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Monday, August 11, 2014
'RBI has started talks on modern monetary policy framework'
At RBI board meet, Jaitley subtly reminds Rajan of growth pangs
Finance minister Arun Jaitley has a knack for making subtle yet effective remarks, a rare skill on display at the RBI board meet on Sunday. On the issue of RBI’s sustained anti-inflation position, Jaitley served a gentle reminder to central bank governor Raghuram Rajan, saying he had already made his stance clear on the last two policy announcements through his official reaction..........
RBI best judge on policy rate, says Jaitley
..........After the meeting on Sunday of the RBI board, with Jaitley presiding, the governor reiterated at a press conference that the current interest rate policy was on course to meet the targets on inflation. "At this point, uncertainty is two-way...If news comes on either side, we can change what the policy is. But, as of now we think the policy is on target. This is contingent on data coming in," said Rajan........
The SLR barrier - Dr. Subir Gokarn
...............It is the most important remaining barrier to the development of a meaningful market for government securities. Why is this so? As a general principle, for markets to work, participants on both sides of the market must be willing to trade. Introductory economics textbooks will tell you that that trade will only ensue if sellers have things that buyers want and vice versa. However, If some potential market participants have things that others want but refuse to part with them for whatever reason, a market cannot emerge. This simple proposition ..........
Inflation & interest rate interaction - Dr.S.S.Tarapore
................This criticism is unfair to the RBI and more particularly, to the Patel Committee. There could, conceivably, be one path which would undertake a sharp and sudden crushing of inflation, with significant dislocation or a more gradual reduction in inflation with little or no dislocation. So long as the RBI’s policy is firmly committed to a glide path of reduction of inflation to a point where it does not create distortions and inequity, one should not find fault with the RBI. The Patel Committee refers to an inflation rate of four per cent +/- 2 per cent inflation rate. One therefore expects (or rather hopes) that the RBI would be reluctant to drop policy interest rates prematurely. But the political economy of policy interest rates has to be taken into account and it remains to be seen as to how developments pan out..........
Unrelenting focus on inflation
...........The monetary and liquidity measures have entirely been in line with expectations. But that has not made the policy statement a non-event. Even before the policy statement was released, the focus had shifted to the future. Will there be a rate cut later this year? (By March 2015). What are the conditions that the RBI will set for easing monetary policy? The only change in the monetary measures — the SLR reduction — is worth analysing. It is significant .......
Ideas for a financially inclusive India
.............However, this is going to be a onerous task given that over half of India’s population remains unbanked even after 67 years of Independence and various initiatives taken by different governments since nationalisation of SBI in 1955. RBI and Nabard have also made concerted efforts through schemes like priority sector lending, no-frills accounts, kisan credit cards, business correspondents, and supporting self-help groups (SHGs) and microfinance institutions (MFIs). To achieve success in financial inclusion, the government will next need to consider out-of-the-box measures to make a difference.............
Over to the govt now
...............In this context, the Reserve Bank of India (RBI)'s move, in keeping the key rates unchanged despite improvement in several indicators and slight easing in inflation in the recent past, is welcome. The government appears to be doing its bit by giving.........
RBI policy impact demystified
..........."Maintaining the stance on disinflationary glide path announced in the earlier policy, the Reserve Bank of India kept the benchmark Repo Rate unchanged at 8%. The RBI monetary policy targeting a CPI inflation rate of 6% as on January 2016 complements well with the government pursuing the fiscal deficit target of 3% as on March 2017. These measures would bring down inflation and likely provide Indian savers real rate of return in future."..........
A report on the AGM of the Forum of Retirees of RBI, Chennai held on 9th Aug. 2014
The Annual General Meeting of the Forum of Retired Employees of Reserve Bank of India, Chennai was held yesterday at the Youth Hostel auditorium, Indira Nagar, Chennai . About 280 members attended the meeting.
The meeting commenced at 3.20 p.m. with an invocation song rendered by Smt. Sumitra Kalyanaraman. Homage was paid by observing two minutes silence as a mark of respect to the members who had passed away during the year. Sri C.Rajagopalan, President of the Forum, took the Chair and Welcomed the gathering. Senior Executives retired S/S. A.Somasundaram, T.R.Devarajan, B.S.Vijayagopal were seated on the dais. United Forum's Convenor Com.A.Govindasamy and Founder of the Forum Com.A.Natarajan were also seated on the dais.
General Secretary of the Forum Sri A.Manoharan read out the minutes of the AGM of the previous year and the same were confirmed.
Sri A.Manoharan also presented the General Secretary's Annual Report for the year 2013-14 and also highlighted certain important issues like Pension updation, Pre 1986 retirees' issues, One more option for RBItes. Sri Manoharan also informed the members about the assurance given by the Regional Director for allotting a room for the Forum's office and the outcome of the meeting of the Executive Committee with Sri Raghram Rajan, Governor and Sri R.Gandhi, Dy.Governor during last month.
Sri Manoharan informed the gathering about the office bearers reaching the Centenarian Sri P.V.Krishnamurthy at his residence to honour him on his completion of 100 years of age. Members expressed happiness for this gesture giving their big applause.
Sri C.Rajagopalan appraised the members about the meeting of the Managing Committee of RBI held two days ago and another meeting of the Central Board of Directors scheduled for the next day. He expressed his hope that the updation issue may figure in the meeting in some form or the other. He expressed his anxiousness to hear more on this subject from Com. A.Govindasamy .
While addressing the gathering Com. A.G. said that he was moved by the emotional attachment exhibited by the retirees in such meetings which is missing amongst the present serving employees. He said that himself and the Com.Samir Ghosh personally prefer to resolve the issues of Updation, One more option for pension, Ex-gratia improvement for pre-86 retirees. He said the Governor and the Dy. Governor Sri Gandhi are at it. He expressed there should not be any difficulty for the Govt. to implement updation as we have given our consent to all the pre-conditions imposed by them.
He expressed his sadness while informing the members the changes in RBI's recruitment policy. He referred to the proposal of the Bank to go for Direct Recruitment of Regional Directors, General Managers etc. which was never in the history. He said we all should join and fight such anti employee measures. He said whether it is serving employees issues or the retirees' issues the fighting capacity rests only with the serving employees and that United Forum leadership and their members are very much united to put up any sort of fight. Com. A.G. conveyed his good wishes to all the retirees in all matters.
The General Secretary's annual Report and the Audited Statement of accounts were adopted by the members unanimously.
The Jt.General Secretary B.Chandraiah informed the members about the efforts taken by the committee with the Bank for issuing coins to the retirees either through special counters in the Banking hall or the Cooperative Bank. He informed that as the proposal was not feasible, the Currency Officer and The R.D. arranged for coin distribution at our meeting venue through HDFC Bank.
He also informed about the Committees' proposal to publish a Members Directory. He said that the printing work is almost over. He requested members help in soliciting funds for the publication through advertisements. He informed that many of the committee members assured to make their own contributions for the said project.
Felicitation function to honour those attained the age of 70/80/90/100 years was a grand scene to witness.
Sri A.Somasundaram, Sri T.R.Devarajan, Sri B.S.Vijayagopal and Com.A.Govindasamy honoured the members. Smt.Sarada Maheswar, Smt.Shanthini Mohan, Smt.Savithri Sundaram and Miss. Rhoda Sonia rendered their services in assisting the committee to honour the members. 95 members were honoured in total.
The meeting passed unanimously resolutions on a number of issues pertaining to retirees as detailed in the Annual Report.
Sri Chandriah proposed and Sri Manoharan seconded a proposal to re-appoint Sri T.Panduranga as Hony.Internal Audior for the year 2014-15. The proposal was adopted by the members unanimously.
Sri Sathyanaraya from IDBI Employees Association and Sri R.Sankaran from All India RBI Officers Association, and two executives from the TPA M/s. MDIndia graced the function. One of the representatives from MDIndia also spoke on the occasion giving certain tips to the members with regard to cashless hospitalisation and submission and settlement of bills etc.
The General Secretary Sri A.Manoharan proposed that the executive committee members can visitSmt.R.Parthasarathy (Wife of the veteran Trade Union leader who is no more) next week and honour her and present a purse of Rs.10,000/- The proposal was approved by the members unanimously. B.Chandraiah proposed the vote of thanks.
- Chandraiah B
(Forwarded by Madan Gauria)
How safe is your money with cooperative banks?
.............Many Indian cooperative banks have gone bust in the past and many more will probably go bust in future but this is the first instance where the banking regulator has forced the depositors to make a sacrifice. Protecting depositors has all along been the unstated policy in a nation where about two-third of the adult population does not have access to formal banking services. Will this be the norm for all future mergers of cooperative banks? ................
Fed up with "the owner is watching"
My View on "RBI Governor's Tough Inflation Stance Risks Stand-...":
RBI and its governor may listen to suggestions from all quarters on how they should go about in conduct of monetary policy. But people are not getting tired of telling Dr Rajan that "the owner is watching". Stretching the ownership theory too far may make some happy, but let us remember that the Indian Constitution was given to ‘WE THE PEOPLE’ and all bodies incorporated under the law of the land owe a responsibility to act under respective mandates and do what is good for the people.Government has never disputed this right.
- M.G.Warrier
Plan for your retirement early to avoid hardships in future
.............These are real life situations. During one’s employment one works to pay off mortgages, children’s education and marriages. On retirement, those who get a pension find it inadequate and those who do not get a pension become dependent on children or relatives. The reason is that we do not plan for our retirement. And with mortality increasing this is more of an imperative than ever before. And it is wrong to think that children have a duty to look after you when you are in your dotage. They do not. They have their own lives to look after. In a country that does not provide social security; a country where pensions when given are based on basic salaries which are artificially kept low, it is imperative that you plan for your retirement sufficiently early and not when you are in your mid-fifties...........
Seventeen Contradictions and the End of Capitalism
.........The author points out how crises do not lie in the wholesale reconfiguration of physical landscapes but dramatic changes in ways of thought, understanding, of institutions and dominant ideologies, of political allegiances and processes, of political subjectivities, of technologies and organizational forms, of social relations, of the cultural customs and tastes that inform their daily life. The debt-saturation and increasingly de-regulated global financialisation that began in the 1980s as a way to solve conflicts with labour by facilitating geographic mobility and dispersal produced its denouement in the fall of the investment bank of Lehman Brothers in September 2008. Harvey highlights the role of central banks for retrieving the system from the abyss it had fallen into. The fact that the United States could exit the crisis in 2009 and that stock markets almost everywhere could recover their losses has had everything to do with the policies of the Federal Reserve. The contradictions of capital have led to innovations.....
Book Review: The Untold Story
..........The author takes a long detour into the story behind the Reserve Bank of India's (RBI) successful closure of Calcutta-based Peerless General Finance and Investment Company, the first RNBC (Residual Non-Banking Company) giant that mopped up deposits from people for decades and managed to stay out of RBI's regulatory ambit. This focus on an entity apparently tangential to the theme of the book slackens the narrative, but the Peerless episode is relevant in understanding how the RBI, under its then governor YV Reddy, tightened its noose around........
MFIs and banks to meet finance ministry offcials ahead of Modi's new financial inclusion plan
Ahead of Prime Minister Narendra Modi's announcement to roll-out a new financial inclusion programme on August 15, the Union ministry of finance has convened a meeting with banks and non banking finance companies on August 11, to discuss the plan..............
Will RBI successfully break the financial logjam?
A panel consisting experts discuss with if RBI's two new rules will bring some relief to infrastructure builders by decreasing their load on old loans and giving them some money to finish the more recent incomplete projects thereby indicating less bad loans for banks
Mega-merger back in focus
A potential merger of HDFC and HDFC Bank has been back in focus. If it happened, it would create one of the biggest consumer lenders in EM Asia. We are Overweight on both the stocks. In this report, we present our analysis on the profitability of a combined entity, assuming a hypothetical merger were to take place........
Regulators including RBI and Sebi discuss ways to implement Budget proposals
..........."The decisions reviewed included one single demat account for all financial assets, introduction of uniform KYC norms and inter-usability of KYC records across the financial sector, strengthening and deepening the markets for corporate bond, currency derivatives and interest rate futures, and participation of DFIs and FIIs in commodity market," the RBI said in a statement................
Vested interests on to defame JK Bank
............He said the propaganda which has been started against the Bank would not only hurt the business community of the state but people at large also. “The confidence which JK Bank has won at the national level will be shaken and the value of its share will fall. The result will be that the Bank will be reluctant to offer financial support to locals even for justified causes,” Baig said. He said the present government eroded the autonomy of the JK Bank when it brought it under the control of RBI..........
‘India should aim for at least half a trillion dollar of forex reserves’
.........Many economists feel that India's foreign exchange reserves, which are mostly held in dollars, are still inadequate to safeguard the currency, should capital flow out of India as US Fed raises interest rates. So how much reserves are more or enough? ..........
Govt plans bank accounts for 7.5 cr families
..........The other advantage of taking banking to the rural areas is to assist about 75% of farming households, who as per government records have no access to formal sources of credit. The RBI is optimistic that financial inclusion would mitigates the exploitation of vulnerable sections by the usurious money lenders by facilitating easy access to formal credit.
Regulations alone won’t work to control India’s illegal finance market
................“The actual problem relates to the factors that attract common man to illegal financiers, they say. The real solution (to the problem of illegal finance market) should come from the macro level,” said Abizer Diwanji, partner, financial services at EY India. Presently, the returns on savings offered by formal financial institutions such as banks on most products are negative if adjusted to inflation. This prompts a large section of savers/investors approach informal lenders to seek higher returns despite their high-risk nature. “Empowering Sebi is a step in the right direction. But the larger issue is ............
Roadmap for common KYC norms, demat accounts readied
.......“A draft roadmap for creating standards and protocol for setting up account aggregation facility for financial assets was deliberated in the meeting,” said the statement. Account aggregation means a single window for a consumer to view details of all of her bank accounts/investments/financial transactions. This will be a precursor to a common demat account for financial consumers. Rajan had earlier tasked the Inter Regulatory Technical Group (IRTG) to study the feasibility of two proposals.
Lens on SBI after complaints
BHUBANESWAR: The State Bank of India (SBI) and its subsidiaries have come under the glare of the banking ombudsman (Odisha) as maximum complaints were lodged against them last fiscal year. Releasing his annual report at the Reserve Bank of India here on Friday, banking ombudsman Bijay Kumar Mishra said, "We received 753 complaints against SBI and its associates, which is 50.27% of the total complaints received against all banks in 2013-14." .....
SBI asked to pay Rs 5,000 for receiving double payment of EMIs
........."The complainant has not disclosed this fact in his complaint and has hidden the relevant fact. Impact of this transition in the payment terms and its processing time as well as return of unused cheques must have been agreed between both parties involved in the transaction and effected upon. "...However, it is apparent that in the process, Opposite Party (OP) has received EMI payment twice for the months of March and April, 2011, but the same was accounted for in statement of account given to the complainant. "Thus, OP (bank) is only deficient on account of receiving double payment of EMI for month of March and April, 2011," the forum said..........
We may not merge associate banks, says SBI
Is Someone Using Your Cheque Book?
..........There was someone, he knew, who had deposited a cheque with the same number to take money out of his account. Is it possible? What was happening? Kataria sensed that he was not a victim of new-age frauds that newspapers have been reporting about: no one had stolen his Net banking password; no hacker had fished out his credit card data. Instead, someone had simply used a cheque that was a replica of a leaf in his cheque book. Half an hour later, Kataria was told by the bank's Mumbai branch manager that the cheque was debited at the bank's branch in Nipani, a non-descript town in Karnataka and 37 kms from Kolhapur. While Kataria did not lose any money (as the amount was credited back to his account by the end of the day), he as well as his branch manager are clueless of what happened, how it happened.......
Aadhaar Down, RuPay Up in Financial Inclusion Drive
.............The finance ministry has decided to limit Aadhaar's role in its welfare scheme payments and, instead, use ATM-enables RuPay cards for last-mile authentication to withdraw money. While it will continue to use Aadhaar for opening accounts and to eliminate ghosts and duplicates from beneficiary rolls, the ministry has decided to give RuPay ATM cards with bank accounts being opened under to-be-announced financial inclusion drive, Sampoorn Vittiyea Samaveshan, government officials told ET............
The Aadhaar conundrum
...........Incidentally, the Reserve Bank of India recently made the Aadhaar card a valid document for opening bank accounts, along with voter identity card, PAN card, driving licence, passport and MNREGA job card. Now, UIDAI officials have suggested that the Latwal family return the envelopes to the Aadhaar enrolment centre for further investigation. UIDAI officials, who learnt about this case, examined their records and found out that the Aadhaar cards were issued on the basis of the address proof provided, which in this case was the ration card.......
Rangarajan calls for timely completion of mega projects
.................Dr. Rangarajan, former chairman, Economic Advisory Council to the Prime Minister, in his lecture gave details on how economic liberalisation was initiated in 1991 and challenges faced by the country in implementation of structural reforms. He called for the need to complete mega projects in a time-bound manner and efforts to find out solutions to environmental and land acquisition problems. He said good governance was the key to economic growth and called for continuity in policies in various States to achieve the desired objectives.......
Fencing India’s economy from global shocks
.........................What is more important is that the Indian central bank has credibility about its ability to control inflation. In his conference with economists after he announced the new monetary policy last week, Raghuram Rajan did well to point this out: “My sense is that for the most part we would be driven by domestic conditions rather than external conditions in determining the interest rate, which is precisely why we are fighting very hard to build inflation credibility, because I think once you get some inflation credibility it gives you................
Now, easy transfer of jewellery to bank gold deposit schemes
............These centres will take just 45 minutes to weigh, melt the gold, verify the purity and issue the certificate against 90 days taken at present. The consumer will be witness to the whole process, against the present practice of completing the process (except weighing) in a remote location at Government-owned mint houses or in Switzerland. Once the process is completed in a purity verification centre, the gold will be taken to the company’s refinery near Delhi...................
Loan Reschedule Only in 4 AP, 3 Telangana Districts
.......According to sources, RBI executive director Deepali Pant Joshi, in the latest letter to AP chief secretary IYR Krishna Rao and TS chief secretary Rajiv Sharma, made it clear that the rescheduling facility would cover only loans given by commercial, cooperative and rural banks.
The RBI’s letter also said this concession would only include short-term production loans and exclude crop loans taken against gold loans for other allied activities..........
Loan waiver: Banks in the red
........."As a result, the effect on both banks and farmers is immense. While the banks have been hit by bad loans, they are losing on revenue as they are not issuing fresh loans. For farmers, it is worse as they are not getting loans when they badly need it, while interest on their defaulted loans is increasing by each passing day," ..............
Apex bank to the rescue once again
...........“As against Rs 33,000 crore proposed in the interim budget, actual dividend from the RBI stands at Rs 46,000 crore,” the government said in its medium-term fiscal policy statement last month, a document that is issued along with the Union budget. “Over the past years, the RBI has been setting aside a portion of its profits as reserves before declaring dividend to the central government. Over the years, sufficient balances have been built up in various reserves and, as such, the RBI has decided to pass on higher dividend to the government. Accordingly, the dividend declared in 2014-15 has been revised upwards,” the document added.........
Government banks shying away from lending to lower rated firms
.........Nitsure said capital conservation pressures will substantially cut down “irrational expansion of loans” in some smaller banks, which used to grow at a rate much higher than the industry average. The companies coming to banks, in turn, will have to make themselves more creditworthy for banks to lend. “The conservation of capital is going to inculcate a lot of discipline in both banks and borrowers,” she said..................
To Clean up System, Banks Turn Screws on Middlemen
State-owned Indian Bank and Andhra Bank are cracking down on middlemen, who act as facilitators between lenders and borrowers, to clean up the system after the recent arrest of the Syndicate Bank chairman and company executives over corruption related to enhancing credit limits..............
Read - ET
Read - ET
Damage control: Syndicate Bank merger on the cards?
..........“We will look into the matter (of Syndicate Bank) in detail and decide on next steps... At this point, we cannot say anything and we cannot rule out anything including its merger,”........
Bad loans and worse
....................Of course, these cases may well be the exceptions. But their high profile and visibility do raise questions about both the integrity of the credit-appraisal processes within banks and the quality of governance and supervision. The formality of credit appraisal is well-established. All banks have some objective and transparent formulae to score loan proposals on a variety of risk parameters. Committees at different levels are supposed to minimise individual influence on specific decisions. Despite all the paraphernalia of objectivity, these and other cases suggest that ...........
Ghost in the Cash Machine
.............The majority of Indian banks have a top-down approach to loan clearance, justified on the grounds of speed and improving market share. In case a branch manager does not approve the loan, promoters go directly to zonal or regional managers. In case they are reluctant, they go to the general manager, executive director or the chairman-managing director. And every superior justifies the decision on the ground of business growth but without any transparency or accountability . No wonder Percy Mistry , who chaired a government panel on financial sector reforms, chose to call Indian public sector bankers “zombie bankers“.........
IDBI Bank's Kingfisher Airlines loan under CBI scanner
..............“There was no need for the bank to take the exposure when other banks’ loans (to the airline) were getting stressed,” the CBI official said. “Along with other lenders to Kingfisher Airlines, CBI also asked us for details about the loan account. Most of the information has already been furnished. A few documents will be handed over to agency in the next few days,” said a senior IDBI Bank executive who did not wish to be named..........
Scrutiny of bad loans set to increase
Recent moves by the Central Bureau of Investigation (CBI) against IDBI Bank Ltd and the chairman of Syndicate Bank Ltd are likely signs of the government getting tough on bad loans in the banking system—as much a reflection of the rot in Indian banking as it is of the economic slowdown and policy paralysis that delayed projects. There could be more such action by enforcement and investigative agencies in the weeks and months to come and the banks themselves could get more aggressive in dealing with the sour loans on their books...............
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