Tuesday, March 20, 2012

Panel discuss oversight body for improved financial regulation

A panel of sectoral regulators headed by RBI Governor D Subbarao today discussed setting up an inter-regulatory body to improve supervision on the financial sector. The sub-committee of the Financial Stability Development Council (FSDC) also reviewed the development in the global economic and financial sector scenario, focusing on issues relating to potential systemic risks for India. "The Sub-Committee deliberated on a proposal for setting up an inter-regulatory forum for improved co-operation for effective supervision of Financial Conglomerates," the Reserve Bank said after the meeting..........

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The elusive policy mix

...... One of the reasons for the slow growth witnessed in the past year has been the adverse monetary and fiscal policy mix in the country. If there was one thing that the 2012-13 Budget was expected to redress, it was the adverse policy mix. The Reserve Bank of India (RBI)—both in its third quarter and mid-quarter review of monetary policy—had highlighted the importance of right fiscal conditions in shaping the inflation outlook and, implicitly, the speed of monetary loosening in the months ahead.Has the budget addressed this issue properly?.........

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Weak dollar flows, trade gap add to concern over inflation

 ........ If budget 2012-13 is expected to spur the Reserve Bank of India (RBI) to bring down interest rates, there is little evidence to support that presumption. RBI has already signalled its worries on the government’s gargantuan borrowing requirements that are hardly supportive of an interest rate reduction, as stated in the December mid-quarter monetary policy review..........

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FSDC panel mulls forum for financial conglomerates

......Significantly, the sub-committee, which is headed by RBI governor D Subbarao, also discussed a proposal for setting up an inter-regulatory forum for improved co-operation for effective supervision of financial conglomerates. ........

Read - Indian Express

Inflation will stabilise: Pranab

New Delhi : ......Interacting with the media after chairing the central board meeting of the Reserve Bank of India (RBI) here, Mr. Mukherjee said: “Couple of months, there will be fluctuations [in inflation] ... So I do hope that after couple of months it will stabilise”.......

Read - The Hindu

UBI gets nod to open office in Myanmar

United Bank of India, the designated Banker for Indo-Myanmar trade has got the Reserve Bank of India's nod for opening a representative office in Myanmar..........

Read - The Hindu

MFIs breathe easy with improved fund flow

........The normal situation in non-AP States, and clarity on the regulatory front (except in AP) with creation of Non-Banking Finance Company-MFIs by the Reserve Bank of India, allowing banks to buy loan portfolios from MFIs to meet priority sector obligations, have been driving this funding, say experts........

BusinRead - HBL

Why Sebi should re-open the Jalan committee report

........ it should not be forgotten that one of the main objectives behind the setting up of the committee was to frame clear policy regarding ownership of exchanges. This should be done sooner rather than later, especially given the complications that have arisen because of the lack of clear guidelines. Even so, the regulator has chosen not to frame new rules relating to the ownership and governance of stock exchanges. If the Sebi board had reservations about the recommendations of the Jalan committee, it could adopt the same approach it did with the new takeover code.................

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135 companies participate in IIMK final placements

.................Apart from major Indian and international companies across finance, marketing, operations, consulting, general management, IT and HR sectors, a slew of public sector undertakings figured in the recruitment drive at IIMK. They included ONGC, Power Finance Corporation, Power Grid and Bank of India. The Reserve bank of India and UTI also took part in the process.

Read - HBL

Monday, March 19, 2012

Co-operative banks to be linked to nationalized bank ATMs

Surat : Lakhs of account holders of co-operative banks will soon be able to withdraw money from nationalized banks' 84,000 ATMs across the country. Nearly 60 cooperative banks in the state, including 15 from south Gujarat, have started the process to get connected with the nationalized banks after Reserve Bank of India (RBI) took a decision in this regard recently……….
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Fake Indian currency recovered, three held

…..Four northeastern states – Assam, Meghalaya, Tripura and Mizoram – share a 1,879-km border with Bangladesh, part of which is porous, riverine and unfenced. The area is prone to frequent smuggling of numerous items, infiltration and occasional skirmishes. Fake currency in Rs.500 and Rs.1,000 denomination is mostly in circulation in the northeast region. Nationalised banks and various other financial institutions in northeast India have taken a series of measures, including installation of fake note detection machines, to identify fake currency.

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It's fake money, honey

………"The actual amount of fake currency floating in Gujarat could be much more - at least 10 times the amount recovered from banks," said a police official who is probing the case. The matter is now being investigated by the city police as an RBI directive makes it mandatory for all banks to hand over fake currency notes to the Special Operations Group (SOG) and the crime branch every month.…….

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Meet the right man in wrong job: Kaushik Basu never cut out to be govt economist

…….FMs haven't always had good relationships with CEAs. That's not true of Kaushik Basu and Pranab Mukherjee. However, after Bimal Jalan (CEA stint in early 1980s) I can't think of a single CEA who has had significant impact on policy. Kaushik is no exception. Perhaps times have changed. Perhaps it requires good inter-personal relationships with higher rungs of civil servants (especially North Block and RBI), which "government economists" possess and completely lateral entrants don't. What about the Economic Survey. Few CEAs paid any attention to Survey. (Arvind Virmani was an exception. Rakesh Mohan talked about it, but didn't do much.)……… 
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Where will the money come from?

…….Even after cutting CRR twice, the Reserve Bank of India (RBI) has not yet pared its policy rate—something that doesn’t happen too often. This marks quite a shift in the Indian central bank’s monetary policy—CRR has become an independent tool for liquidity management. The reason behind the CRR cut is acute cash crunch in the system. The daily cash crunch, which peaked at Rs. 1.90 trillion in early March, could have risen further by this time on account of advance tax outflow had RBI not gone for CRR cut ahead of its quarterly review of monetary policy……..

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HDFC Bank crosses 1 m in rural loan initiative

.............The objective of the programme was to help 10 million families (40 million families) become self-sufficient through its ‘Viable Finance' initiative. RBI Deputy Governor, Dr. K C Chakrabarty, and HDFC Bank MD, Mr Aditya Puri, participated in the programme.

Read - HBL

Caveat emptor — Boon or bane?

The credit / debit card market has witnessed a fast growth with increasing number of banks offering the facility, more establishments willing to accept them and more consumers finding it a convenient mode of payment. In such a scenario, the Reserve Bank of India has issued several guidelines to protect the interests of card holders. However, issues persist..........

Read - The Hindu

Corporate finance - less capex, more financialisation

Growth feedback effect and productivity gains emanating from a steady capex in the industrial sector provides a sustainable base for GDP growth trajectory. However, a comparative analysis of the Reserve Bank of India's annual study of financials of non-government, non-financial public limited companies during the decade of 2000s over the decade of 1990s, reveal a disturbing trend. ..................

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Banks to start rate cuts after prod by govt

Taking cues from the government, banks led by State Bank of India are going to begin selective reduction in interest rates, starting this week…………

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RBI says meeting higher Govt. borrowing a challenge

The Reserve Bank has said it is a tall order to manage government’s enhanced borrowing next fiscal but it will do its best. “It is going to be a challenge managing the enlarged borrowing programme ... but certainly we will see how best we manage,” Deputy Governor H.R. Khan, who oversees the government’s borrowing programme at the central bank, said...............

Read - The Hindu

Budget 2012: Time is right for rate cut, says R. Gopalan

Can this growth scenario play out without support from the monetary policy?

The RBI takes a number of things into account. It takes into account fiscal deficit and the underlying inflationary pressures in an economy. It looks at global factors and the core inflation. RBI has to take care of inflation but it has multiple roles. It also has to look at growth. So, with all this it ismore reasonable to presume that there could be rate reversal. The time is ripe for it to happen……………
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Bond yields may stay firm amid tight liquidity

…………..Reserve Bank of India Deputy Governor H R Khan said the government’s market borrowing programme is a challenge for the central bank. However, RBI has tools like OMO, cash reserve ratio and liquidity adjustment facility (LAF) to manage liquidity-related issues…………

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Bank rate lives to die another day


…..Rangarajan’s successor Bimal Jalan repositioned the bank rate as the real signalling rate on the lines of the US Federal Reserve rate and delinked it from all refinance rates. This is in conformity with the recommendations of the report of a panel on financial sector reforms, headed by former RBI governor M. Narasimham. Jalan was in favour of using the bank rate sparsely, and focus on other instruments like repo rates, etc., to send short-term interest-rate signals…………


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'Present situation not right for rate cut'

.........."In my opinion, if the RBI cuts CRR by 100 bps...the banking system on its own will reduce interest rates. So, CRR is more important at this point of time than policy rate cuts."...........

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Clamour for 10-year NRE deposits increases

.......Banks in India received a net inflow of $1,067 million into non-resident external (NRE) accounts during November 2011, compared with $406 million in October 2011, according to the Reserve Bank of India (RBI) data, coinciding with the depriciation of the Indian rupee and the higher interest rates offered on NRE deposits. However, there are those who feel that 10 years is too long a time to take a stance on interest rates........

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Swiss bank account: The smart ones saw it coming as fewer rooms left at home to park black money abroad

……A typical transaction to move money from Switzerland involves buying a shell company in Dubai or Singapore, opening an account of the company through the Reserve Bank-approved liberalised remittance scheme that allows investments up to $200,000 a year per person. This allows the Indian resident to hold shares of a paper company having account with a bank in Dubai or Singapore. A year ago, RBI, which perhaps had a whiff of what was on, barred residents from using the scheme to float new companies. But it has hardly been a deterrent as there is an army of lawyers ready with paper companies that are up for sale…….

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ED asked to look into deals of Dubai hotelier who saved Indians from gallows

……….Indicating a nexus, the whistle blower has said despite he being an informer on whose information, the income tax survey was made, the department is withholding information regarding the seizure to the informer. Vijay Pal Singh has moved an RTI appeal for this information.  The complaint has also recorded that banks are duty-bound to report the matter to Reserve Bank of India but nothing happened.

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Sunday, March 18, 2012

RBI's financial Outreach Camp to be held

Imphal, March 17 2012: Reserve bank of India (RBI) as part of its Platinum jubilee celebrations, had organized financial outreach Camps in various villages of the North Eastern States in the year 2009 and 2010 . Encouraged by the response received and the success of the Financial Outreach Camps, Reserve Bank of India has now launched the third phase of such camps in the North East and is organizing another camp at Kimin Village in Arunachal Pradesh on March 26, 2012, according to a source from RBI. The purpose of such camps is to bring awareness regarding banking facilities and make an attempt at making available such facilities to every adult citizen in the target area and for bringing them under the fold of mainstream banking. It is very important for every adult citizen to have a bank account since a scheduled bank is not only a safe place to deposit his/her hard earned money, but also a channel which links the account holder with the broader network of payment and settlement platform enabling easy remittance and payments anywhere in India. Moreover, all can get loans from the banking system at reasonable rates of interest under various schemes for all the requirements such as education, personal needs and for business. Many of the schemes are primarily targeting Below Poverty Line citizens and underdeveloped areas of the country, the source maintained. The Camp at Kimin Village on March 26, 2012 would be inaugurated by H R Khan, Deputy Governor, Reserve Bank of India. Chief Secretary of Government of Arunachal Pradesh, Regional Director, Reserve Bank of India, Banking Ombudsman for North East, Chief General Manager, State Bank of India, NE Circle, Chief General Manager, NABARD, District Magistrates and Papumpare District will also be attending the camp. To dissipate information on various facilities/schemes, stalls would be set up at the camp by RBI, Office of Banking Ombudsman, NABARD, various banks like SBI, UBI, UCo Bank, Arunachal Pradesh Rural Bank, Arunachal Pradesh State Co-operative Bank, NEDFi, SIDBI, KVIC, KVIB, NSIC, Agriculture/Veterinary Department, the source disclosed.

RBI to be spared from wealth tax


Imagine the Reserve Bank of India (RBI) being asked to pay wealth tax. Sounds bizarre? The government has just realised that the central bank need not pay wealth tax and to stem any embarrassment it is planning to amend the Wealth Tax Act to ensure that the tax is not levied on the RBI which is the banker to the government and custodian of the country's gold reserves….....


Hiking indirect taxes a smart move, says RBI deputy governor Subir Gokarn

Finance Minister Pranab Mukherjee's Budget proposal to raise excess revenue from indirect taxes rather than touching the direct taxes is a smart move, as it does not require a Parliamentary approval, Reserve Bank has said. RBI Deputy Governor Subir Gokarn said this method improves the reliability of garnering the necessary revenue as change in indirect taxation is an executive decision, and does not have to be approved by Parliament................
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HC notice to RBI over firms’ gold loans

A division bench of the High Court of Karnataka headed by Chief Justice Vikramajit Sen has issued notices to the Governor of RBI, chief secretary of Karnataka and the Registrar of Societies for failing to regulate non-banking financial institutions Mannapuram Finance and Muthoot Fincorp, both of which deal with gold loans…….

Read - Mirror (Bangalore Edition)

Plea to set up debt management office for banks

.......It was very important that the relationship between the Union and the State governments and that of both with the RBI be taken into account before giving shape to the structure of DMO. He said the proposed debt management office should be an independent, autonomous body with equal participation of the Union and the State governments and the RBI, with independent views, goals and objectives...............

Read - The Hindu

Maharashtra govt injects Rs 50 cr into MSCB to achieve 4% CRAR

……. "The government has recently conveyed to Nabard that it was prepared to allocate Rs 5 crore or more to MSCB to achieve the CRAR of 4% from 3.95%, as shown by Nabard. Accordingly, a provision has been made and included in the supplementary demands tabled in the state legislature on Thursday. The ball is in now in the court of Nabard and ultimately of RBI to grant banking licence to MSCB."…….
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An example worth appreciating/emulating


Dear All

The following report appeared in the Hindu on March 15, 2012.

Regards

M G Warrier, Thiruvananthapuram
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A gesture of appreciation to society


THIRUVANANTHAPURAM: When H. Ganesan retired from the Reserve Bank of India (RBI) as Manager after 37 years of service, he wanted the occasion to be more than just a meeting. “I wanted to make an occasion to express my gratitude to my friends, family, and dear ones for the good things that have happened in my life. I also wanted to give back something to society because I have come up in life the hard way and have benefited from the many acts of benevolence of society,” Mr. Ganesan says. He chose to do a few things which he thought would never go waste. The Government Hospital at Fort, which has been rendering medical care to all in the locality since ages and used to be a big source of solace to Mr. Ganesan and his family, was to be the first beneficiary. “We had great faith in this hospital, its doctors, and the red-and green-coloured medicines which used to be dispensed from the huge glass bottles to everyone. I believe that government hospitals, as institutions rendering public health service, should be strengthened and patronized by more of us,” he says.



Hospital equipment

On March 1, at a function in Thiruvananthapuram, Mr. Ganesan handed over equipment to the tune of more than Rs.1 lakh to the health authorities as a token of appreciation for the service rendered to the poor. The equipment included wheelchairs, a walker, glucometers, blood pressure apparatus, nebulisers, water purifier, ceiling fans, mattresses, bed-sheets, waste buckets and the like. Mr. Ganesan says he visited the hospital several times to assess its requirements and ensure that he only bought items that would not be supplied by the government. As a token of gratitude to the staff at the RBI canteen who, he says, fed him good food all through his years in office, he handed over 14 savings bank (SB) and recurring deposit (RD) account pass books to the canteen employees in whose names he had opened bank accounts. The accounts were zero balance operable accounts with an initial deposit of Rs.900 in SB account and Rs.100 in RD account and included an insurance cover for Rs.5 lakh. He also distributed blankets and bed-sheets to 25 elderly, indigent persons. Hailing from a poor Brahmin family in the Fort area, Mr. Ganesan remembers the years of penury when he and his six siblings depended on the ‘padachoru’ and ‘prasadams’ from Sree Padmananbhaswamy temple for subsistence. He could not go for higher studies, but after he joined the RBI as a typist, he acquired MA, MBA, and M. Phil. Degrees through self-study and correspondence courses. He is currently pursuing his doctorate in Healthcare Administration at Madurai Kamraj University. “All this was possible because of the grace of God which showed itself in so many acts of kindness of many people. It was my duty to do whatever I could to thank God,” he says. 

Budget 2012: Infra bonds may no longer be tax-deductible

……….. Investors should not confuse the increase in the permission given to institutions to raise additional amounts of tax free bonds with this particular benefit. Those are tax free bonds where the interest earned is not taxed while these are bonds that allow for deduction based upon the amount of investment in the bonds and the interest income earned here is taxable.
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Budget 2012 - Merely a management game : Subir Roy

…….What is, however, most likely to happen is that the deceleration in the inflation rate witnessed in the last few months is likely to be halted, at least temporarily, courtesy the across-the-board rise in indirect taxes. Seeing this, the Reserve Bank of India is likely to go easy on any action to lower interest rates, in line with its inaction in the latest review of monetary policy. If we note that the deceleration in the growth rate over several quarters to as low as 6.1 per cent in the third quarter of the current year was critically due to the central bank’s anti-inflation policy of dear money — and that a cheap money regime may not arrive in a hurry — then how will the growth rate go up to 7.6 per cent next year from this year’s 6.9 per cent? And, without higher growth, what happens to revenue buoyancy and correction of the fiscal balance?.........
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Budget 2012: Do we need a 1990s crisis to shock us into reforms?

…..There is some hope that the RBI will cut rates in April. But with such a deficit, high global liquidity and so much left to be done to correct administered prices, it is tough to expect the RBI to oblige. Deputy Governor Subir Gokarn may have sounded appreciative of the government’s tax increases to bridge the deficit, but if month-on-month core inflation rises, as it well may, the RBI may find itself postponing the much awaited rate cut........
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Possibility of fiscal slippage is low: RBI

The Reserve Bank of India (RBI) believes that the scope for fiscal slippage in 2012-13 is low because the government’s plan to reduce the fiscal deficit is based on revenues coming in from higher taxes and had addressed the supply bottlenecks that had been worrying the RBI..................

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No service tax on Metro, taxi, 2nd class rail travel

……….As regards sale and purchase of foreign currency, it has been clarified that such activity among the banks and dealers will be kept out of the Service Tax net. However, by implication, the sale of foreign currency by dealers to individuals will attract the levy. It was also pointed out that the services provided by the Reserve Bank of India (RBI) and foreign diplomatic mission will be kept out of the purview of the tax net……..

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How to ensure safety of ur bank locker & bank locker charges

......According to the Reserve Bank of India, the relationship between the Bank and the Locker hirer is that of the ‘Bailor and the Bailee’ and not that of the “Landlord and the Tenant”. ...........

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A ferocious great of Santiniketan

......The Yaksha-Yakshi series sculpted as the mythical guardians for the Reserve Bank of India building also grab one's attention at the exhibition as does his equally well-known sculpture of Gandhi.......

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Saturday, March 17, 2012

Banking should reach all: Suma Verma


KASARAGOD, Kerala : The benefits of banking should reach all sections of society, Reserve Bank of India (RBI) Regional Director (Kerala and Lakshadweep) Suma Verma has said. She was taking part in a face-to-face programme for the customers of the Pavoor ‘satellite branch' of the North Malabar Gramin Bank (NMGB) here on Thursday. Some of the customers said they were unaware of agriculture lending schemes, interest concessions, and subsidies offered by the banks.Some said they depended more on non-banking financial companies to meet their requirements. RBI General Manager Anil K. Sharma said those making timely repayment of agricultural loans were eligible for a concessional interest rate of four per cent. RBI Deputy General Manager K.D. Joseph handled a session on detecting fake currency. Ms. Varma distributed loan sanction letters to customers. National bank for Agriculture and Rural Development Assistant General manager N. Gopalan; NMGB General Managers U. Sreenivasa Menon and K.P. Chandrasekharan; and Syndicate Bank Chief Manager Ajith Kumar Menon attended. NGB Regional Manager D. Damodaran welcomed the gathering and Manager (Kunjathur branch) Y.K. Govinda Bhat spoke.
HBL

The e-payment transformation

With the abundance of technological solutions available, it is prudent that in public interest, the government and RBI devise means to move to a less-cash economy

…..On the other hand, the Reserve Bank of India (RBI), which has the mandate of currency management, spends a considerable amount of its revenue in managing cash in the country (printing and distribution, storage, management, accounting, etc.). The expenditure towards this cash management reduces the balances that are transferred by RBI to the government’s kitty. Similarly, the government also spends money (out of its revenue) to manage cash payments and receipts through its various departments, social programmes, etc.……..

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RBI tightens screws on non-operative NBFCs

....... "An NBFC which is in receipt of CoR must necessarily commence NBFC business within six months of obtaining CoR. If the business of NBFC is not commenced within six months...the CoR will stand withdrawn automatically," said an RBI circular..........

Read - Moneylife Personal Finance site and magazine

‘Disappointing, inflationary'

K. Mariappan, president of Salem District Small and Tiny Industries Association (SADISSTIA) said the announcement of Rs. 5,000 crore corpus for Micro, Medium and Small Enterprises (MSMEs) was disappointing. Though Reserve Bank of India (RBI) stress for collateral free loans, nationalised banks do not disburse loans without security...........

Read - The Hindu

Go for value addition, food processing, says RBI official

Reserve Bank of India Regional Director A.S. Rao on Friday exhorted people of Sivarampuram, a Financial Inclusion (FI) village of the Syndicate Bank's Tallur branch, to go for value addition and food processing to realise better price for their produce..........

.....RBI General Manager (Rural Planning and Credit Development) R.N. Das, RBI Deputy General Manager R.P. Rajput, Syndicate Bank Deputy General Manager N. Mohan Reddy, Lead District Manager J.V.S. Prasad, and NABARD Assistant General Manager M.P. Naresh Kumar were among those present.

Read - The Hindu

Higher govt borrowing may not eat up public credit: RBI


HDFC Bank Limited Managing Director Aidtya Puri (left) at Gudivada in Krishna district on Friday. RBI Deputy Governor K.C. Chakrabarty is seen
Reserve Bank Deputy Governor KC Chakrabarty today said private credit demand will not be crowded out as a result of higher market borrowing by the government even as the fiscal deficit target for next fiscal is pegged at 5.1%. "The idea of 5.1% fiscal deficit should not deprive credit needs of the society," he told PTI at an HDFC Bank event…………
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Halfway there

The finance minister needed to do three things in the Budget: control the deficit, bring down inflation, and create the conditions for faster economic growth. He can be said to have succeeded substantially, but not wholly. The unfinished task is that the deficit has been left too high, as also market borrowings which go up next year. That does not give the Reserve Bank of India (RBI) the elbow room to drop interest rates sharply, a necessary condition for the revival of private investment and of finance-backed consumption………………
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Interview: Deputy Governor, Subir Gokarn

With the Union Budget out, RBI's Subir Gokarn talks about the fiscal consolidation measures taken by the finance minister and the inflationary impact of indirect taxes

Freeing Overseas Investment Possible If C/A Improves

....................Reserve Bank of India Deputy Governor H.R. Khan said on Friday that options were open on a further cut in the cash reserve ratio (CRR) for banks, but a view had not yet been taken...........

Read - Businessworld

Savings account interest get Rs 10,000 tax concession

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After deregulation of interest rates on savings bank accounts by the Reserve Bank of India in 2011, Indian banks raised interest to 4% from 3% on saving deposits, while private banks hiked it up to 7%. Kotak Mahindra Bank is currently offering 6% interest on saving deposits while Yes Bank is offering 7%...................

Read - Hindustan Times

Budget 2012: 10 lakh annual income? Save Rs 22,660 more

An upper middle class household will have an additional Rs 22,660 at its disposal in the coming year with Finance Minister Pranab Mukherjee introducing in part the personal income tax rates and slabs proposed under the Direct Tax Code........

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Budget 2012: A new entity for helping Public Sector Banks

....... "The move to set it up as a corporation is mainly to ensure that the holding company does not come under the ambit of the Companies Act, or within the Reserve Bank of India's net as a finance company,''…….
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Budget 2012: Not enough action on fiscal correction – Rakesh Mohan

……The FM also announced some measures for further development of the financial sector , including establishing the Public Debt Management office. Given the current fiscal scenario, this is clearly the wrong time to make this change from the very competent debt management that the RBI has done for the country over the last 75 years. In the interest of financial and fiscal stability, the government would be well advised to shelve this ill-advised change in debt management….. Read.....................

Look Subbu, I shrunk the fiscal deficit. Now, about the repo cut…

Reserve Bank of India Governor Duvvuri Subbarao has been one of those avidly watching the Union budget 2012. After all, by hanging on to his stance and refusing to cut key rates ahead of the budget, Subbarao had made it amply clear that unless Pranab Mukherjee delivered on his hope of credible fiscal consolidation, there was no chance he’d cut rates too much, given the inflationary risks………
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Microfinance Bill in the Budget Session 2012

.......The Bill will empower the Reserve Bank of India to issue directions to Indian MFIs regarding interest rate charged from borrowers, processing fees, insurance premium, reporting to credit bureaus, and adhering to industry’s code of conduct.

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Fiscal consolidation – a missed opportunity

......To the extent ECB borrowings take away a part of banks' rupee resources, there will be less available for other normal loans. Would it not be better if the RBI opened a refinance window for forex loans on terms that are competitive internationally? The advantage is there is no increase in external debt. Further, the RBI can earn a better return on its reserves than what it is getting now........

Read - HBL

MFIs want government to walk the talk on Bill

……The plea is the government must walk the talk now and avoid further delay in framing a national microfinance law as the crisis of confidence has reached a nadir. The Bill, besides recognising RBI as the sole regulator, will define the role and functioning of microfinance companies, remove ambiguity over their legal forms, focus on protection of poor borrowers and tighten monitoring of the sector.……..
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A Budget by the book

........The deficit reduction targets, too, are realistic, both from a political standpoint as well as giving the Reserve Bank of India (RBI) the elbow room that is sufficient to initiate policy rate cuts. The other positive from the Budget is that it sets the stage for a predictable and stable fiscal regime.......

Read - HBL

RBI hails fiscal measures, but evasive on rate cuts

The Reserve Bank today welcomed the Budget proposal to bring down fiscal deficit to 5.1 per cent, saying the strategy of increasing indirect taxes and capping subsidies are reliable measures to control deficit. It, however, said this will not have any immediate bearing on the central bank's monetary policy stance…………..
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RBI growth stimulus not possible without fiscal consolidation

……..“The government has boxed itself into a corner, where the only priority is fiscal consolidation,” Walker told Firstpost in Hong Kong. And if fiscal consolidation is not No 1 priority in this budget, the RBI will be unable to deliver the growth stimulus that is required – interest rate cuts – and the government can forget about economic growth, he cautions…….

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Lowered fiscal deficit target is a positive, says Subir Gokarn

......“While it (roadmap for fiscal consolidation) is a positive development, monetary stance is not based on one factor. Fiscal numbers are not the only things that will change the policy stance. But a reduction in deficit is what we wanted from our side. There are other factors such as growth considerations and oil prices,”............

Read - HBL

Greater agri-outlay a drag on banks

.........With credit growth to agriculture moderating, the current year estimates of Rs 4.75 lakh crore will be just met. Therefore a 21 per cent jump in outlay for agriculture next fiscal is a tough ask for banks. Especially as the asset quality of agriculture loans has been under severe stress. Extension of interest subvention on agriculture loan may give some respite however this benefit is not available for private banks.

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Credit-refinance fund proposed for RRBs

A short-term credit-refinancing fund and extension of capitalisation for two more years have been proposed for regional rural banks (RRBs)...........

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Budget 2012-13: Opening of ECB to power sector meaningless, says Dalton Cap

………………As far as the RBI is concerned, the under provision for subsidies, especially fuel subsidies and the provisions is nearly Rs 1,00,000 crore because whatever has been provided, Rs 43000 is enough for the backlog. For this year, either they are going to deregulate completely and there is not going to be any subsidiary requirement or it is going to be another of these 4.6-5.9 jump. That is something that certainly would be bothering the RBI which is clearly reflected in the money markets today. There is a huge reform in subsidiary regime that is outside the Budget.……………

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Govt to infuse Rs 15,888 cr into banks

…..“For 2012-13, I propose to provide Rs 15,888 crore for capitalisation of public sector banks, regional rural banks and other financial institutions, including Nabard (National Bank for Agriculture and Rural Development),” Finance Minister Pranab Mukherjee said while presenting the Budget for 2012-13. “We are committed to protecting the financial health of public sector banks and financial institutions.”…….
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Unions flay decision on PF

The AITUC State council has called on the Union government to quash the order slashing the Provident Fund interest from 9.5 per cent to 8.25 per cent. A press note quoting AITUC general secretary Kanam Rajendran said the Finance Ministry had ignored the demand raised by employees' representatives to raise the interest. He said the decision would affect 5 crore employees. The reduction came at a time when RBI was resorting to upward revision of interest to curb currency inflation.
HBL

Firewalls likely between banks, insurance firms

.......... “RBI has also expressed concern over banks’ exposure to insurance companies. As banks own most insurance companies, there is a concern that if either of the two sectors is in stress, it may impact the other too. RBI has proposed holding company structure to prevent banks and its subsidiaries from having cross exposure trouble in future, this will act as firewall. However, it is yet to be finalised and various issues are being worked out.”..........

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Friday, March 16, 2012

RBI Deputy Governor inaugurates CSP at SBI’s Kurla (East) branch


Dr. K C Chakrabarty, Deputy Governor, Reserve Bank of India inaugurated a customer service point ( CSP) of SBI's Business Correspondent M/ s Geosansar Advisors Pvt. Ltd. at the bank's Nehru Nagar, Kurla ( East) branch. State Bank of India has set up more than 29,000 CSPs across India. J K Sinha, Chief General Manager ( Rural Business), State Bank of India, Corporate Centre; Dr. J N Misra, Chief General Manager, State Bank of India, Local Head Office, Mumbai; Apurv Bagri, President & CEO, Metdist Group, London and Nish Kotecha, Chairman, Geosansar were present on the occasion. 

Banks rue lack of armed guards

.......Though Reserve Bank of India is yet to take a call on making the security installations mandatory across branches, RBI Regional Director Mr N.S. Vishwanathan, averred that there was no freeze on recruitment of security guards. However, regarding policy changes, the call rests with the head office, he added...........

Read - Deccan Chronicle

World Consumer Rights Day

.......“In the financial sector, banking, financial services and investor protection are pedestrian and consumers have major problems. At present the Reserve Bank of India (RBI) as a monolith regulator is unable to do much for the consumer, though the establishment of an ombudsman was thought to be a good idea but unfortunately the people posted being from the banking sector as an opportunity for retired officials rehabilitation is affecting the functioning and has not gone well to address real grievances in a systematic way.”..........

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EPF rate for 2011-12 slashed to 8.25%

Just days before the Union Budget 2012-13, finance minister Pranab Mukherjee has taken a bold decision to slash the rate of interest on deposits in the Employees’ Provident Fund (EPF) to 8.25 per cent for 2011-12.........

Read - Express India

HDFC Bank's Rural Initiative in Gudivada, Andhra Pradesh

This is a major milestone for the Bank in its journey to make 10 mn families (i.e. 40 mn Indians) self-sufficient through 'Viable Finance'.


Gudivada in Krishna district of Andhra Pradesh will witness our Bank's 300th Grameen Loan Mela Mahotsava for this financial year (501st overall) tomorrow. It is truly a grand finale and RBI Dy Governor Dr K.C.Chakrabarty has agreed to grace the occasion along with our MD Mr Puri. This is a major milestone for the Bank in its journey to make 10 mn families (i.e. 40 mn Indians) self-sufficient through 'Viable Finance'. This is our board-approved mandate and is aimed at helping rural folks meet their banking and financial needs. Be it financing for tractors, auto, two wheelers, commercial vehicles or even gold loan, HDFC Bank is providing solutions tailormade for the mns of Indians in the hinterland. The journey began two years back, which has seen the Bank traversing the countryside, taking organized finance there, freeing people from the clutches of money-lenders, and, thereby, making a difference to their lives. Chomu in Rajasthan, Pimpalgaon in Maharashtra and Kumbakonam in Tamil Nadu are some of the mofussil locations. Earlier this month, the Bank launched a gold loan scheme customized for the rural customer, thus ensuring that the most prized asset remains in safe hands even as the Bank plays the facilitators in unlocking value of the asset.

Federal Bank revives arm to expand retail lending business

At a time when most banks have failed to convince the Reserve Bank of India (RBI) in allowing them to set up subsidiary companies, Federal Bank has revived its wholly-owned arm to expand its retail loan business..................

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NBFCs come under RBI's lens

.............The RBI said it has come across cases where some NBFCs obtain registration from the Bank, park their funds in fixed deposits with commercial banks but do not commence NBFI activities for several years thereafter. NBCFs must necessarily commence business within six months of obtaining certificate of registration (CoR), the central bank said.................

Read HBL

Deutsche Bank boosts its Indian operations

......... Indian banking watchdog, the Reserve Bank of India (RBI), has approved Deutsche Bank's plan to open two branches in Ahmedabad and Surat, which will take its network to 17 outlets................

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Corruption, Coalition Politics Hurting Reforms: Govt

......RBI, while keeping interest rates unchanged to keep prices under control in its monetary policy review, pointed to the deterioration in central government finances."Credible fiscal consolidation will be an important factor in shaping the inflation outlook," RBI Governor D Subbarao said. Agreeing with the RBI on the need for fiscal consolidation, the Survey said: "The principal way in which this has to be achieved is by raising tax-GDP ratio and cutting down wasteful expenditures." ......

Read - Outlookindia

Caught smuggling liquor, Mumbai cops suspended

Fourteen Navi Mumbai policemen were suspended after they were caught allegedly smuggling out 45 cases of Indian Made Foreign Liquor (IMFL) from Goa. The men were in uniform at the time and they were on duty escorting a convoy of the Reserve Bank of India (RBI)...............

Read - Hindustan Times

Bills on the anvil

.....The Debt Management Office is proposed to be set up through legislation in the Finance Ministry for better management of public debt. The government has proposed to set up an independent DMO, aimed at separating the RBI's roles as the decider of interest rate in the market and being the banker to the government. At present, both the government's debt and fresh borrowings are managed by the central bank. In his 2011-12 Budget speech, Finance Minister Pranab Mukherjee had mooted the proposal to introduce the Public Debt Management Agency of India Bill. The Reserve Bank of India has opined against setting up a separate entity, DMO, to manage the sovereign debt of the government, saying only the central bank has the requisite expertise to manage market volatility. RBI had further said that in order to achieve monetary and financial stability, separation of debt management from central bank seems to be a "sub-optimal choice". .......

Read....... The Hindu

Debt is crowding out credit : K Kanagasabapathy

......One inherent conflict in the RBI's operations is that it is really difficult to distinguish its monetary operations from debt management operations. The recent liquidity augmenting measures are intended apparently to ease monetary conditions to enable the banking system to expand its credit portfolio to productive sectors of the economy. But, what seems to have been actually achieved at least thus far is to see that the extraordinary appetite of the government to borrow from the market sailing through smoothly...........

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World Bank’s financial sector report likely by April

.....India’s FSAP was initially completed by the IMF/World Bank in 2001 but it was not made public, as it was part of the pilot FSAP assessment of 12 countries. The committee on financial sector assessment (CFSA) — co-chaired by RBI Deputy Governor and Economic Affairs Secretary — completed a self-assessment in 2009. ........

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Govt to infuse Rs 12,000 cr in PSU banks this fiscal: Survey

......"As capital is a key measure of bank's capacity for generating loan assets and is essential for balance sheet expansion, the government of India has regularly been investing additional capital in the PSBs to support their growth and keep them financially sound and healthy so as to ensure that the growing credit needs of economy are adequately met,"........

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RBI's U-turn: Indian companies losing pricing power

India Inc’s top line growth remains robust, but the picture pales on the margin front. While the Reserve Bank of India (RBI) governor Duvvuri Subbarao blamed poor pricing power for this, his stance is a break from the past. In previous monetary policy reviews, the apex bank had said pricing power remained intact despite a slowing environment and corporate India was able to pass on higher costs to customers. So what has caused this change of stance?...............

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Current account deficit a challenge

The Reserve Bank of India said on Thursday country’s current account deficit (CAD) was likely to remain high, on the back of feeble export growth and volatile crude oil prices. The central bank also pointed out that the financing of CAD would be a challenge. “The financing of CAD will continue to pose a challenge so long as the global situation remains uncertain,” the central bank said in a statement...............
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RBI policy on expected lines, say bankers

......"The review was on expected lines and I am not disappointed by the Governor leaving all the policy tools unchanged. The RBI has done its bit last week with a 75 bps CRR cut," .........

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Budget 2012: The message from Mint Street to Pranab

......  "Credible fiscal consolidation will be an important factor in shaping the inflation outlook," says RBI in its monetary policy review. The biggest danger to monetary policy in the months to come is from inflation, which in turn decides the interest rates. In a five-page note on mid quarter monetary policy review, the RBI has said the timing and the magnitude of interest rate cuts will be driven by inflation risk. .........

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Two documents, common concerns : The Hindu

.....The RBI's scheduled mid-quarter policy review was hardly the non-event it was feared it would turn out to be. A cut in interest rates was not on the cards and with no expectation of one, attention turned to the RBI's views on the economy, especially inflation, fiscal consolidation and growth. Inevitably there is an overlap between the central bank's views and the Economic Survey, although they vary in their emphasis. Both agree with the official forecast that the economy will grow by 6.9 per cent during this year. However the Survey is much more optimistic about the future.......

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Economic Survey Has 14 New Ideas for Budget: Pranab

.........The Survey said the slowdown in economic growth should act as "a wake-up call" for the government and the RBI to address the domestic issues hampering recovery. Referring to tight monetary policy, persistently high inflation and slowing investment and industrial activity, it said, "there is room and need to be innovative in terms of policy; the slowing of economy is a wake-up call in that respect"..........

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As Subbarao remains unrelenting, a survey of caution from Basu

It is now clear that D Subbarao, Pranab Mukherjee and the rest of us aren't really part of the same economy. Monetary policy will remain fixated on inflation; fiscal policy will be captured by political tug-of-wars; and beyond them, we will continue to reel under high prices and soaring but impotent interest rates. That high interest rates have not been able to control the inflation rate is a fact Mint Street, home to Reserve Bank of India (RBI), has been consistently dismissing...................

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Reserve Bank of India Rate Decision; Growth

Brinda Jagirdar, general manager and head of economic research at the State Bank of India, discusses the Reserve Bank of India's decision to leave interest rates unchanged at 8.5 percent and growth expectations for the country.

Subbarao’s pregnant pause: no certainty of rate cut in April

....... To be sure, Subbarao’s policy statement of Thursday, however, is full of signals. Read the fine print carefully, and you will understand why the RBI governor, who has made it clear earlier that he will be one of the most careful observers of what finance minister Pranab Mukherjee does in his Union Budget on 16 March, did nothing to reduce key rates .......

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Is the RBI waiting for the impossible to happen?

...... If the government does not bring out a good Union Budget with proposals to cut subsidies and deficits, interest rates may stay where they are and will further lower growth estimates for 2012-13. On the face of it, it looks like wishful thinking that this government will turn reformist to please the RBI. On the other hand, the government might pile on political pressure on the RBI to cut rates — and that is worse.........

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Inflation fears, fiscal slippage force RBI to keep rates on hold

.......Reiterating its concerns on the fiscal situation, which saw sharp increase in government borrowing, the central bank said " credible fiscal consolidation will be an important factor in shaping inflation outlook" which has key determinant of policy actions in the past two years.........

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Knitwear exporters decry RBI policy report


Coimbatore, March 15: Knitwear exporters have expressed disappointment with the RBI's mid-quarter policy review announcement made this morning. The exporters have for some time now been demanding a cut in the interest rate to help them withstand the pricing pressures and sustain in the global market. “This has not happened; neither has the RBI addressed our request for a separate chapter for exports,” said Dr A. Sakthivel, President, Tirupur Exporters' Association. 

HBL

All hands on deck for growth: Saugata Bhattacharya

.... The Survey’s message has been reinforced by the Reserve Bank’s monetary policy review, with the two pretty much endorsing a common view on the growth-inflation tradeoff. Maybe the Survey is just a bit more inclined on the side of growth. Inclusive growth is its leitmotif: “The govt is in a position to turn its attention more exclusively to inclusive growth…primary concern to advance the economy’s productivity and improve income distribution...during the current year, all hands have to be on growth.”……… 

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RBI mid-quarter policy review highlights

Highlights of the Reserve Bank of India (RBI) mid-quarter review of monetary policy announced Thursday.................

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Thursday, March 15, 2012

Managing debt : Samir Ghosh, General Secretary, AIRBEA


By suggesting that the proposed Debt Management Office of the government of India will unburden RBI (FE, March 8), Ila Patnaik actually argues for more burden for RBI. Our government has a burgeoning public debt, which shows little inclination to come down, given the government’s current fiscal policy thrust of more and more deficit financing. The government will have to frequently come to the market for more loans, combining fresh loans as well as escalating interest payment. This will result in the interest rate structure of the whole system going awry, as RBI’s interest rate policy as part of the monetary policy will definitely be under strain, for government’s need for large debt and RBI’s need for balanced interest rates will work at cross-purposes. The author should refer to a comment by C Rangarajan that if the public debt management function is taken away from RBI “prematurely”, it would not be wise. As James Tobin said: “There is no neat way to distinguish monetary policy from debt management, [both] the Federal Reserve and the Treasury … are engaged in debt management in the broadest sense, and both have powers to influence the whole spectrum of debt.” 

Samir Ghosh, General Secretary,  All India Reserve Bank Employees Association (FE)