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Friday, September 5, 2014
Raghuram Rajan’s first year at RBI: Making a difference to continuity
Singular vision paying off for India’s Reserve boss Raghuram Rajan
..........Mr Rajan came to the job with no policymaking experience. It had been, he said, a bit of a culture shock to go from the freedom of being an outside critic. “Now that I’m on this side, you have people saying what you’re doing is terrible, it’s going to lead to problems,” he said..........
The man who turned the economic tide
...........The good news though is that he seems to have struck a good rapport with the powers in New Delhi. This is important, not just in the conduct of monetary policy, but also in the context of the recommendations of the Financial Sector Legislative Reforms Commission which, if implemented, will curb the role of the central bank. If Dr. Rajan’s good understanding with the Centre is sustained, we could well see more reforms from the RBI in the months ahead..........
Mr. Rajan’s Bag of Low-Key Tricks
.............Whether Mr. Rajan’s legacy will be as the man who tamed Indian inflation is still unknown. But he has deployed other less-understood technical measures since taking office as well, including changing the way the RBI lends to commercial banks. If nothing else, he may earn a reputation as a central banker with low-key smarts.
Super skills okay, but did external factor also aid Rajan?
..........Without taking any credit away from the man-of-the-moment Raghuram Rajan, who completes one-year in office today, many argue whether he was also lucky in terms of the events – both domestic as well as global – that took place in the days after he assumed office. Jahangir Aziz, chief economist at JPMorgan calls it more as baptism by fire.......
Narendra Modi and Raghuram Rajan: Tale of contrasting debuts
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| "NamoRa" File photo |
.................Both took over their respective positions at a time when the economy was, and perhaps still is, in doldrums. Both were faced with fairly stark choices. Their predecessors—Manmohan Singh and D. Subbarao—had left them with unenviable tasks. Rates for economic growth and inflation had swapped places. We were growing at less than 5% and had an inflation hovering around 9%. Both leaders had to make a clear choice in their policy stance in order to prevail. They simply could not afford to carry on with the muddled approach..............
One year later at RBI, rockstar Raghuram Rajan has many battles to fight
When Raghuram Govinda Rajan took over as the 23rd Governor of the Reserve Bank of India (RBI) on 4 September, 2013, the former IMF chief economist was seen as a long-awaited saviour to rescue a faltering economy, than just a mere, routine change of guard at the Mint Road. There was a mountain of expectations built around Rajan. Almost everyone praised former finance minister P Chidambaram and (for a change) the UPA government for choosing Rajan as the government’s money manager.............
Rajan has done well but his task is incomplete
............Dr Rajan deserves most credit for his publicly stated resolve not to look at quick-fix solutions, but to focus on correcting the larger structural issues. Given the Indian environment, achieving even a part of that mission before he leaves office would be a considerable achievement.
Ignoring Doubters, Indian Central Bank Chief Tackles Inflation
.........."For long, we've been punching below our weight," he said in the interview. "Today, we're still not there, so if someone gives attention to us, it is because of where we will be, rather than of where we are now."............
Regulators always live in interesting times
I visited one of the deputy governors at the Reserve Bank of India (RBI) a couple of weeks ago and discussed, amongst other things, my continuing obsession with the fact that volatility is so low in markets everywhere. He pointed out that, since the financial crisis, regulators are active everywhere. Not only have banks been slapped with huge fines - although, to my surprise, there have been no prison sentences - but capital requirements been cranked up substantially - and appropriately, I might add. As importantly, regulators are much more proactive. If there is ........
‘RBI needs to focus on banking needs of new States, North-East’
.........Availability of adequate currency notes/coins, development of cooperative and non-banking finance companies, suitable banking network, financial inclusion and financial literacy are issues that need to be accorded high priority. A department for currency management should, ideally, be opened in all tier-III offices and there should be recruitment of staff at the base level periodically. The HR Department had sought the views of the Association in response to its document on the ‘operational blueprint for organisational restructuring and implementation of the human resources initiatives.’.......
No easy path to higher growth - Dr.S.S.Tarapore
...........There are always aspirations for a quick return to the halcyon days of 9 per cent growth. But the RBI does well to caution that for a medium-term growth of even 7 per cent per annum, it is imperative to have better microeconomic policies to improve activity and productivity; this should go along with a conducive macroeconomic environment with reasonable, positive rates of interest, low inflation, moderate balance of payments and current account deficit, (CAD) and a low fiscal deficit.....
Forget Interest Rates, Just Grow!
......Growth is vital. So, if spurring growth is as easy as lowering the interest rate, why is there any hesitation? This begs the question: how should we think about the RBI-set interest rate? What evidence is there to suggest that lowering of the interest rate induces investment and leads to robust economic growth? One would expect investment to respond to lower interest rates and a favourable profit outlook. The theory is compelling, but it's largely silent on the relative importance of these two factors........
Finance, credit and markets - R.Gandhi
Speech by Mr R Gandhi, Deputy Governor of the Reserve Bank of India, at “Credit Summit India 2014”, organised by Association of International Wealth Management of India and National Institute of Securities Market (NISM), Mumbai, 26 August 2014
...........Although banks play an important role in these economies by channeling funds from depositors to companies without access to capital markets, banking itself, says Nobel laureate Merton Miller from University of Chicago, is “ basically a 19th century technology”. Today’s emerging Asian economies do not have well-developed capital markets and so remain heavily dependent on their banking systems to finance growth. However, ............
Financial intermediation for all – economic growth with equity - Deepali Pant Joshi
Speech by Dr Deepali Pant Joshi, Executive Director of the Reserve Bank of India, at the Financial Inclusion Conclave of Dun & Bradstreet, Mumbai, 26 August 2014
......“Technologies that reduce asymmetric information in credit markets are technological innovations which can be leveraged for improved borrower identification. Bio-metric authentication helps to reduce leakages and ensure that Government transfers direct to bank accounts achieve the desired objective of financial inclusion, thus creating a better enabling environment and increasing penetrative outreach for optimal results.”“Financial inclusion is critical to ensure equitable economic growth and a just Society.”Leveraging technology makes it easy to leap frog the barriers of geography for sustainable, scalable financial inclusion.Empowering Small Banks Alternate types of Payment Banks are also viable options. We also ........
Moneylife Foundation selected for the 10th MR Pai Award
...........Moneylife Foundation has been nominated for the 10th MR Pai Award, instituted in memory of the man 'Reader's Digest' once called, 'Champion of the Consumer'. Dr Deepali Pant Joshi, executive director of Reserve Bank of India (RBI) would present the award to Moneylife Foundation on 16th September at 5.30pm at IMC in Mumbai. This award, in the memory of well-known consumer activist Mangalore Ranga (MR) Pai, was instituted in 2004 by Punjab and Maharashtra Co-operative Bank Ltd. The Award is given to.........
UFBU - IBA Stalemate Seems to be Over
Reports indicate that the negotiating meeting for Xth BPS has been now called on 17th September, 2014 at 2.00 PM. Who has bent? IBA officials are likely to meet DFS, Ministry of Finance on 8th September 2014 for finalising their strategy. Hope it will not turn into another Lunch Party. Report to follow.
High Flyer
After breaking into the all male club that was the Top 10 of the India Inc's Most Powerful CEOs listing in 2010, Chanda Kochhar has remained there for the past four years as India Inc's No.1 woman CEO. In a list dominated by promoters, she is the country's most powerful professional CEO. And as CEO of ICICI Bank, she also happens to be the country's most powerful banker. Ms Kochhar spoke with CD minutes before taking off on a flight to Delhi. Edited excerpts:..........
Read - ET
Read - ET
'We are not growing much,so dont need more capital
Arundhati Bhattacharya, who completes a year as State Bank of India chairman this month-end, says she sees much more optimism now than six months ago. In an interview with Manojit Saha & Abhijit Lele, she says she expects stalled projects coming back on track in two quarters. Edited excerpts........
RBI norms may hit co-op depositors
..In its latest circular, the RBI has said that under the new guidelines, the acquiring bank should not incur any loss arising out of the said merger or transfer of assets and liabilities of cooperative banks. “Big depositors holding deposits in excess of Rs 1 lakh each will be required to sacrifice in proportion to the deposit erosion of the target bank,” the circular said........
Read - TOIShriram seeks clarity on niche bank operation
.............“We have written to the Reserve Bank of India (RBI) if one promoter can float multiple banks with different managements and different boards,” said G S Sundararajan, group director. “In case it is allowed, we would be keen to look at wholesale consumer banks and small banks as well.” In a major shift in its traditional stance on bank licensing, RBI has said it would allow niche banking activities and invite applications for differentiated licences, along with those for a universal lender.......
RBI directive to banks on KYC norms for medium and low risk customers
The Reserve Bank of India on Thursday asked banks and all India financial institutions to dispense with the requirement of ‘positive confirmation’ at two/three years in respect of medium and low risk customers respectively. Positive confirmation pertains to obtaining Know-Your-Customer related updates through e-mail/ letter/ telephonic conversation/ forms/ interviews/ visits, etc..........
RBI begins review of Jan Dhan rollout
..............."Besides doing checks, the effort is to find out challenges and hitches being faced by bankers. This is not a fault finding exercise. The aim is to take feedback and attempt to provide timely support, as the targets are stiff," the official said. At the apex, a panel comprising the finance minister, RBI governor and finance ministry heads will take stock of the progress.........
Withdrawal Cap in Jan Dhan Yojana may Deter Depositors, Bankers Say
.......“Once you tell people that they may not be able to withdraw more than Rs 10,000 per month, some fear their money will be locked in case of emergency,” said an SBI branch manager, requesting anonymity. A finance ministry official, however, told ET that accounts opened under the scheme were governed by the Reserve Bank of India’s guidelines for ‘small accounts’. “We do not expect these small account holders to withdraw more than Rs.10,000 per month,” said the official, who did not wish to be identified.........
Jan Dhan cover: LIC says no to premium
..............While the insurance behemoth has agreed to extend life cover, it has conveyed to the Finance Ministry’s top brass that it is in no position to bear the premium cost, sources close to the development said. Even a premium as low as ₹100 for every life insurance contract with a sum assured of ₹30,000 would mean an outgo of at least ₹750 crore, a rough calculation shows............
Outlets everywhere, not many to bank on
..........The problem is set to grow following issuance of 75 million new RuPay cards in the next six months with the launch of the Jan Dhan Yojana. In addition to the problem of long queues at ATMs, there would be the problem of guiding new cardholders, especially in rural and semi-urban areas, on how to use those cards, some bankers told Business Standard. "Biometric cards, though costly in the beginning, are very simple to use. And they mitigate the risk of theft or fraud. RuPay cards will entail a lot of guiding from banking staff to new customers. That may result in hiring caretakers at ATMs who will help customers. Then there is the risk of pin-based cards being misused,".............
ICRA: Fresh NPAs on uptick for PSBs
...........However, ICRA highlighted that there was a significant drop in fresh referrals to the CDR (corporate debt restructuring) Cell for restructuring during Q1, FY2015. If the current trend were to continue, one may expect some containment of the standard restructured book. Overall, the Gross NPA percentage plus 30% of standard restructured advances remains large at 5.5-5.7% (around Rs. 3.5-3.7 lakh crore as of June 2014) and may continue to impact profitability over the short term. Moreover, ........
RBI curbs banking operations of Choundeshwari Sahakari Bank
The RBI has issued directions to The Choundeshwari Sahakari Bank Ltd of Kolhapur, Maharashtra that will require the bank to seek prior approval for its banking business. “In particular, depositors of the bank will be able to withdraw a sum not exceeding Rs 1,000/- (Rupees one thousand only) of the total balance held in every savings bank or current account or any other deposit account by whatever name called, subject to the conditions stipulated in the RBI Directions,” RBI said in a statement........
Debt and default
..........It remains to be seen if the other banks in the consortium, which has notable names like the State Bank of India, IDBI Bank and Punjab National Bank, will follow suit. Mr. Mallya has tried to shift the blame on to UBI for not following due process before declaring him a “wilful defaulter”, but there is no getting away from the basic fact that Kingfisher has not repaid its loans. It can only be hoped that the process of recovery of dues does not get bogged down in the legal system, given that Mr. Mallya has said he would go to court to contest UBI’s action. Banks are under pressure from the Reserve Bank of India to clean up their balance sheets and go after defaulters. Gross non-performing assets of the banking system at 4 per cent may not be alarming yet, but it is a cause for concern.....
Asking bank to stop cheque payment may land you in jail!
........" Once the cheque is issued by the drawer, a presumption under Section 139 must follow and, merely because the drawer issues a notice to the drawee or to the bank for stoppage of the payment, it will not preclude an action under Section 138 of NI Act by the drawee or the holder of the cheques in due course," the Court held..............
IDBI Bank launches e-lounge in Mumbai branch
.............At IDBI Bank’s e-lounge, banking services that the customers can, on a self-service basis, enjoy are facilities such as ATM, Automated Cash Deposit (with a receipt and instant credit of the amount), Automated Cheque Deposit (with an acknowledgment receipt), Automated Pass Book Printing, e-Transact terminal for various Card and Net Banking holders to view balance, make a funds transfer, pay bills and recharge.........
It’s irrational to oppose what’s better for everyone, Uber says
........"Culturally, we are a very solutions-oriented company. So we are, of course, going to look at all options. However, right now we are having conversations with the Reserve Bank of India (RBI), trying to understand what the rule means for us and how we can just focus on delivering a safe alternative to users," Ryan Graves, head of global operations at Uber, told TOI at the company's headquarters in San Francisco............
Credit Card: Cards up your sleeve
........If one does not get a letter regarding the closure of the credit card account, the bank may charge renewal fees, which will show as unpaid dues even after one has cancelled the card. This will keep getting carried over to the next month, attracting penalty. This will affect one’s credit score in the long run — all the records are shared with various credit information companies. Moreover, if one wants to close multiple credit cards, it is better to do it gradually. Analysts say.......
Radio Taxi industry in talks with RBI
Cashless mode of payments is going to play an important role in India’s radio taxi market and the industry is in discussions with the Reserve Bank of India (RBI) to come out with alternative payment models, a top official said. Siddhartha Pahwa, Chief Executive Officer, Meru Cabs said the industry had given a couple of proposals to the RBI on the alternatives, which includes solutions such as a prepaid wallet and exempting a certain amount of rupee transactions from the two factor authentication...........
Telcos Seek RBI Go-ahead for Arms as Payments Banks
.........The GSM industry body, Cellular Operators Association of India (COAI), has written to the central bank, saying that some of the clauses on promoter equity, foreign equity, rural branches and ring-fencing in the draft guidelines will make it complex and expensive for telecom operators to function as payments banks. It has also asked RBI to do away with the restriction on the maximum deposits per customer and align it with those applicable to any scheduled bank......
Read - TOI
Mobile banking may raise lenders' risks, say experts
.......Security experts say that even though the value in transactions through basic mobiles is not high there will be volume-based vulnerability. The caution comes at a time when the government is planning to extend banking service on basic telephones using the *99# command or USSD (Unstructured Supplementary Service Data)a communication protocol for GSM providers. “When compared to SMS, USSD is considered to be relatively more secure because no copies of messages are stored on customers' phones or at the SMSC. The big risk lies on the fact that data carried within the communication channel (between handset and USSD gateway) is not encrypted,“ .....
Read - TOI
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