National coin exhibition a hit with Hyderabad participants

...........Hanuman Sada, a numismatist at the exhibition, said he had started collecting coins as it was his hobby, and now he owned world's rarest coins. "I am fond of collecting old coins, since childhood I used to take out coins from the Ganga in Varanasi. I have exhibited coins in Reserve Bank of India (RBI) and they have awarded me. I have a collection of thousands of year old coins, including Kushan, Chattrap, Maurya Sassanian, Guptas and all ancient coins," Sada said..................

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InfiniteCourses.com Offers Information About RBI Recruitment Process, Eligibility Criteria And More

......However, so many of these aspirants fail to make it to the Reserve Bank of India (RBI) due to the lack of information. Like many government companies of India, the RBI has its own recruitment process and you need to be in complete knowledge of the same to get the job with ease. Not only do you need to know about the RBI Recruitment process, but also about the various openings in the bank as also the qualification requirement and age criteria for the same. You would also be able to prepare yourself thoroughly if you had substantial information on the important dates of the recruitment........

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Financial inclusion is a business opportunity, says Visa

......'Financial inclusion', the phrase invented to paper over the widening economic disparities, has found a surprisingly new taker: Visa Inc, the transaction processing company that's taking baby steps into the evolving mobile phone payments business...................

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Red herring, or the real cause?

...... The flow of funds from foreign institutional investors has become an uneven and uncertain trickle due to fears over amendments to tax laws. The RBI itself in a paper (April 11) on foreign direct investment flows to India has attributed them to certain institutional factors that dampened the investors' sentiments. In these circumstances, the Finance Minister may have to put under the scanner the strength of the macro-economic fundamentals themselves. The fall of the rupee is a complex syndrome which had predominantly to do with India's economic (mis)management, rather than being brought on by Greece or Euro Zone...........

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Banking Laws Bill in Parliament today

..............The Bill, which was introduced in Lok Sabha in March 2011, seeks to empower Reserve Bank of India to dismiss a bank’s board and force a reconstruction of the board to protect the interests of depositors, shareholders and employees. This will pave way for the central bank to grant licences to industrial houses to set up banks. The other proposals in the Bill include increasing voting rights of an entity in a nationalised bank to 10% from the existing 1%. Besides, once legislated, the Bill will provide the RBI powers to ask for information from banks’ associate companies.........

Read - Hindustan Times

Slippery moves

It isn't an overnight happening. It has been coming, and coming for a long time. When it actually arrives, the country finds itself sucked into the cross-currents of global politics of economics. All along, the Reserve Bank of India, which has sort of been pushed to announce a huge cut in Bank Rate, has been virtually pleading with the fiscal authorities to see the writing on the wall. The pleadings have largely gone unheeded. With the rupee sliding continuously against the dollar, the political leadership is beginning to sense the gravity of the situation......................

Read - The Hindu

Report on capital needs under Basel III this week

............“Most public sector banks are well capitalised as of today,” said a member of the panel headed by State Bank of India (SBI) chairman and managing director Pratip Chaudhuri. “So, it will not be difficult to meet Basel-III requirements. The common equity of banks is good. The report will be submitted (to the finance ministry) very shortly after getting a green signal from all the banks.” It was the finance ministry that formed the committee to assess the additional capital needs of all PSBs in line with the recent Basel-III guidelines issued by the Reserve Bank of India (RBI)...................

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The 'S' word returns

........... “We now have the worst of both worlds — not just inflation on the one side or stagnation on the other, but both together. We have a sort of stagflation situation.” The “S” word, which he coined, is being mouthed with increasing frequency by India-watchers. It describes the current conditions pretty well. Inflation has been above the Reserve Bank of India’s (RBI’s) comfort zone for the past two years. It is unlikely to fall any time soon, given that the consumer price index was up 10.4 per cent in April 2012.......................

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Policy- making for Indian Planning

Book Review by P.P.Ramchandran

The book under review has contributions by fifteen experts in divers fields connected with policy- making. Dr.C.Rangarajan, in his Foreword invites pointed reference to a note prepared by Montek for the then Prime Minister in 1990, which charted the path for the economic reforms that were launched in 1991. Dr.Y.V.Reddy delineates the formal agreement concluded between the Government and the RBI for ending automatic monetisation, which laid the groundwork for legislation on fiscal responsibility. Montek also contributed in enabling the RBI to build up Reserves in its Balance Sheet. The current RBI Governor Dr. Subbarao showers praise on Montek for his extraordinary competence and skill in negotiating the settlement of the Rupee — Rouble deal with Russia.

Details

The exchange rate: economics bites back

........... So, in theory, a cheaper rupee should, in time, improve both the current and capital accounts of our external finances. But sharp and unexpected depreciations can also be excessive and destabilising. So, the RBI is, quite correctly, trying to put some brakes on the process, even though market intervention in turbulent times is more an art than a science. However, RBI actions are palliatives, at best. The real cure lies with the government’s economic policies......................

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BB not interested in India's swap funds

.......RBI Governor Dr D Subbarao announced formation of a $2 billion swap arrangement fund at the 24th Saarc finance governors' meeting in Pokhara, Nepal last week. The facility will be available in three instalments. “India has set the interest rates for the fund as it has provided the entire fund,” said the BB official, pointing at a higher interest rate. However, he said the fund is less costly than loans, such as Islamic Development Bank that charges a 5 percent interest rate..................

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Dollar inflows from exporters' FX accounts to support rupee

.......“Rupee weakness is driven by a strong dollar against global currencies and it would need unwinding of dollar strength to provide relief to the rupee. The RBI’s actions could only limit excessive traction between the dollar index and the dollar-rupee exchange rate,” .......................

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Gold lenders vow to be ‘fair’ to borrowers

The Rs.1 trillion organized gold loan market is implementing a code of conduct in an attempt to rebuild the image of lenders that took a beating after a recent clampdown by the Reserve Bank of India (RBI). The “fair practice code” released by the Association of Gold Loan Companies (AGLC), the industry body, prohibits non-banking financial companies (NBFCs) that lend money to borrowers with gold as collateral, from charging excessive interest rates. The companies also have to disclose the interest rate, processing fee and other service charges levied on customers. ........

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Rupee needs to depreciate in nominal terms : S.S.Tarapore

The RBI should have bought foreign exchange in the market during the period the rupee was appreciating and sold when the rupee was depreciating. This would have avoided very large fluctuations in the dollar- rupee exchange rate....


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Rupee depreciation

With reference to “Austerity and the rupee”, the editorial has rightly observed that the rupee's problems are largely structural, having to do with the current account deficit.  Had there been other significant reasons, we would have seen results when the government announced an increase in NRE deposits and EEFC measures. It is true that the RBI policy should be to buy aggressively when the rupee appreciates and sell when it is depreciates, besides cutting imports on fuel, fertiliser and gold and deregulating diesel and urea.

 - K. G. Varma, New Delhi (HBL)

Global feeder fund investors reap returns on falling rupee

At a time when almost everyone associated with the financial markets is getting jitters from the depreciation of the rupee, there is a small set of investors that is rejoicing for having invested in global feeder funds. This is because when the investments in these funds were made they were converted into dollars. However, the NAVs, when converted back into rupee, are showing smart profits even if the dollar-denominated returns are not so good. So even though RBI Governor D Subbarao, Deputy Governor Subir Gokarn and other top central bankers are trying to contain the weakness of the rupee, these investors, along with the exporters, are a happy lot.

TOI

Punjab to disburse welfare funds online

The Punjab government has issued instructions to directly credit cash in the bank accounts of beneficiaries under various welfare schemes through Electronic Benefit Transfer system to check delays and redtapism. Informing this here today, state's Social Security and Health Minister Madan Mohan Mittal said the SAD-BJP alliance government in consultation with Reserve Bank of India has adopted the EBT model under which cash benefits to be disbursed to the beneficiaries would be directly transferred to their accounts.......................

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Why RBI Governor D Subbarao won't cut rates anytime soon

........"Structural inflation, and the middle class' demand for food, limits the RBI's ability to pursue easy monetary policy," said Chin Loo Thio, the Singapore-based regional strategist for BNP Paribas. "There is a limit to which the monetary policy can be effective." Deputy Governor Subir Gokarn himself poured cold water on any hopes of a sharp reduction in interest rates last week. "We started that process [of reducing interest rates] in April," Gokarn said in Hyderabad recently. "But if you look at our inflation projections in relation to what we consider as long-term or medium objective there are inflationary pressures. That in a sense limits the room that we have to reduce rates."..............

 

Read ET

Little chance of further rate cuts, says Indian Overseas Bank chief

NAGPUR: There is little chance of further rate cuts by the Reserve Bank of India (RBI), feels chairman of Chennai-based Indian Overseas Bank (IOB), M Narendra..............


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Inflation control should not eat away growth

.............Subba Rao, RBI Governor feels that rate hike is necessary to curb inflation. If inflation is due to excess money supply, then RBI Governor’s prescription is correct. But in the present context, food price hike is due to demand supply mismatch which in turn is due to wastage of food produced. Under the circumstances, an interest rate hike will not bring in the desired results. Only fiscal measures can bring the desired solution to the problem. Rate hike will only help the fixed deposit investors to enjoy more returns. But here again, the fixed deposit return can be eroded by high inflation and the investor is a net loser. But he has no choice.......................

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A silver lining in India's slowdown?

.........The RBI has continued to implement financial reforms to facilitate infrastructure financing, improve the transmission of monetary policy, and promote financial inclusion. If these positive signs are quickly followed by bolder government action, the recent slowdown would have a silver lining.

Read - BS

The postman will bring loans, besides moneyorders!

The Department of Posts could give the yesteryear Hindi film song Daakiya Daak Laayaa (Postman has brought a letter) a new twist. The lyrics of the1970s song could well change to ‘Daakiya Loan Laayaa, Daakiya Kisht Leney Aayaa' (Postman has brought a loan, Postman has come to collect an instalment) if the Department's plans to set up a bank pan out. So, the postman will give you money, that is loan, even if you do not get a money order from your dear and near ones! ..........

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RBI to close down coin, currency counters

.........“If the RBI totally withdraws from the scene this will send a signal to the racketeers and the common people will be the worst victims. This will throw the entire currency management into a state of anarchy,” feared Thomas Joseph, convener, United Forum of Reserve Bank Officers and Employees and secretary, Reserve Bank Employees Association (RBEA). While the Central Bank will be shorn of one of its core functions, the move will also deprive the public of a valuable service enjoyed by them for decades.............

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My Views on "Plea not to close down RBI counters":

Sections 38 and 39 of the RBI Act make it obligatory on the part of GOI to put rupee coins into circulation through RBI and on RBI to supply different forms of currency to the public. It is intriguing that within a short period after heralding its intention to be part of GOI’s outreach programmes to ensure financial inclusion to every village, RBI is being persuaded by Centre to withdraw from one of its core functions. RBI withdrawing from the scene will immediately put banks under pressure and short-supply of currency and coins in cities will result in several unethical practices. No big research is needed to see that already under-staffed banks will not be in a position to fill the vacuum created by RBI’s withdrawal. Already there are pockets like bus depots and religious centres where coins are piling up waiting for bank staff to accept. In such a situation, banks will scare away customers approaching for exchange of notes and coins.

M G WARRIER, Thiruvananthapuram

My Views on "RBI not to interfere in bank service charges"

- A.Chandramouliswaran, Former Executive Director

While in a deregulated environment, it is oaky that RBI should not interfere in Bank charges. Nevertheless, they have to see, especially in new private sector banks, whether the charges are reasonable and they should counsel the banks when they find that the charges and the minimum balance required to be maintained,especially of the new private sector banks, are unreasonable. It is not so easy to change bank accounts when several transactions of the customer including online payments are linked to the bank.

Fake currencies found from ATM

MALDA (WB): Fake currencies, with the face value of over Rs one lakh, were found from two ATMs of a state-run bank in English bazar town of Malda district in the past two days.............

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India’s Mobile Banking Ekosystem

...........Agent networks are the main issue that mobile operators and banks need to get right if they are to turn branchless banking into a sustainable business. The Reserve Bank of India recently removed restrictions on agent exclusivity, so customers can now transact at customer service points of one bank even if their accounts are held at another bank. Such interoperability should mean greater efficiency and lower costs across the system............................

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Bharti Airtel and Axis bank collaborate on mobile money and banking services

.............The venture marks Airtel's second attempt to extend its mobile money capabilities into the banking market. The telco announced a joint venture with the country's largest bank, State Bank of India, last year, to a offer a complete suite of banking services via both the mobile platform and a state-wide network of branches and retail distribution outlets. However, the plans were scuppered by the Reserve Bank of India over the equity arrangements for the venture, which would have given the telco a stake in the banking business without recourse to a banking license.

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RBI stall at Govt. exhibition

An official of the Reserve Bank of India explaining to the public at the RBI stall at Government Exhibition in Coimbatore on Thursday the features that help identify counterfeit currency notes

COIMBATORE : The public can exchange soiled currency notes at the Reserve Bank of India (RBI) stall at the Government exhibition here. The RBI had a stall at the exhibition last year too. Every day, currency was exchanged for about Rs. 25,000 and nearly 200 people walked in. A special coin was also released last year, said District Lead Bank Manager J. Vanangamudi.The stall this year had details about identifying fake currency notes, coins released by the RBI so far and also about banking services. Soiled currency notes would be exchanged and coins would be distributed at the stall. With shortage in availability of coins, the demand was high for coins and a large number of visitors were expected to come to the stall for it, he said. Apart from currency exchange, clarifications would be available on the banking services too. Kaya Tripathi, Deputy General Manager of RBI, and District Collector M. Karunagaran participated at the inaugural of the stall on Thursday

Stagflation: Over to FM now; Subbarao can take a vacation

..............“The RBI is like a goalkeeper trying to prevent self-goals by the government. It cannot fix all the problems, many of which have been caused by fiscal policy and worsened by government’s inaction.”......................

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Nothing more than normative wisdom

.......A senior colleague was recently trying to persuade one of the grey eminences of the monetary policy world to work on a ‘tell all' memoir. It was firmly refused on the grounds that he did not want to fall into the trap of most such books — of portraying events as happening around oneself. Or, that one had played a central role in the way things unfolded. All the persuasion didn't work. Thankfully, there are others who make up for the modest reticence of some. Bimal Jalan is one of them. He can claim to have been at the centre of many developments, having travelled the corridors of power in his career. As an economist, as Chief Economic Advisor, as a Member of the Planning Commission, as Reserve Bank of India Governor between 1997 and 2003 and as a Rajya Sabha member for six years thereafter, Jalan certainly played a pivotal role in the shaping of policy in India. Yet, this book is not in the tell-all genre. It is full of prescriptions and, one may add, even some sound advice............

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RBI to continue defending the rupee: Subir Gokarn

..."The approach over the last few months have been a combination of intervention at times when we have felt it will help us stabilise, and some administrative action. This is the approach that will work now," Deputy Governor Subir Gokarn said...................

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Plea not to close down RBI counters

Kochi, May 18 (PTI): Syndicate Bank Staff Association today strongly opposed the move to close down RBI counters delivering coins and currency notes in metro centres and state capitals in a phased manner. This move is 'disastrous and anti public' and would inconvenience the business community, .............

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Warmhearted succumbs to heart attack...............

I regret to advise the sad demise of Shri.S.Srinivasan on May 16, 2012. He retired as  D.G.M  from  R P C D, Mumbai , after a long service of over 38 years. He was 77 years old. For over two decades Srinivasan worked in the Department of Statistics. He had served in Madras and Hyderabad Offices. He was not well for quite some time and passed away due to cardiac arrest. He leaves behind his wife, son, daughter and grandchildren , A warmhearted and genial person he had a wide circle of friends and admirers both within and outside R B I. 

- P.P.Ramachandran (via e-mail)

India in the European mirror

.......A collapsing currency is a sure negative signal for international investors, and can accelerate their exit. A downward spiral is a possibility that therefore needs to be pre-empted. However, there appears to be no convincing response from the government thus far. The RBI is wary about stoking inflation by reducing rates to spur growth. The deficit on the government's budget and India's relatively high public debt to GDP ratio are preventing the government from raising expenditures (as it did in response to the global crisis of 2008). This is partly because of the government's own fiscal conservatism. But the more important reason is the fear that larger fiscal deficits or higher taxation would upset foreign investors and hasten their exit.....................

Read - The Hindu

Reduce exposure to NBFCs giving gold loans: RBI to banks

......."Banks are advised to reduce their regulatory exposure ceiling on a single NBFC, having gold loans to the extent of 50% or more of its total financial assets (loans), from the existing 10% to 7.5% of banks' capital funds (tier I + tier II capital)," RBI said in a circular. ..........

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Plateful of Inflation

Practically every trick that the government with the Reserve Bank of India on tag has tried to control food price inflation has failed. And that’s inflation at the mandi level. No one is talking of inflation of consumer level prices, where it actually hurts the consumer the most. Both RBI and the government have periodically trotted out excuses for the failure to control inflation.............

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After forex intervention, RBI may now target oil to save rupee

.............The RBI is widely seen to have two options: it could open a dollar window for oil companies to buy dollars directly from the central bank or it could purchase oil bonds via special market operations. RBI opted for the latter in 2008 and then again in 2009 because oil companies back then were holding illiquid bonds. That helped the central bank both inject dollar liquidity and help the sector monetize its debt. However, 2012 would be different. Oil companies no longer hold much outstanding oil bonds and traders see a far more effective approach if the RBI were to sell dollars directly to the sector.............

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ED imposed Rs 922.35 cr as penalty in 858 FEMA violation cases

...Besides ED, the Reserve Bank of India has powers to take action in any matter related with violation of FEMA, the minister said. "Appropriate action is taken by the ED and RBI, as and when, any matter of suspected contravention of the provisions of FEMA comes to the notice of Directorate of Enforcement," ............

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TDS on interest

The voice of fixed-deposit holders has been ignored. While 4.75 per cent of a bank's deposits are held with the Reserve Bank (cash reserve ratio), 24 per cent is invested in Government and other approved securities, according to the RBI directions. Forty per cent of a bank's loans are directed to be lent to priority sectors such as agriculture, small-scale industies, and to SC/ST, women and other weaker sections. Rest of the money is lent mainly to industries and trade apart from retail loans. While depositors' money is routed for productive purposes, the Government is encouraging people to invest in stock markets, run on the whims and fancies of FIIs and greedy promoters. It is tiresome to get a TDS certificate from the bank. It is time the Government scrapped TDS on interest from bank deposits. Then people will not be persuaded to buy land and gold.

- K. Narayanan Chennai (HBL)

RBI’s hands tied, need FIIs: PM advisor

Arguing that the uptick in inflation has “considerably diminished” the Reserve Bank of India’s legroom to intervene in the forex market to prop up the plunging rupee, the Prime Minister’s top economic advisor has called for “more proactive steps” to attract capital flows as the more viable way out of the crisis..................

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PSU banks report frauds worth almost Rs 8,850 cr in last 3 years!

..............The country’s largest PSU, State Bank of India tops the charts with frauds to the tune of Rs 1,221 crore. Bank of India has reported frauds amounting to Rs 709 crore, Canara Bank has revealed scams worth Rs 605 crore, IDBI Bank has indicated to RBI on frauds to the tune of Rs 609 crore. Central Bank has reported frauds amounting to Rs 562 crore..............

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SBI winning the war on bad loans; Q4 net jumps

....The Reserve Bank of India expects loans to grow 17 percent in 2012/13, against 13 percent a year earlier. SBI's loan book grew to 8.7 trillion rupees at the end of March, up 14.5 percent from a year earlier. The net interest margin, a key gauge of profitability, rose to 3.89 percent in the March quarter from 3.07 percent a year ago............

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Modulated depreciation is salutary - S S Tarapore

.....One recognises the danger of self-fulfilling prophecies, but the least the RBI should do in the immediate future would be to smooth out sharp volatility, but not fight a fundamental exchange rate adjustment. To that extent, the RBI should intervene strongly by purchase in the forex market when the rupee appreciates, but undertake limited sales only to avoid excessive depreciation. The problem is that political economy considerations would not allow the appropriate exchange rate adjustment to take place. This could be unfortunate as monetary policy cannot bear the burden of fiscal imbalances as well as a fundamental disequilibrium in the exchange rate. In the absence of effective policy adjustment, India would face a sharp increase in inflation and a lower growth rate.

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Regulatory autonomy, not autarchy

....... In certain quarters in India, the importance of the role played by the Reserve Bank of India is overstated by equating it with that of the Election Commission — and, by implication, free and fair elections. As we have witnessed repeatedly in the West and in India, regulatory autonomy has not prevented frequent financial market failures, since market and credit risk were allowed to build up to systemic proportions................

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Finance Minister Pranab Mukherjee to resolve wage revision issue of IDBI staff

........The Minister said as soon as the Budget session is over, he will call the IDBI Chairman and all concerned and try to arrive at an agreed solution. He said that so far no solution could be arrived at as the IDBI Employees' Association had been insisting on parity with RBI employees for most of the time. He said IDBI employees, unlike in other scheduled banks in public sector, have refused to negotiate with the Indian Bank Association to negotiate its wage issue...........

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Anini hosts DCC meet

............K K Pandey expressed his apprehension on not only the low but decreasing CD ratio in the district from 29.68% in September 2011 Quarter to 23.27% in March 2012, and advised LDM to take steps for increasing CD ratio to the minimum national norms of 60%. The RBI officer also emphasized the need to create credit demand at the grass root level through line departments of State govt to improve the CD ratio while assuring the support of RBI in future deliberations. S Mukherjee, Manager RBI also spoke on currency chest.............

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RBI asks BCs to operate from ultra small units in rural areas

"...It has been decided that BCs can operate from such Ultra Small Branches as their association with the branch will increase their legitimacy and credibility in the area and give people increased confidence to use their services," RBI said in a notification.................

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RBI staff concern over coin, notes distribution

.......Either coins supplied by RBI remain accumulated or are distributed only in bulk in preference to retail customers or small businessmen, who are mostly in need. This would only aggravate the crisis and people in cities would only rush to RBI counters even more. Strangely, RBI has sought to restrict entry of customers on specious pleas creating panic about shortage of coins. Even the Finance Minister has recently said that “currency distribution is a key sovereign function and among the primary functions of a central bank. “It is also the most visible of its functions, as it touches directly and immensely the common person.” The unions also referred to complaints from members of public with regard to supply bottlenecks. Unscrupulous people are already taking full advantage. If the RBI were to totally withdraw from the scene, it would only sound out racketeers who would be emboldened to carry in with their nefarious activity. This could lead currency management to anarchy, the unions said.

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SKS Microfinance pins revival hopes on proposed law

The central bank, as the sole regulator, would cap interest rates and fees levied by microfinance companies under the new law, and also stipulate rules for debt collection

......SKS, backed by Sequoia Capital, forecasts relief from a Bill approved by Prime Minister Manmohan Singh’s cabinet last week that would enable the Reserve Bank of India (RBI) to regulate the industry......

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Microfinance Bill will regulate the sector to death, to the joy of moneylenders

The Cabinet has cleared a proposed Bill empowering the Reserve Bank of India (RBI) to regulate all microfinance institutions (MFIs). A central legislation makes sense only to the extent that it over-rides draconian state-level laws. However, the Bill suffers from many infirmities. And it is unfortunate that these have been overlooked. The law, if enacted, is likely to kill small MFIs and hurt the sector that is struggling to stay afloat.....................

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UCBs can offer higher rates on FCNR deposits

In order to attract more dollars into the country, the Reserve Bank of India on Thursday increased the interest rates on foreign currency deposits of non-resident Indians (FCNR-B) held in Urban Co-operative Banks (UCB). In the first week of May, the central bank had revised interest rates on such deposits held by scheduled commercial banks (SCB). The ceiling on one to three year foreign currency deposit rates in UCBs has been upped to 200 basis points above...............

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Exporters slam RBI order on foreign exchange

....Earnings in other currencies such as pound and Euro were normally used for meeting overhead and other expenses. Therefore, the RBI order would cause a great loss to the MSME sector, which does not have the skill to handle foreign exchange risk......

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RBI opens additional counters for tax payers

......Rajeev Dwivedi, Deputy General Manager (Banking) of Reserve bank of India informed that facility for depositing income tax by cash or cheque was available at 145 branches of public sector banking including State bank of India and ...............

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Office bearers scot-free as Nagpur District Central Cooperative Bank stares down the barrel

NAGPUR: With RBI setting a deadline of September 2012 for Nagpur District Central Cooperative Bank (NDCCB) to improve its financials, it is a race against time for the bank. As the management is busy compiling list of assets it can sell to garner funds, an inquiry that could have made the chairman and directors pay for the losses which led to the bank's troubles has been conveniently forgotten............

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Why will RBI go for a rate cut in its July review?

.... Liquidity is expected to tighten in June due to first quarter advance tax payments. The higher than expected inflation for April 2012 will drive out any rate cut expectations in RBI's June policy review.

Bond yields will trend down post RBI policy review in June as liquidity situation will ease on the back of advance tax money coming back into the system while the country will have seen the onset of monsoons. Rate cut expectations will gain momentum for July as inflation is likely to keep its head down on weak commodity prices........

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CPI-based inflation data: A good start, but a long road to stabilisation

.....The CPI also has an edge over the WPI, as it includes some services in the miscellaneous category like education, medical care, recreation & amusement, transport and communication, personal care and effects, and household requisites. However, for now, RBI would have to consider both the WPI and the CPI for policy decisions. Some economists even feel the WPI would have to be there even if the CPI stabilises, to gauge movement in wholesale prices. It would also offer a picture of production........

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Understanding loan to value under new RBI norm

....The Reserve Bank of India has brought about many new directives and guidelines in order to curb speculation in the property market as the sector stands poised for a revival post recession recovery. One of the guidelines that has dampened the mood of real estate developers as well as prospective home buyers is the exclusion of stamp duty, registration fees and all other allied charges while calculating the loan to value when taking a home loan......

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Growth vs inflation

Apropos the debate “Should policy focus on growth or inflation” (May 16), it is ably argued that growth with price stability is most desirable. However, it is equally important to maintain consistency and contain policy uncertainties to achieve robust economic growth and tackle inflationary expectations. Further, proper co-ordination between various policy authorities is needed to avoid a clash of interests.

- Raman Kumar Agrawalla, Bhubaneswar (BS)

RBI’s hands tied, need FIIs: PM advisor

Arguing that the uptick in inflation has “considerably diminished” the Reserve Bank of India’s legroom to intervene in the forex market to prop up the plunging rupee, the Prime Minister’s top economic advisor has called for “more proactive steps” to attract capital flows as the more viable way out of the crisis................

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Rupee plunges to new low before RBI pulls it back

.....Most economists Mint spoke to said they are not revisiting their current forecast that the rupee would trade in the 52-55 to a dollar range over the next three months. The gyrations in the currency market are knee-jerk, they say. RBI deputy governor H.R. Khan had said on Wednesday that the central bank was keeping a close eye on the rupee, and “will take all steps to curb volatility”. He did not elaborate further. The RBI’s stated policy is to intervene only when the foreign exchange market becomes volatile rather than target a particular exchange rate.........

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Rescuing the rupee: What RBI can do next

....In a special report, Deutsche Bank notes that the rupee has lost about 3 percent this month, which is in line with the fall in the value of of some other regional currencies, and even lower than some other emerging market currencies. Thank the RBI for that because were it not for a slew of central bank measures, the rupee would have fallen even further. Is there anything more the RBI can do? Yes, says the brokerage, noting that there are three further steps the central bank can take.....................

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Weakening currency bane for RBI rate cut

The sharp decline of the rupee in the last one month may complicate things further for the central bank, in terms of lowering interest rates, as concern of imported inflation is set to weigh on Reserve Bank of India (RBI)’s decision making. With the country importing more than 80 per cent of its crude oil requirement, a weakening rupee will push up oil prices which will affect inflation............

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The ropey rupee

......The RBI governor, Duvvuri Subbarao, remains in an unenviable position as he tries to devise polices to support the rupee while also facing the ongoing monetary policy dilemma. On the one hand, the dismal industrial production reading means that he will continue to face pressure from businesses to cut interest rates further. He appeared to succumb to such lobbying in April, when the central bank reduced the repo rate by 50 basis points to 8%. On the other hand, when considering the RBI’s determination not to undermine its credentials as a monetary institution unwilling to tolerate excessive price instability, it would be difficult to justify further monetary loosening when inflation is still so high......

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Rupee: What exactly is RBI intervention?

In the wake of the rupee’s slide, there has been much talk about the RBI’s intervention in the currency markets to support the Indian currency, including a massive selloff of dollars. But what exactly is RBI intervention, how does it work and what impact can it have? Here’s a quick guide to understanding what tools the RBI has at its disposal and what it can do......................

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RBI dy guv Chakrabarty may be India rep at ADB: Sources

..........Come July, the RBI could be on the hunt for a new Deputy Governor. According to sources in the finance ministry and RBI, Chakrabarty could be headed for a bigger and better role as the Indian representative at the Asian Development Bank pending government approval..................... 

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RBI announces SAARC swap arrangement

.........With a view to strengthening regional financial and economic cooperation, Governor Dr. D. Subbarao announced in the 24th SAARCFINANCE Governors’ Meeting, in Pokhara, Nepal, that the Reserve Bank of India will offer Swap Arrangement of US$2bn both in foreign currency and Indian rupee. The facility will be available to all SAARC member countries, viz., Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. With launching of this facility, member countries can now approach Reserve Bank of India for availing of the facility...................

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‘We're already geared to meet proposed norms'

What recommendations of the Usha Thorat Committee will be implemented, in your opinion?

Higher capital requirement for NBFCs (12 per cent tier-1 capital) will surely be implemented. Recognition of non-performing loans after 90-day due, instead of 180 days, may also be implemented. Directionally, the RBI is saying that NBFCs should be more prudent in the way risk capital is being provided. While we would like the RBI to govern us more we would also like to be given a level playing field. The RBI shouldn't worry that credit to NBFCs is going up.............

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As policymakers, we can’t... tell markets how to behave: D SUBBARAO

.....“God does not play dice.” Less well known perhaps is the retort of his friend and mentor Niels Bohr who said: “Albert, stop telling God what he can or cannot do.” Similarly, it is possibly the case that all market signals are not objective. But as policymakers, we cannot presume to tell markets how to behave..........

Read - Indian Express

36 districts in Bihar lack proper banking facilities: Sushil Modi

.....Modi said that there was one bank branch in the state per 21,358 population which was far lower than the national average of 14000 people per branch. Efforts were on to set up ultra small branches in the state as per the RBI guidelines, he said........

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Mobile — A game changer for financial access

...........The Government and the RBI have been emphasising on financial inclusion and enabling basic banking and financial services to reach the vast majority of the population. Conventional banking, in the form of retail outlet branches and ATMs, is still too expensive to be cost-efficient in many areas. Hence under the three-year financial inclusion drive, banks were tasked to cover all villages with population more than 2,000 by March and are working towards reaching out to all villages in a time-bound manner. ............

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Axis Bank, Airtel tie up to offer mobile banking

.........However, KC Chakrabarty, Deputy Governor of Reserve Bank of India (RBI), who spoke at the event said, “I caution that such tie-ups should not be to just provide remittances. Financial inclusion is also about providing deposits, advances, and all other banking products to customers. You may capture a customer on the basis of remittances but provide him with all products.”.......

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Electronic payments up, but cheque transactions higher

Cheques are still the preferred mode for making high value transactions in the country, RBI data shows. Use of electronic payment systems gained traction in 2011-12, but the volume and value of transactions was far less than cheque payments......................

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Watch out for insider trading

The Reserve Bank of India (RBI) intervenes in the foreign exchange market through the medium of commercial banks to stabilise rates. We are living in times of instant communication and real-time processing of information. Are enough checks and balances in place, either before or after the transaction, to prevent insider trading, directly or indirectly, by those with advance knowledge of the matter? Should we wait for another scam to break out before thinking of such preventive steps? The central banks in the West, South East Asia, Japan and Israel intervene directly in the market without any intermediary. Can the RBI follow this procedure so that the number of people privy to the transactions is at a minimum? What is the merit of the current procedure? There is only an enlargement of the risk. There is also a conflict of interest when an authorised dealer is entrusted with market intervention.

- A Seshan, Mumbai (BS)

Government securities scam comes back to haunt central cooperative banks

......NAGPUR: A decade after it rocked the state's cooperative banking sector, government securities (g-secs) scam is now threatening the very existence of a couple of banks in the region. However, it is expected RBI may ensure that the depositors' interests are safeguarded even if the banks face action......

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RBI seeks forex conversion data

Even a week after the Reserve Bank of India (RBI) asked Exchange Earners Foreign Currency (EEFC) account holders to convert half their dollar funds into rupees, the measure has not yielded the desired results. This has prompted the central bank to seek data from banks on how much individual companies have converted till now. Such account holders had been given 15 days to meet the requirement...........

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Use of forex reserves

Use of forex reserves to arrest slide of rupee is a short term measure, which will be resorted to by the central bank in emergent situations. Perhaps, eminent economists and statesmen should use their clout to persuade GOI to take long term austerity measures(austerity is a bad word for the rich and the powerful and the beneficiaries of their magnanimity) like having some control on import of luxury articles including aeroplanes and cars as also celebrations involving forex where there is no corresponding 'inflow' benefit. A recent report indicated that import of gold was 4 to 5 times of the average export of gold products including jewellery. Despite having a handsome domestic stock of over 18,000 tonnes(according to World Gold Council estimates, which must be conservative) at least a sizeable portion of which could be exploited, given the will, gold is being imported in large quantities, year after year.

M G WARRIER

RBI can’t save the rupee

.....Intervention can be useful only when the pressure on the currency is transitory. RBI has already spent more than $20 billion this year until two months ago in defending the rupee. Reducing day-to-day volatility and smoothing out currency depreciation has few known benefits. Further, the current pressure on the rupee is not caused by temporary factors......

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RBI to curb rupee volatility, not support value: DG

As the rupee dipped to its all time-low of 54.46 to a dollar today, leading to increasing calls for arresting its fall at any cost, RBI Deputy Governor K C Chakrabarty said the Reserve Bank intervenes in the forex market only to curb volatility and not the slide........................

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Wobbly Re complicates RBI efforts

The rupee fall has complicated the efforts of the Reserve Bank of India on the monetary front. At a time when the industrial production growth declined by 3.5 per cent and inflation surged to 7.23 per cent, the 9 per cent fall in the currency in the current fiscal is set to add to inflation and inflationary expectations and slow down the central bank’s initiative to kickstart growth and bring down interest rates..........

Read - Indian Express

RBI officials resigned to weaker rupee

The Reserve Bank of India (RBI) accepts that it is fighting a losing battle in trying to stem a fall in the rupee, a slide that has mirrored the slump in the once high-flying emerging market. The force of dollar demand is such that the Reserve Bank of India can do little to check the fall, central bank officials say. "We may prop the rupee for sometime by this way or that, but it is not enough," said a senior RBI official directly involved in currency management.......................

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Rupee's fall partly due to global factors: RBI

The sharp fall in the rupee to a record low on Wednesday is partly because of global factors, HR Khan, a Deputy Governor at the Reserve Bank of India, said. "The RBI is aware of the situation. We have taken steps and will take further steps if necessary," he said at the sidelines of a summit of South Asian Association for Regional Cooperation in Nepal. The rupee slid to a record low of 54.46 to a dollar, succumbing to the steep risk aversion hitting global markets and highlighting the vulnerabilities of a country facing challenging fiscal and economic outlooks.

http://www.moneycontrol.com/news/commodities/rupees-fall-partly-due-to-global-factors-rbi_705096.html 

RBI digs deep but rupee sinks further

..........“Apart from weak domestic economic fundamentals, the global conditions are not strong either. The downside to the rupee from here essentially depends on the strength of the measures taken by the RBI and the government. Clearly, only intervention in the foreign exchange market is not enough to arrest the fall,” ...............

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Subbarao: the only dove among hawks?

Next time you blame RBI governor D Subbarao for not cutting bank rates and almost withholding the growth of the country, you might have to think twice. Subbarao went against the majority view of the external members on the central bank’s technical advisory committee (TAC) when he cut policy rates by 50 bps (100 bps=1 percent) on 17 April...............................

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RBI staff opposes Guv's move on currency, coin distribution

Reserve Bank of India (RBI) employees and officers are up in the arms against the RBI Governor's recent move to channelise the distribution of currency and coins only through currency chests and bank branches. United Forum of Reserve Bank Officers and Employees, in a statement said the move will deprive the public of the quality service that they have been getting from RBI for decades and seriously hit the staff strength of RBI across all the cadres...........................

 

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Doctor recalls his association with Durgabai Deshmukh

.........The death anniversary of freedom fighter and social worker Durgabai Deshmukh, on May 9 went by without much of a whimper. While many may have forgotten the significance of the day, a doctor in the Capital will always remember the day and the profound impact that Durgabai Deshmukh and her husband, the first Indian to be an RBI Governor, late C. D. Deshmukh, had in his life....................

 

Read - The Hindu

Cheque clearing fees set to fall

Clearing charges for high value outstation cheques are set to come down with the Reserve Bank of India asking banks to fix their charges on a "cost plus" basis. The central bank has said that lenders can no longer fix their charges as a percentage of the value of the cheque.............................

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Should policy focus on growth or inflation?

...........Responding to inflationary pressures, the Reserve Bank of India (RBI) hiked the repo rate from its December 2010 level of 6.25 per cent to 8.5 per cent by October 2011. Only towards the end of 2011 did the RBI change its stance from anti-inflationary to neutral. And only in April did the central bank cut rates by 50 basis points, bringing the repo rate back from 8.5 per cent to eight per cent. Recently, activity has begun to show some signs of recovery. But it is probably too early to assume all is well on the growth front, especially in the face of an uncertain global environment..............

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Capital raising: Banks biggest test post Basel III norms

....."If you are looking at the incremental capital, because of Basel III, that is, what capital would have been required otherwise going ahead with Basel II, over and above that how much you require to implement Basel III -- it is a comparatively small figure. It is Rs 71,000 crore in common equity. That means it comes down from Rs 1,43,000 crore to Rs 71,000 crore. And the total capital requirement for public sector banks comes down from Rs 4,20,000 crore to Rs 1,65,000 crore," ........

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For a fistful of deposits

......But apart from inflation, the lower growth of bank deposits could also have been linked to a slowing economy, resulting in lower growth in incomes and household savings. As per RBI estimates, households account for nearly two-thirds of gross domestic savings in the country. While nearly half of these household savings are in the form of financial assets (as distinct from physical assets), 50 per cent of the financial assets are in the form of bank deposits...................

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RBI's forex order is unfair on MSMEs

.......The system now introduced will result in increasing expenses because additional charges are incurred, once on 50 per cent being credited to the EEFC account, a second time on 50 per cent being converted to Indian rupees, and a third time when the EEFC account is utilised. The accounting system for MSMEs will become more complicated and time-consuming. MSMEs should be completely exempt from this mandated requirement. Alternatively, the RBI can consider imposing a maximum ceiling which MSMEs can maintain in the EEFC accounts and amounts in excess of this can be converted to rupees..................

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'2012 end of toxic low growth & high inflation combination'

............Given what happened with inflation, Baig says that he doesn’t expect easing from the RBI in June. “I really cannot see what local factors can precipitate the RBI to make a move now given what has happened with inflation,” he elucidated. While domestic factors aren’t encouraging enough for a rate cut, Baig says a big slowdown in global growth or a big decline in oil prices could lead to a response from the RBI. “Short of an extreme scenario like that, it is very hard for me to see under which circumstances RBI will be able to cut rates in June,” ........

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Capping growth

The regulatory intervention by the RBI has not gone beyond providing a basic legal framework for the functioning of MFIs

............“The government and the RBI have wilfully promoted a policy direction in the last 10-15 years whereby private players are allowed to engage in micro-credit. In 1999, the RBI, in its Monetary and Credit Policy, deregulated all interest rates on micro-credit. The absence of regulation and the freedom given to private players allowed MFIs to charge exorbitant rates of interest. The present RBI guidelines still allows an interest rate cap of 26 per cent, while you can get a home loan or a car loan at 9 per cent or 11 per cent.”...................

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RBI Adviser: Government Must Raise Fuel Prices

.......The recent frequent market interventions by India's central bank won't arrest the rupee's slide and the government must raise fuel prices to cut the country's ballooning current account deficit, a top adviser to the Reserve Bank of India said Tuesday. The current account deficit is at the heart of India's currency problems, said Sudipto Mundle, a member of the RBI's technical advisory committee on monetary policy.............

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RBI pours in dollars to defend battered Re

...." Even if the RBI decides to intervene decisively to bridge the current account deficit gap, the fact that the size of the BoP balance is a far more powerful driver of INR movement than RBI intervention, we expect the INR to depreciate further and head towards 55- 58 INR/ USD over the next 12 months,"....

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‘RBI won’t tolerate rupee weakness beyond 54.30′

.....The only supply of dollars came in from RBI, which was a little sporadic and the Reserve Bank did not want to spend too much fire power because it reckoned it as fighting a global trend. “If we see more softening in core prices, the headroom for the RBI to support growth more is likely to expand, especially after the recent weak production numbers,” .........

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RBI helpless now, need govt action to defend rupee: Kotak

Indian currency is growing weak adding woes to investors. While the Reserve Bank of India has stepped in and sold dollars via state-run banks in early trade to boost the rupee, it breached the psychological 54 mark today. However, Sanjeev Prasad of Kotak Institutional Equities feels that the central bank is not in position to defend rupee strongly. In an interview to CNBC-TV18, he said that RBI is helpless at this point and the rupee will need action from the government to regain strength.....................

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State-run banks chafe under govt diktats

..........Others have pointed out that there has been growing pressure on independent institutions such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India. The latest instance of micro-management was when the government wrote to banks asking them to give their balance sheets to their respective audit committees at least two days before the boards meet to finalize accounts..................

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SBBJ to pay Rs 38K for dishonouring cheque

The State Bank of Bikaner and Jaipur (SBBJ) has been ordered by a city consumer forum to pay over Rs 38,000 to one of its customers for dishonouring his cheque to his grandson's school, despite enough funds in his account..........................

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RBI clarifies on ‘financial leases’ covered in NBFC

The banking regulator had been receiving requests for clarifications as to whether ‘operating leases’ would not be permissible.................... 

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