writ petitions. Senior officers of the regulator are appointed, and can be removed, by the government. The FSLRC recommends an annual report to Parliament, as well as regular discussions with parliamentarians. These are good suggestions, which would add to oversight.“ The FSLRC report had dissenting notes from members K J Udeshi, P J Nayak and Y H Malegam. In effect, other than the chairman and the member-secretary , only two members had gone with the FSLRC report in its entirety .
- M G WARRIER Mumbai
- M G WARRIER Mumbai
ET
Is there any hope for Relief for RBI Retiree's? - Dr.T.V.Gopalakrishnan
.....RBI has the money and the authority to grant the updation but it prefers to remain silent and dance to the tune of the MoF for reasons unknown to the retirees but perhaps well known only to the top management. After the departure of Dr Jalan, two Governors have come and gone and they had very diplomatically side tracked the issue ..........
Read.......
Financial inclusion seminar on Jun 27
..........The workshop will revolve around participative panel discussions on the various aspects of the importance and need of Financial Inclusion, challenges and way forward, followed by a one-to-one interaction between bankers and various stakeholders. Through this release ICC welcomes delegates for participation. Dr. Jayanta Madhab, Ex- Economic & Financial Adviser to Chief Minister, Govt. of Assam will address as the Chief Guest while Guest of Honour Shri. MTM Guite, AGM-Financial Literacy Cell, RBI will speak on Reserve Bank of India regulations. Special Address on Financial Inclusion in North East – Perspective of NABARD will be delivered by Mr. A.P. Sandilya, Chief General Manager, NABARD,...............
Financial Literacy in Rural Banking
...........The conception of financial literacy, as reflected in the Reserve Bank of India's Financial Literacy Guide, is packed with stereotypes of the poor as ignorant and in need of moral lessons on savings, consumption and credit. Financial literacy has to be positioned within a broader conceptual view of the financial system, so as to become a tool to raise critical consciousness and equip people to respond to the challenges posed by the financial sector. Further, financial literacy material must evolve from below, such that lives of the common people are organically a part of it. This paper also hints that........................
Spl Teams Rush to AP to Nab Ex-RBI Staff's Killer
CHENNAI: The city police, probing the murder of an ex-RBI staff, on Wednesday rushed a team to Kadapa in Andhra Pradesh based on specific input about the killers’ location. Meharunisha (55) was found dead by her husband Ali Mohammed Sayeed around 2.15 pm on Tuesday on the II floor of their residence. The ground and first floors of the house in Triplicane were being used to run a printing press business.............
Hike tax exemption on bank deposit interest to Rs 25K: AIBEA
Bank employees body AIBEA has demanded an increase in the exemption of tax on interest earned on bank deposits to Rs 25,000 from Rs 10,000 at present from the government in its maiden Budget next month. The limit of Rs 10,000 was fixed about a decade ago and hence needs to be revised, because bank deposits are the only source of income for senior citizens and retired employees, All India Bank Employees’ Association (AIBEA) General Secretary C H Venkatachalam told PTI......
Allahabad Bank plans to hire 1,100 people this fiscal
..While 600-odd recruitments would be made at the officer level; the remaining 500 would be clerical staff, Rakesh Sethi, Chairman and Managing Director, Allahabad Bank, said........
IBPS recruitment poses language hurdle to banks
........Appointment of people who speak languages other than Kannada to Karnataka, has created a road block in communication between farmers and bank officials. Earlier, the selection of bank employees who interacted with the agricultural community was done through campus interviews. Now, they are selected through the IBPS examinations held all over the country. This issue was highlighted at ......
SBI's Budget wishlist: Target job creation, MSMEs, infra
........If you look at the agriculture side also, if you look at the reports that have come from Reserve Bank of India (RBI) and otherwise, in agriculture we have been told in India the problem is fragmented land holding. Now, that is not really something that we should take as a given because if you consider China, they too have fragmented land holding then how is it that their productivity is from 6 to 190 percent more?...........
Relief for Customers In Credit Card Fraud
........Bank customers have often disputed transactions shown on their credit card bills and declined to pay. This has resulted in banks levying late-payment penalty. The new rule is announced by the Banking Cdes and Standard Board of India (BCSBI) that works to protect customer rights. It makes banks responsible to find evidence that the customer had authorised and was responsible for the disputed transactions.........
World Bank, IMF and USOTA to assisit India to set up non legislative financial bodies
...........The government has decided to rope in international bodies for seeking assistance for the establishment of three different entities - Public Debt office, Resolution Corporation and Financial Data Management Centre. These are three among the four task forces to be set up as envisaged under the recommendation of the Financial SectorLegislative Reforms Commission. The ministry of finance is in process of signing an agreement with .........
Farm loan waiver: Telangana, AP struggle for resources
.............According to government sources, the RBI is willing to consider the reschedulement of agri loans only if the government agrees to arrange for the repayment within one year. The expert panel constituted by the AP government met RBI Governor Raghuram Rajan on Wednesday to ask for rescheduling. However, no clear assurance came from the RBI even though one of the panel members, when contacted, said the regulator was in principle agreeable to the reschedulement............
RBI concerned at loan insurance, wants lending by cos in segment monitored
..............RBI said the lending activity of insurance companies, mainly life insurance ones, while not very large in comparison to total banking sector lending, is nevertheless significant. The amount was Rs 88,870 crore as at end-March, less than five per cent of the assets under management of insurance companies. A significant portion of these are secured against the surrender values of life insurance policies. “While the risk management framework and exposure limits (single issuer, group, and industry) are in place for insurance companies, there is a need to plug the possibility of any regulatory arbitrage by closely aligning the practices and regulations applicable to lending by insurance companies with those by banks,” said RBI in its report...........
NBFCs outside regulatory ambit may pose risk to financial system
...........A Shadow Banking Implementation Group carried out a preliminary study of such institutions and recommended that they be brought under some regulation. It found that there was a high degree of heterogeneity in business models and risk profiles across various non-banking financial entities in the organised as well as the unorganised (informal) sectors. It also identified “exempted” provident funds, unregulated chit funds, co-operative and credit societies and primary agricultural credit societies as groups of institutions that need a greater degree of oversight. “The study stresses on the need .......
RBI advice on bank cash course
...............In his foreword, RBI governor Raghuram Rajan said the financial system remained stable, though public sector banks faced some major challenges, mainly in terms of asset quality and liquidity. Macro stress tests show that the system level capital to risk-weighted assets ratio of banks remains well above the regulatory minimum even under adverse macroeconomic conditions, said the report............
RBI sees better days ahead for economy
................The overall tone of the report reflected optimism generated by the thumping majority scored by the Bharatiya Janata Party in the recently-concluded general elections. "Going forward, with the formation of a stable government, the prospects of recovery appear bright," the RBI said. The central bank drew comfort from reduction in both fiscal and current account deficits and moderation of consumer price index (CPI) -based inflation..................
RBI: Policy coordination needed to reduce global spillover effects
................In the Report, the RBI said that in the absence of global policy coordination, cooperation and global safety nets, EMDEs may have to resort to less than optimal policy options such as strong macro-prudential measures including capital controls and reserve accumulation. “With their enormous clout, countries whose currencies serve as reserve assets can induce negative externalities on EMDEs through changes in their monetary policies,” it said.............
CS emphasizes need to regulate NBFCs, protect investor
........The meeting convened by Reserve Bank of India was attended by Principal Secretary Home, Suresh Kumar, Regional Director RBI, K K Saraf, Secretary Law, Mohammad Ashraf Mir, IGP, Arun Chowdhary, IGP CID, Dr B. Srinivas, General Manager, RBI, Jammu A.K Mattu, Chief Financial Consultant, Ravi Mangotra and representatives from SEBI, NHB, ICAI, and Union Ministry of Corporate Affairs and other senior officers. Chief Secretary while receiving brief on the status of registered Non-Banking Financial Companies in the State emphasized the need for regulation of this sector and priority to protect the interests of the depositors. He called for greater coordination between the Reserve Bank and the other regulatory..........
SLR may be cut further
............."As the liquidity coverage ratio (LCR) requirement increases progressively, RBI may consider it desirable to further reduce the pre-emption of banks' resources through the stipulation of SLR in gradual steps, along with a commensurate decline in the held-to-maturity (HTM) dispensation," ........
Arrangement between banks, asset reconstruction firms needs a relook
.................The RBI noted that as most of the securitisation activity is taking place predominantly with the issuance of security receipts (SRs) rather than cash, there is a concern that banks may tend to use this option to evergreen their balance sheets. SRs may not carry the stigma of NPAs (their value mainly being derived from the collateral and not based on the record of recovery), although the risk of loss of income on the asset still remains, in effect, with the originator (the bank). The central bank said under the current framework, the ‘real’ incremental value addition of ARCs in the process of ‘reconstruction’ of assets,............
Invisible receipts at $232.77 billion in FY14
The country's earnings from invisible receipts, including earnings from export of services like travel, health, etc, stood at USD 232.77 billion in 2013-14, the Reserve Bank of India said Thursday.........
Time banks tapped capital market for funds
............According to certain rough estimates, Indian banks’ additional capital requirements will be to the tune of ₹4.95 lakh crore over the period of phasing in of the Basel III capital requirements. In its 9th Financial Stability Report, the RBI said the Indian banking system needs to pay urgent and greater attention to the Basel regulations, especially those relating to subjecting banks to market discipline. Swifter progress towards a more robust emphasis on market discipline will result in better pay-offs not only for the Indian banking sector but also for the overall financial system, .............
Nabard hopes for budget largesse to give long-term loans
The National Bank for Agriculture and Rural Development (Nabard) wants the government to announce a Rs.5,000 crore fund in the annual budget on 10 July so that it can facilitate long-term loans to farmers to build drip-irrigation facilities and buy tractors, assets that will boost farm output and stem a sharp decline in capital investment in the sector. The aim is to provide long-term loans at attractive interest rates to farmers for long-term asset creation in agriculture, said Harsh Kumar Bhanwala, chairman of Nabard, a development bank set up by the government to ensure credit flow to agriculture and promote rural development............
Fix Aadhaar, don’t junk it
...........It is important to remember Aadhaar is not just a number, it is an enabler. Thanks to RBI and NPCI, electronic payments infrastructure has expanded and India has platforms now that support real time online authentication and transactions which connect to even banking correspondent agents across rural areas. Linking the Aadhaar authentication platform to the benefits transfer programmes of the government has already yielded good results. A recent randomised control trial of the ...........
Microfinance sector to rebound: CRISIL
....According to CRISIL, the sector will grow at a compounded annual rate of 35% , to reach Rs450 billion by end-March 2016 “supported by stronger building blocks”. In order to to sustain the current pace of growth, micro finance instituitons (MFIs) will have to raise equity; but that will require them to “address challenges associated with low promoter shareholdings and a near-term decline in profitability”, said CRISIL......
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