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Friday, August 22, 2014
Dr Rajan and me
Rajan assures RBI will oppose legislative changes of FSLRC, says Union
.........According to a statement issued by the United Forum of Reserve Bank Officers & Employees – the association of RBI staffers, Rajan had referred to a recent public statement of deputy governor HR Khan that public debt should be continued to be managed by the RBI for which Khan has been appreciated. The meeting between top RBI brass and the unions comes after the central bank’s board asked RBI to discuss the issue of restructuring with all stakeholders............
COO - Interpretation of RBI Act : M. A. Batki
My View on "Interim COO at RBI not possible: FinMin":
With due respect to the views expressed by Secretary Financial Services on creation of new post of COO, it may be pointed out that the Central Board and Governor of the Bank are not powerless to do do. On true and correct interpretation of the provisions of Sect 7 of the RBI Act, 1934 read with the full bench decision of the Apex Court in V. T. Khanzode v. RBI (AIR 1982 SC 917), it would be permissible to create a post of COO on terms and conditions as may be decided by the Board. The COO can be contractual appointee and also be given a benefits/status of Dy. Governor at par with Dy. Governors appointed under the current provisions of the RBI Act. Needless to say, statutory appointees being not more than four can be increased to five/six by amending RBI Act, as and when comprehensive review of the Act is taken up. To read a prohibition on powers of the Board would be contrary to what the Apex Court has stated in its aforesaid judgement.
- M. A. Batki, Former Legal Adviser RBI.
Useful contributions of MSD and Mandhyan
My View on "Need to 're'visit HR in 'Re'serve Bank - V.S. Das,...":
Many thanks, Dasji. Very interesting views. Hope, more members of the RBI Family (serving or retired) will participate and make this discussion more useful, at least for bringing together some ideas for consideration by the Bank. If my memory serves me right, the earlier comprehensive look at the structure of RBI and management of HR was by the Cadre Review Committee circa late 1960’s. The settlement with trade union/s on combined seniority and decision to make direct recruitment of officers at two levels and certain other HR policy refinements happened around 1969-71. MSD and Mandhyan made useful contributions to improvements in handling HR in RBI. RBI Act needs a relook not only from the monetary policy perspectives, but from the structural aspects of the central bank also. Irritants like indirect interference from finance ministry in day-to-day administration to carrying out mandated roles need to be removed by mutual discussions between RBI and GOI.
- M G Warrier, Mumbai
Shri V.S.Das, Ex ED, is absolutely right. Is there no better way of providing job delight and professional progress other than promotions and change of designations? Previously in 70's GM's post had a lot of sanctity. Now even PCGMs look like the posts at pedestrian level. Officers with excellent track record, measured and quantified on the basis of performance parameters, may be provided with financial incentives but the sanctity of posts should not be diminished by up gradation/creation of a large number of sine cure posts inconsistent with job responsibilities.This diminishes them in the eyes of the senior executives of the banking sector apart from their own subordinates. We should not imitate the IAS/IPS where more than one third posts are in super time scale and above leading to serious ego hassles/delay in decision making process. If necessary, the scales of pay may be elongated and differential may be paid in the form of higher Grade Pay to the substantive HOD.
SS Mundra's First & Exclusive Interview After Becoming RBI Deputy Governor
The new deputy Governor of RBI SS Mundra talks exclusively to ET NOW in what is his first interview after taking over as RBI DG. Listen in!
Proceedings of the meeting of United Forum with DGs and Governor on 19th Aug 2014
.............We emphasised our objection to creation of posts in the level of ED and DG as a part of restructuring while down below the posts are being reduced by the Manpower Committee. We reiterated upgradation of officers-in-charge of metro centres to Executive Directors which would be more effective............
A challenge to live with
My View on "Raghuram Rajan: Rockstar Of India’s Financial Sect...":
A very interesting presentation of the challenges before Dr Rajan. The pressures, internal and external, makes RBI Governor move much faster than the 'time management' lessons he would have learnt at IIMA would have prepared him. So far, Dr Rajan has proved that he can change with the times and take criticism and occasional set backs in his stride. His advantage is that he doesn't have the burden of familiarity of faces he see while taking views. Ironically, the unfamiliar Indian context which has undergone changes during his absence and the need to align his views with the central bank's legacy has become a challenge he has to live with.
- M.G.Warrier
Arvind Subramanian likely to be chief economic advisor
Noted economist Arvind Subramanian is favoured as the choice for the government’s Chief Economic Advisor (CEA). It has been vacant since Raghuram Rajan resigned almost a year before, to become governor of the Reserve Bank. His name is learnt to have gone to the Appointments Committee of the Cabinet for approval........
Amitesh, Aayushman win City Round of third RBI Quiz Competition
...........Speaking on the occasion, K.K Saraf, Regional Director, RBI for J&K said that the RBIQ was being organized with a view to create awareness and interest about the history and role of RBI, banking, finance, other banking institutions, economics, current affairs, personalities and events that have contributed to the growth and progress of the country over the years. He said RBIQ is aimed at connecting RBI and the young student community enrolled in schools across the country and achieve extensive dissemination of financial literacy, he added.......
Read..........
Plastic Notes Coming Next Year
...........“The Reserve Bank of India is also looking at other alternatives for improving the life of bank notes,’’ the central bank said in its annual report for 2013-14. The central bank floated a tender for plastic currency notes in January after years of deliberation. Depending on the trial, the notes should be introduced widely next year...........
Read - ET
Plan Your Finances Well to Duck ATM Withdrawal Fee
......They also claim to have the backing of their financial advisors. However, most advisors say that with a little bit of planning, most people can avoid any problem they may face due to these restrictions, and multiple bank accounts actually do more harm to one's finances than any good. They also add that most individuals have a sizeable amount lying idle in dormant savings bank accounts -mostly salary accounts -they have opened at different points of their adult life. “I think this is a knee-jerk reaction. The Reserve Bank of India (RBI) has given the freedom to banks to decide on the number of transactions for their customers on their own ATMs.So far, no bank has announced whether it is going to limit transactions or levy a penalty for exceeding the limit. It is better to wait for a clear picture,“ .......
Read - ET
Age bar - M.G.Warrier
My View on "5-year term for public sector bank heads mooted":
The move to appoint public sector bank heads for longer tenures is most welcome. But, to find sufficient number of suitable candidates in the age group of 50 to 55 in the pool of candidates to be considered for selection will continue to be difficult, unless a revamp of recruitment and career progression policies across hierarchies is made. Recently, one large bank had only one eligible candidate when 'selection' of candidate for the top-most position was to be made. Finance Ministry had to bend rules to make more candidates eligible for being considered.
- M.G.Warrier
Top posts at four govt banks still vacant
..........The government follows the practice of lateral transfer of CMDs in large banks, though there have been exceptions. There has been reports that the present government was reviewing the decision of the previous one regarding all future appointments in public sector banks. The government is also planning to split the chairman and managing director's post in public sector banks. ........
Inflation moderating, RBI may not hold rates for long: Mayaram
........."RBI in its recent credit policy statement stated that the central bank will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates. Hope we reach that threshold very soon," the finance secretary added...........
Let Raghuram Rajan manage your bond returns
.............However, given the stability and focus of the RBI’s framework and with every reason to expect complementary action from the government, perhaps for the first time in five years, there is now a fundamental reason to buy bond funds. And the reason is not an early expected rate cut but the fact that the RBI is almost insistent on providing real, sustainable and positive returns to long-term bond holders.
Read - Mint
Read - Mint
RBI optimistic about investment upturn in Indian economy
........As per RBI estimates, capital expenditure of more than Rs.1.2 trillion is expected to ensue from new investment intentions of the corporate sector in the year to next March. “This could be realized as forward-looking surveys and economic indicators along with rising business confidence provide hope that the decline in private corporate investment could be arrested in 2014-15,” said RBI in its assessment of the economy for the current fiscal year..............
Impact of deficient monsoon seen small, says RBI
..........“The marked improvement in monsoon since mid-July 2014 has reduced the likelihood of 2014-15 being a drought year but the final outcome would depend on the spatial distribution of rainfall in the rest of the season,” .......
Stressed assets in infra rose sharply: RBI
.........“This implies that the stress rate of infrastructure, which was much less than the average, is now over twice that of the overall portfolio. About a fifth of all infrastructure advances are stressed and in stress tests of credit risk exposure to sectors, infrastructure impacts banks most severely on account of potential losses on future assumed impairments,” said RBI in the annual report..........
Stress on identity in policy review
..........The Reserve Bank of India today asked the government to work with it on a new monetary policy framework. The central bank wants its “operational independence” to be considered while a review of the existing policy framework is done. Various recommendations have been made with regard to a new monetary policy framework, of which two have generated heated debate — one made by the Financial Sector Legislative Reforms Commission (FSLRC), headed by Justice B.N. Srikrishna, and the other by a committee headed by RBI deputy governor Urjit Patel. Both reports had recommended the setting up of a monetary policy committee. However,..........
RBI sees India Inc back in investment mode
.........The biggest comforting factor for the central bank comes from the fiscal deficit. The government is showing a resolve to bring down the deficit, which reached a record high during the previous government's tenure. The fiscal deficit target for this financial year is set at 4.1 per cent of GDP. "The fiscal deficit is likely to reduce further in 2014-15. The budgetary targets are realisable, though concerted efforts are necessary to achieve these targets," the RBI said. On the external front, the central bank sees the Indian economy "far more resilient" now due to moderation of current account deficit and a stable rupee, but it warned against market disturbence in the event of quicker monetary tightening by advanced economies..........
RBI's FY15 agenda: Strengthen, reform, develop financial sector
.....As a measure to strengthen the banking structure, the RBI has proposed to review the group exposure norms for banks so as to align them with the revised global standards. "The tightening of exposure norms will also help in risk mitigation during cyclical downturns as banks' exposure under the framework will be more granular and diversified to a large number of unrelated counterparties rather than being concentrated to a handful of large and related counterparties," says the annual report.............
RBI balance sheet expands 10% in FY14
...........On the decision to transfer the entire surplus, RBI said after reviewing the adequacy of internal reserves and the central bank’s surplus-distribution policy, a technical panel had said the balances in the contingency reserve and the asset development reserve were more than the buffers needed. RBI said the increase in assets was primarily due to growth in foreign currency assets and the impact of the depreciation of the dollar against other major currencies in which the Reserve Bank’s foreign currency assets were held.......
RBI nips 'unofficial' NBFC margin funding; sets new rules
......Surprisingly, it has taken the RBI so long to issue the guidelines, despite it being an open secret that stock brokers were building leveraged positions through the NBFC route, so that they could avoid making disclosures to the stock exchanges. In fact, a Sebi order on a high profile stock market investor in August 2006 clearly said that the investor and his associates were violating RBI guidelines on NBFC lending to capital markets. But Sebi said it could not take any action as it was for the RBI to look into the violation.
PM Modi Invited Suggestions to replace Planning Commission
..............The scrapping of the Planning Commission is the first step in the right direction, to ushering in good governance. It is an opportunity to bring a focus to what is done and for whom, by each government ministry and its departments. It is an opportunity to assess the impact of alternative actions of each ministry before listing desirable actions. It is an opportunity to ensure that the actions of one ministry do not compromise India’s potential for change, resilience, stability and sustainability. It is an opportunity to undertake best practices and not merely......
Decommisioning of Planning Commission - Dr.T.V.Gopalakrishnan
...........The new body should have experts from Agriculture, Planning, Industry, taxation,rural development, Information technology and data collection. It should have representation from all regions. The village surveys which were once prominent and helped to devise developmental plans have been unfortunately given a go bye and it needs to be reintroduced involving NABARD and Regional Offices of the Reserve Banks. Local Boards of RBI need to be involved actively by the new body The strength and weaknesses of..........
Read........
A temple of policymaking
............... The study at Yojana Bhavan as well as in Calcutta was recognised internationally since I got a fully-financed admission for a Ph D in Cornell University. Thus, the Planning Commission was not a temple of lazy economists but of economists and policymakers who were as passionate to do something for India as Narendra Modi has been elected to do. So what is the hurry to abolish a temple of policymaking that has made India a modern economy because of sophisticated thinkers?............
FM: PSU banks need to manage risks better
...........“With regard to professionalising the management of banks, we have taken some decisions. We also expect banks to have better risk management,” Jaitley said at a function organised by Indian Bank, adding that the department of financial services is working on these issues. While not referring to any specific instances, he said that some recent incidences have been disturbing. “But I only hope that they are a drop in the ocean. We must learn the lessons from such incidents and hope there will be no repetition of them,” he stressed..........
`Disturbed' FinMin Cracks the Whip on PSB's Sagging Morals
.........“Some recent incidents have been disturbing... I would only hope that they are a drop in the ocean and we have all learnt the lessons from such incidents, and there will be no repetition of them,“ finance minister Arun Jaitley said on Thursday . “Credibility is of extreme importance as far as the banking industry is concerned... We must endeavour improved standards of credibility ,“ .............
Read - ET
Decision on FDI limit in HDFC Bank soon: FinMin
......If the proposal of the bank to raise foreign investment to 67.55 per cent is accepted, it would exceed the cap of 74 per cent, after taking into account parent HDFC Ltd's stake.The Department of Economic Affairs (DEA) and DIPP (Department Of Industrial Policy & Promotion) are of view that promoter HDFC Ltd's 22.56 per cent stake in HDFC Bank is foreign investment...........
Banks must set deficiencies right to check frauds: BoI
......Absolutely, it is a systemic risk. What happens at the ground level is when the deposits are offered, they get a little bit lured to increase the business size of the branch. So there comes the deficiencies in accepting the KYC, requesting the KYC, getting in touch with the original depositor. So these are the normal safeguards, which any branch has to take at and here is where the deficiencies occur. So it is not intentional but not adhering to the systems and procedures. I totally appreciate that..........
RBI lens on illegal deposit-taking entities
The Reserve Bank of India (RBI) is working with the government to bring about changes in the law to regulate the entities illegally accepting deposits from the public, Deputy Governor R Gandhi said on Thursday. “There are a number of companies that are registered as finance companies but are not regulated by the Reserve Bank. There are incorporated companies and unincorporated entities illegally accepting deposits. The laws these days are inadequate to deal with these issues...........
Cheque bouncing: Supreme Court's verdict on jurisdiction
..........The Court noted that the law of cheque bouncing was being misused rampantly. Complaints were filed in Delhi just because lawyers were issuing notices from there, even though the bank of the payer or the payee were outside Delhi. The Supreme Court has effectively put an end to this harassment at the hands of the Drawee......
Now, transfer money through your mobile recharge shop
....When the Reserve Bank of India initiated a pilot project, away from media attention, to test cash-out through mobile-based wallets, many like Neelam saw it as a step towards financial inclusion. RBI's pilot project is powered by 8 companies which include Airtel Money, Vodafone's M-Pesa and Oxigen. These e-wallets till now were offering cash deposit facility which enabled online transactions. For instance,............
Banking through basic handsets from Aug 28
........The push for basic mobile banking is also being undertaken by RBI. “Efforts will be made to leverage the potential of the high mobile density that exists in the country . Necessary groundwork will be undertaken to put in place standards for customer on-boarding, se curity of transactions and redressal of customer grievances,“ the central bank said in its vision and agenda document in its annual report on Thursday .........
Dena Bank to open 100,000 new accounts in Gujarat by Aug 28
........."Being member of the state level bankers' committee (SLBC), we have been given a target of opening 75,000 accounts by end of August. But we will be able to open 100,000 savings account by August 28," said Dena Bank general Manager and SLBC convenor for Gujarat Kailash Chandra Chhipa.........
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