India GDP: not looking good

“There are only two [factors that could force] RBI to look at cutting rates. One is what happens to Greece and if there is some severe shock waiting for us. And the second is if growth over the next one or two quarters continues to remain close to 6 per cent – if that is the scenario then RBI would feel compelled to cut rates,”.......

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The rupee saga

The partially convertible rupee on Tuesday closed at 55.67/68 per dollar, 0.9% below its previous close of 55.1850/1950

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Time is ripe for an NRI bond issue to support rupee: Indranil Sen Gupta, India Economist, Bank of America Merrill Lynch

.....RBI Governor D Subbarao is really losing the game of expectations rather than facing capital outflows. Of the $20 billion that the RBI sold in October-January, almost $8 billion remain parked in banks' forex nostro-balances and thus have not left the economy. All the forex market is probably looking for is a commitment that the RBI will rebuild reserves abandoning its policy of trying to appreciate the rupee at the cost of buying forex.........

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Rupee fall will not last very long: PM

Dismissing any comparison with the 1991 external debt crisis, Prime Minister Manmohan Singh today said the fall of rupee is a matter of concern but was confident it will not last very long. He said the rupee depreciation was taking place against the backdrop of the global economic problems and the Euro zone debt crisis and expressed optimism that solutions will emerge at the G-20 Summit in Mexico next month............... 

Read - Indian Express

The rupee: a reality check

.............Unlike countries such as China, our official policy is not to target any particular exchange rate. The Indian central bank has stuck with this hands-off policy, allowing the market to determine the value of the rupee. One way of looking at the current slide is to consider it an overdue correction after a long period of overvaluation, when the strong capital flows into India sent the rupee soaring. RBI has done well to not target an exchange rate, because recent economic history shows us how difficult it is to defend the value of a currency in a world where capital flows freely across borders...................

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Banks asked to ensure every family has at least one savings bank account by June

.....It is important that all such accounts are active and do not end up like no-frill accounts, a majority of which are dormant and hence unviable," said a top executive of a public sector bank. The government has also decided to extend its financial inclusion drive, called 'Swabhimaan campaign', to habitations with population of more than 1,000 in the north east and hilly states as per the 2011 census. The ministry maintains this model of financial inclusion is not in conflict with the blueprint prepared by the Reserve Bank of India. "There are no differences and the RBI's model of "one district-many banks-one lead bank" is being followed," another finance ministry official said.

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RBI asks co-op banks to formulate norms for conversion of FDs

Reserve Bank on Monday permitted cooperative banks to formulate policies to check the practice of premature conversion of fixed deposits into other deposit schemes by customers with a view to obtaining higher interest rates. "In order to facilitate better Asset Liability Management (ALM), it has been decided to permit banks to formulate their own policies towards conversion of deposit with immediate effect", RBI said in a notification..........

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RBI eases banks' short term deposit restrictions

 The Reserve Bank of India has removed restrictions imposed on banks which earlier prevented lenders from levying penalty on customers for foreclosure of some term deposits..................

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Maharashtra State Co-Op Bank omits key information from its annual report

......In the 2010-11 fiscal, according to the annual report, it is pertinent to note that the company was imposed a penalty of Rs5 lakh, for non-compliance of Reserve Bank of India (RBI) directions issued u/s 35A of the Banking Regulation Act, 1949 (The Act). According to Section 35A of the Act, it gives RBI the powers to give directions to a bank, in the interest of depositors and to safeguard their interests. Furthermore several deviations were noted in the annual report and stated in verbatim, below:

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Has cloud computing come of age?

......While there’s excitement over the benefits of the cloud, Mahajan cautioned that the industry needs to address the issue of data sovereignty. “RBI (Reserve Bank of India) mandates all the banks and their branches to keep data within geographic boundaries. Hence, there is a gap for pure public solutions,” he said. Garkel of Deloitte agreed that the main concern today was from a regulatory perspective as it (the cloud) had not come under the purview of RBI. For example, regulatory perspectives regarding audits are yet to be introduced in the area of cloud computing. Currently only non-core activities are in the cloud. “There has to be more clarity on how the regulatory landscape evolves,” said Garkel........

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Banks can lower interest rates if CRR cut further: SBI

Ahead of RBI's mid-quarterly policy review, State Bank of India today said a cut in cash reserve ratio (CRR) will give a room to banks for lowering interest rates."More the RBI cuts CRR, greater will be the ability of banks to reduce rates," SBI Chairman Pratip Chaudhuri told reporters here................

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RBI and 926 bank branches to collect advance income tax

...."As many as 926 computerised branches of public and private sector banks will receive...These arrangements have been made for the convenience of the income tax assesses," RBI said in a statement.......

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Here, women deal a ‘biz’ blow to dry spell

........Manndeshi Mahila Sahkari Bank, which was started in Mhaswad in 1997, has been able to transform thousands of lives in rural Satara. The bank is the first micro-financing initiative in India and tends only to women. Riding on women power, the Mhaswad-based bank has now reached Vaduj, Gondavale, Dahiwadi, Satara and Lonad along with two mobile branches. Each branch has “Rural-B schools” which helps women learn various skills and encourages them to form self-help groups for better sustainability. Despite economic slowdown across the globe, this women bank has grown to Rs2.25 crore from an initial capital of Rs6 lakh. Women are managing finance better than men. “Our repayment rate is 98%. As women are programmed to save more and manage better than men, we were sure about the success of the bank though our application had been rejected by RBI initially,” says Chetna Gala Sinha, the founder of the Mann Deshi Mahila Bank, who gathered all illiterate women of Mhaswad to launch this bank in 1997......

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Nabard FY14 operating surplus soars 28 pc to Rs 1,635 cr

.....Serving special needs, the bank ploughs back the surpluses in its reserves and other funds and does not pass on anything to the government which owns 99 per cent stake in it with the remaining 1 per cent being held by the RBI, the bank said in a statement issued here. A Bill is pending in Parliament to allow the RBI to divest this residual one per cent stake too. Earlier, the RBI and the government were equal owners of the development bank.............

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Tread cautiously on risks, Pranab tells banks

...... the Financial Services Secretary, Mr D.K.Mittal, later told reporters that the current gross NPA level of over 3 per cent for 2011-12 was a matter of concern, but there was no need to panic. “Indian banking system is much sounder than the European system,” he said. Mr Mittal highlighted that there was continued efforts to address the NPA issues in the Indian banking system. Asked whether the Government, in consultation with the RBI, was contemplating a special dispensation for asset recognition in the wake of the current difficult economic environment, he replied in the negative. “There is no need for separate dispensation. Banking system has to face the challenge,” he said..........

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Will RBI and government learn their lessons from current crisis?

.....If you do not consolidate your gains and reform during your good times you are forced to do that in the worst of times. If the RBI and the government learn that one lesson from the current crisis, we will have done well. Is that too much to hope for?

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‘Rupee slide to have less impact on sovereign ratings'

.....However, the rupee's fall is also a result of India's existing credit weaknesses such as loose fiscal policy, which has boosted domestic demand, inflation, and import spending; government subsidies, which support India's reliance on imported commodities; and domestic regulatory uncertainties, which have deterred foreign portfolio and direct investment........

Read - The Hindu

RBI's two options to guide rupee

RBI deployed strong ammunitions to dilute the momentum in rupee fall but could not prevent the “run” into 56-57 (low of 56.39). This is seen as strong support zone for rupee where genuine .................

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Rupee decline fans inflation risk

....The Reserve Bank of India will probably be unable to lower borrowing costs until October-to-December, Goldman said. Tushar Poddar, an economist at the company in Mumbai, wrote in a note to clients that the RBI will now likely lower interest rates by half a percentage point in the final three months of 2012, compared with the 75 basis points previously forecast

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Mobile money: Kenya good, India bad

 Although the government made a similar push for inclusion in India, the Reserve Bank of India took a more cautious approach when the product was introduced last December. Vodafone could offer its mobile service, says Joseph, but it had to team up with a bank to materially cash in and cash out the transfers.................

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Ahmedabad SE plans revival, will sell land to raise net worth

....Tie-up talks between NSE and ASE have been going on for two years. The plans got delayed as Sebi had set-up a committee under former Reserve Bank of India (RBI) governor Bimal Jalan to study working of stock exchanges and prepare a road map. As per recent norms all stock exchanges in India should have a net worth of Rs 100 crore. ........

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BANKS SWELL WITH DEPOSITS, DON’T LEND A PENNY IN JK

.....Pertinently, during his visit to the state in March this year, Reserve Bank of India (RBI) governor, Dr D Subbarao had also slammed the banks for having dismal CDR in J&K. According to observers, the CDR should have increased in view of “peace in the state last year”, as compared to past three years when the Valley saw different agitations..........

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K R Kamath tipped to become RBI dy guv

K R Kamath, currently the Chairman & Managing Director at Punjab National Bank (PNB), is tipped to move to Mumbai’s Mint Road as a Deputy Governor at the Reserve Bank of India. Kamath’s move to the central bank is being talked about to fill a probable vacancy that could arise if K C Chakarabarty, one of the DGs at RBI, moves to Manila as an Executive Director at the Asian Development Bank. One DG position at the central bank is always filled with a person from the commercial banking space, usually by a chief of PSU bank. Incidentally, prior to joining RBI as a DG in June 2009, Chakrabarty also served as the CMD of Delhi-headquartered PNB.

 

TOI

Forget Mussoorie, hold meets at HQ: FM to PSBs

State-run bank executives are the first victims of a fresh round of austerity drive that finance minister Pranab Mukherjee warned about in Parliament last week. His ministry has sent a circular to all public sector banks, directing them to hold their board meetings at their headquarters and not at tourist destinations. "It was brought to our notice that banks hold their meetings in tourist destinations such as Goa or at hill stations on the pretext of interacting with the local staff," said a finance ministry official.

Interestingly, the diktat to state-run banks comes at a time when the board of the Reserve Bank of India is meeting at Mussoorie..........

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An RTI test looms for a regulator

.....The Reserve Bank of India (RBI) has challenged an order by the Central Information Commission (CIC) asking the central bank to disclose names of the top 100 industrialists who have defaulted on loan repayments. In a writ petition to the Delhi high court, which is scheduled to be heard on 29 May, the central bank has argued that provisions of the RBI Act, 1934, prohibit disclosing credit information relating to bank customers and that doing so will violate confidentiality. RBI has asked the court to quash the order...........

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Central Vigilance Commission reconstitutes advisory board to check commercial frauds

....The board will have a tenure of two years. It would form part of the organisational infrastructure of the CBI and the Reserve Bank of India, providing the required investigative and secretarial services. "The Board's jurisdiction would be confined to those cases where, in disagreement or dispute with the Bank, Public Sector Undertakings or financial institution, the CBI desires to register a Regular Case or Preliminary Investigation in respect of an allegation of a fraud," an order said. Besides, it may also advise on any other technical matter referred to it by the CBI or the CVC. The board, under the chairmanship of former Deputy Governor of RBI Shyamala Gopinath, will be based in Mumbai but it can meet anywhere in the country at its convenience........ 

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India's macro-eco situation has suddenly worsened: Assocham

....This would be catastrophic and depress the demand in the manufacturing sector, the largest employment source after agriculture and services, it said. However, the chamber hoped that RBI will take a balanced view when it reviews the credit policy next month.......

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RBI taking steps to check rupee slide: Pranab

....Mr. Mukherjee said the RBI was taking steps to check the depreciation in the Indian currency from time to time.RBI recently indicated that it may sell dollars directly to oil companies to ease pressure on the currency. Besides, it has already taken steps to curb speculation in the forex market and increase the inflow of foreign currency...........

Read - The Hindu

Half-hearted efforts

This refers to “Reforms not put on the backburner: Bansal” and “Rupee fall continues, hits 56 to a dollar” (Business Line, May 24). On the reforms front, the Government is so used to rollbacks, that it prefers to bring in half-baked measures to show that it is doing something and project that the coalition partners and opposition parties are the stumbling block. On fuel prices, the Government should have arrived at an auto-linkage formula vis-a-vis the crude oil basket's price. On the rupee front, the RBI is inching forward in uncertain times, especially because the economy is so interlinked with foreign markets that no monetary or forex measure can stand the test on its own. The RBI's firmness appears to be the right stance at this stage.

- K.U. Mada Mumbai (HBL)

NRIs beware: Best time to remit cash ending?

.....However, recent moves like hiking the petrol prices by the government and the sale of dollars by the RBI at least show intent by Indian authorities to do something about the rut. While this in itself may not be enough, the fact that the rupee has already depreciated by more than a quarter in less than 10 months, and that the Indian economy is still growing, albeit slower than before, may help support the rupee at current levels................

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On a downhill course

.....Amidst all these, there have been very few explanations from the Reserve Bank of India and the government, which can be considered original. It is this apparent helplessness as much as the actual fall that is truly baffling. One must remember that the recent rupee-dollar movements are being dictated by market forces and not induced by any RBI action. Recent declines, unprecedented as they are, have left policymakers nonplussed and scrambling for rational explanations. Failure to identify specific causes, in turn, suggests that countervailing policy measures, even if feasible at all, cannot be effectively targeted within a given time span.........

Read - The Hindu

Easing interest rates may not be an easy task for RBI

..............."Given the forex volatility and RBI interventions, liquidity has remained tight and government induced inflation pressure still remains high, so the RBI will have little room to cut rates immediately,'' ..................

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Rupee likely to slide further

....The PPP theory is based on the idea that currencies are in equilibrium when their purchasing power is the same in each of the two countries. The PPP theory suggests that a currency would appreciate or depreciate vis-à-vis another currency to the extent of the inflation differential between the two countries.........

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Rupee: depreciated tactics - Renu Kohli

.....There is little doubt that the measures the Reserve Bank of India (RBI) has taken to increase the inflow of foreign capital are remedial in nature and not really aimed at fighting a fundamental exchange rate adjustment. The central bank is more managing the pace of currency depreciation than supporting the rupee at this or that level. With foreign exchange reserves down to six months of import cover, short-term debt above 40 per cent of overall external debt and significant foreign currency liabilities due for repayment in the near term, the RBI knows better than anyone that it can only do so much and no more. The RBI also must be conscious of the fact that it did not buy any foreign currency to accrete reserves when the rupee was on the upswing since 2009. But it is now forced to sell to moderate the depreciation, which is unsustainable beyond a point as it will only deplete reserves.......

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High govt spending makes it hard for RBI to act decisively: Derrick Irwin, Portfolio Manager, Emerging Markets, Wells Fargo

..........We are worried that government paralysis will continue to act as a drag on investment spending and lead to a lower rate of growth. India faces numerous headwinds to growth, and the Reserve Bank of India (RBI) and the central government are at odds over economic policy. While RBI has room to stimulate the economy by cutting rates, we fear that profligate government spending will make it very hard for RBI to act decisively. Further, India remains ....................

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India's balance of payments: The alarm bells are ringing

.....The problem was not with services alone. As the RBI notes in its report on India's balance of payments, export growth decelerated in October-December 2011 while imports continued to rise largely due to high international commodity prices and inelastic demand for gold and silver. Here it is important to remember and the RBI reminds us that the advanced economies of the West still shape India's export-fortunes; so while the Commerce Ministry and commentators may appear innovative in seeking new markets for India's exports, the fact remains that the largest part of export earnings come from the US and Europe and other major western economies.......

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Exporters rattled as some buyers demand quotes in rupees

.....Exporters plan to approach the Reserve Bank of India (RBI) to review its recent directive requiring exporters to offload 50 per cent of their foreign currency holdings in the exchange earners' foreign currency account. Already, exporters have complied with it, bringing a gush of dollars into the market — a move that has not helped stabilise the rupee...........

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My View on "Electronic transactions"

In the case of electronic transactions, even an agency commission of Rs 12 migt leave more margin for a bank than a payment of Rs 50 for a transaction done thru  a cheque payment.It does not seem likely that a customer would not put through an Electronic transaction just to enable banks earn more commission per transaction. 

- A.Chandramouliswaran

Gold loan firms’ profit drops after RBI norms

.....Gold loans business in the country has been adversely impacted due to developments in the past few months, particularly the Reserve Bank f India (RBI) regulations that placed many restrictions on the lending practice of the companies. The RBI censured two companies – Manappuram and Muthoot Fincorp – for using their branches to accept deposits from the public unlawfully. This led to investor skepticism against the sector and resulted in drying up of borrowing sources.......................

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Rajat Gupta under ED scanner

.... A confidential report of the Reserve bank of India accessed by The Sunday Standard reveal the modus operandi of the troika. Incidentally, Gupta and Vangal are co-founders of the IT company, Scandent Solutions. Gupta and seven NRI investors led by Vangal picked up 24.93 per cent equity in TMBL with the clear understanding among themselves to acquire substantial TMBL shares and get representation on the bank’s board. “The share transfers in favour of seven foreign investors were in violation of FEMA provisions. Some of the investors have either not provided any information towards the acknowledgement process or have not responded to the specific information sought by the RBI,” states the March 2011 order of RBI Deputy Governor Anand Sinha. In Rajat Gupta’s case, the Foreign Exchange Department (FED) of RBI during the investigation revealed suspicious transfers of shares allegedly masterminded by Rajat Gupta.......

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RBI to pack in additional stringent steps for banks

In an interview to CNBC-TV18, Anand Sinha, RBI deputy governor, shared his view on the initiative taken by the regulator in the banking space.


Below is the edited transcript of his interview to CNBC-TV18............

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3 pvt banks to insist on minimum balance every month

The top three private sector banks have tightened their minimum savings bank deposit balance norm. Against the normal practice of maintaining minimum average quarterly balance, these banks want customers to maintain minimum balance on a monthly basis. What this means is that customers will have to keep higher balances. The move to get customers to maintain minimum balance on a monthly basis follows the Reserve Bank of India deregulating the savings bank deposit rate in October 2011. The RBI has not stipulated any minimum balance to be maintained in savings accounts to any bank. The RBI guidelines only state that accountholders should get from their banks a month's notice on any change in the minimum balance norm........

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Slowdown in growth likely to continue

The worst of the economic slowdown could still be ahead of us, according to a new RBI working paper. The paper ‘‘Evidence of Interest Rate Channel of Monetary Policy Transmission in India'', has suggested that an increase in policy interest rates is associated with a fall in real GDP growth rate. The maximum decline in GDP growth occurs with a lag of two quarters with the overall impact continuing through six-eight quarters ahead...............

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Textile, finance ministries to meet next week

The textile and finance ministries are expected to meet next week to discuss restructuring of loans for the textile sector, according to sources. Representatives of the Reserve Bank of India may also attend the meeting. The textile industry, ..............

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My View on 'The paradox of forex reserves'

It is a fact that our Forex Reserves Management has not been getting the attention it deserved, as it depended on borrowed expertise and RBI’s own priorities hovered more around internal debt management and monetary policy concerns. It is comforting to see that RBI governor is focusing on the components of forex reserves and their vulnerabilities. As the returns on forex investments were not encouraging, there has been some complacency in augmenting the reserves position, resulting in the reserves stagnating around $300 billion for quite sometime now. On the part of GOI/RBI, it was a late decision in the last quarter of 2009 to increase the gold component in the country’s forex reserves by about 200 tonnes, by a purchase from the International Monetary Fund. In the context of improving the country's image as one with a decent net-worth, it is important to manage the domestic gold-holdings outside the forex portfolio also and make them visible and available as part of nation’s resources. Let us no forget the 1991 episode when solid gold had to be carried abroad for pledging and borrowing. Such shameful experiences can be avoided in future, if a part of domestic stock of the estimated 18,000 tonnes of gold is made tradeable and part of the ‘stock’ of standard gold.

- M.G.Warrier

India's forex reserves drop by $1.80 billion

....Foreign currency assets, the biggest component of the forex reserves kitty, fell by $1.74 billion to $256.11 billion during the week ended May 18, according to the Reserve Bank of India's weekly statistical supplement. The RBI did not provide any reasons for the change in foreign currency assets...........

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Rupee fall: Reserve Bank of India can do little to help

.....More than the magnitude of the rupee's depreciation, it is the speed of the decline that is troubling RBI. The recent slide has not caught the central bank unawares . Last year, when the greenback gained, the exchange rate reached 54.305 rupees to the dollar on December 15, 2011. This was an all-time low for the rupee, which had hit a year's low of 43.855 on July 27 - a 23.83 per cent drop in 91 trading days..........

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Does the Indian economy have a 1991 crisis feel?

...Last month, in a panel discussion (attended by the prime minister, Manmohan Singh who was the finance minister in '91), RBI governor D Subbarao pointed to macro numbers which were approaching '91 levels. "That is quite a disturbing picture," he said (as quoted by Reuters). "Nevertheless, I would still argue that in 1991 an implosion was imminent, in 2012, an implosion is not." ....................

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Rupee may Rebound to 52-levels in 6 months: Barclays Capital

.......Barclays Capital said the RBI may eventually opt to float dollar denominated bonds through public sector banks (like State Bank of India) for non-resident Indian (NRI) investors. If well designed and executed, we think, such a scheme could trigger $12-15 billion of inflows in a relatively short amount of time, the report added. While we expect the RBI to cut repo rate by a further 50-75 basis points by March 2013, we think it is likely to maintain a more neutral bias in the next one or two policy meetings after the larger-than-expected 50 basis points cut in April.

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Bank trade unions threaten to go on 2-day stir in July

.....GD Nadaf, Convenor of United Forum for Bank Unions (UFBU) said the central government offices and RBI were working five days a week and asked why banking industry cannot be brought on the same pattern. “An avoidable expenditure towards fuel, water, energy are incurred for half a day work on Saturday. Instead, one-hour working hour may be increased for five days in a week,” ...............

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This summer, reap the benefits of travel cards

...........Pre-paid travel/forex cards score over the other options. When you load your card locally, you lock into the exchange rate prevalent on the day you buy the card. With the US dollar being a widely accepted currency across the world, at no time does this proposition make more sense than now. Swiping your credit card when the rupee is depreciating will make you shell out more for every dollar..............

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Samajwadi Party toes Mamata line on UPA support

.....He has asked Mukherjee to direct RBI governor D. Subbarao to get NABARD release the amount. The UP chief minister has also written to the RBI governor in this regard and has marked a copy to agriculture minister Sharad Pawar as well.....

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Hacking attempt on RBI website

......"We found the IP address and blocked it and got the website on its feet again," the spokesperson said, adding there was no loss of information or defacing as the hackers could not get into the site. The RBI brass, including Governor D Subbarao and all the Deputy Governors, were in Mussorie, Uttarakhand, on Thursday for the board meeting when the hacking attempt was reported. Further details like the exact time period when the hacking happened and the geographical location where the attack has been traced to, are unclear........

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Reserve Bank of India prohibits 25 co-operative banks from accepting fresh deposits

The Reserve Bank of India has issued certain directions to 25 District Central Co-Operative Banks in UP prohibiting them from accepting fresh deposits in order to protect the interest of the existing as well as future depositors of the bank. According to Deputy General Manager of the RBI H.K.Soni the directions have been issued to district central cooperative banks at Aligarh, Allahabad, Azamgarh, Bahraich, Ballia, Barabanki, Basti, Deoria, Faizabad, Farrukhabad (Fatehgarh), Fatehpur, Ghazipur, Gorakhpur, Hardoi, Jaunpur, Kanpur, Lucknow, Mau, Pratapgarh, Rae Bareli, Siddharthnagar, Sitapur, Sultanpur, Unnao and Varanasi.

TOI

Bank unions threaten two- day stir in July

Chennai Trade unions of banks demanded regulated working hours and a five- day week for officers and threatened to go on a two- day strike in July, in support of their charter of demands. G D Nadaf, Convenor of United Forum for Bank Unions ( UFBU) said central government offices and RBI were working five days a week and asked why banking industry cannot be brought on the same pattern. Nadaf said some of the residual issues of the 9th Bipartite settlement like compassionate appointment scheme, improvement to staff loans, corrections to second option on pension scheme were still pending with the IBA/ government. " Instead, one- hour working hour may be increased for five days in a week," he said ahead of the three- day meet of All India State Bank Officers' Federation.

FPJ

New Rs. 5 coins to commemorate 150th year of CAG

The Reserve Bank of India will shortly put in circulation new coins of Rs. 5 denomination to commemorate 150th year of Comptroller and Auditor General of India (CAG). The coin will bear the logo of CAG along with year "1860-2010" on the bottom of the logo............

Read - Hindustan Times

Changes in draft Microfinance Institutions Bill shocks the microfinance sector

....."This is an upward revision of microfinance that doesn't seem to be in alignment with reality," said Yeshwant Thorat, former chairman of National Board for Agriculture and Rural Development. "I'm not sure whether this is consistent with equity and social justice," Thorat added...................

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Why the MFI Bill is flawed

....Banks lend to MFIs at about 10 per cent instead of directly giving loans to the SHGs. The MFIs in turn lend at high rates ranging from 24 to 60 per cent to the poor. In addition to banks, the micro-finance sector gets support from apex agencies such as Rashtriya Mahila Kosh and Nabard in several other ways. Also, as the Malegam Committee (a subcommittee of the Central Board of Directors of the RBI) found, banks were holding securitised paper issued by non-banking financial companies (dealing with microfinance) worth Rs 4,200 crore. Banks and financial institutions had also invested in the equities of such companies. The Committee found that over three-fourths of finance obtained by .....

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Basel III- not a matter of if but when

............And similarly, the Reserve Bank of India has told domestic banks they must start reporting on aspects of Basel III liquidity strength measures from as early as June this year, ahead of the reporting timetable laid out by the Basel Committee. Furthermore, it has stipulated that banks go above and beyond Basel III requirements and provide a statement outlining their bond spread movements compared to their share price in a bid to better monitor early signs of systemic risk.........

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Rakesh Mohan condemns 'metro mania' amongst urban transport policy makers and planners

Metro projects should be restricted to cities with over 5 million population and all urban transport costs should be borne by cities through user charges and fiscal imports, said Rakesh Mohan, Chairman of the National Transport Development Policy Committee today...................

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The malaise within

The growth of the last two decades had been properly utilised, India’s GDP would have been several times more

The Indian rupee has touched a record low of 56 per dollar and continues to go down. The interventions of the Reserve Bank of India have been of little avail and the finance ministry remains clueless as to how to reverse the trend. Two years ago the rupee-US dollar exchange rate was at around 44.00. Thus, there has been a fall of about 25 per cent during the last two years. Rupee has been on the decline consistently and is expected to fall further in the near future.

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Welcome the fall

.....A falling currency is a sign of weakness, and the decline of the rupee reflects the many ways in which the economy has been mismanaged; the loss of competitiveness gets neutralised through a cheaper currency. Some players may have got caught unawares by the sudden drop, but commentators have woken up to the positive macroeconomic effects of the rupee’s depreciation. Players should be relieved that a key element of macro-adjustment has been more or less achieved — partly through fortuitous commodity price movements. While ........

 

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Rupee slide: RBI Governor meets Manmohan Singh

A day after hinting that the central bank would take necessary steps to arrest the rupee's slide, RBI Governor D Subbarao today met Prime Minister Manmohan Singh and is believed to have discussed the issue with him. Although the rupee has recovered after yesterday's announcement by Subbarao on the possibility of selling dollars directly to oil companies, it had fallen to 56.07 to a dollar in the morning trade, after yesterday's close of 55.65..............

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We will look beyond consumption expenditure to estimate poverty: C Rangarajan

Suresh Tendulkar is a reputed economist, known for his work on poverty. Why has the new committee been appointed when his estimates of poverty were already there?

This committee has been appointed due to concern over estimating poverty using the Tendulkar committee’s method. We need to look at how to define and measure poverty. So far, the level of consumption expenditure has been used as a way to estimate poverty. This is based on the basket of goods and services, and estimated using the least possible level to sustain someone. It is adjusted for price increases and consumption patterns every five years.....

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RBI Central Board of Directors meets today at Mussoorie

Dehradun, 24/May/2012 : The Central Board of Directors of the Reserve Bank of India met today at Mussoorie, Uttarakhand. Dr. D. Subbarao, Governor, Reserve Bank of India chaired the meeting. Directors Dr. Anil Kakodkar,Kiran S. Karnik,M.V.Rajeev Gowda,Y.H.Malegam,Dr. Indira Rajaraman and Dr. Najeeb Jung, as also, Government nominee director on the Central Board D. K. Mittal, Secretary, Financial Services attended the meeting. Deputy Governors Dr. K.C.Chakrabarty, Dr. Subir Gokarn,Anand Sinha and Harun R. Khan were also present. The Board reviewed the current economic situation and global and domestic challenges and policy responses..............

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RBI to relax policy norms to encourage banking in Uttarakhand

....."The Reserve Bank and the government, as the case may be, will relax the policy guidelines to see that there is greater penetration of banking system in the hilly areas," RBI Governor D Subbarao told reporters after the central bank's board meeting here........

 

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Reserve Bank's G. Gopalakrishna: 'We Have No Target for the Rupee'

The Indian rupee has been falling very sharply in recent months. G. Gopalakrishna, Executive Director of the Reserve Bank of India (RBI), says that the central bank's principal job is to monitor volatility, not value. Gopalakrishna has been a central banker all his working life; he joined the RBI in 1980. He is currently executive director of the Deposit Insurance & Guarantee Corporation, an RBI affiliate. On a related issue, he says that full convertibility of the rupee is not on the horizon.

An edited transcript of the conversation follows...............

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Real time gross settlement delays payment of Nagpur Municipal Corporators contractors

....If you use the RTGS route, the money goes through RBI. Even if there is a minor mistake in the form describing the work and payment, it gets rejected. That is why we are advising the contractors to open an account with us. Then there would be no formalities involved.".....

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Tender exact change, govt tells shopkeepers in Meghalaya

.....It has been observed that shopkeepers are offering chocolates in lieu of the balance money/exchange that they have to return to customers, East Khasi Hills deputy commissioner Sanjay Goyal said. Violation of the instruction shall invite stern action which may go up to the extend of imposing penalties on the shops under relevant provision of the laws, he said. Goyal said the shopkeepers are responsible to tender exact changes to customers as the Reserve Bank of India has clarified that there is no shortage of coins.

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RBI, finance ministry differ over rural bank branches

The Reserve Bank of India, RBI, and the finance ministry seem to have differences on the way banks should go about ensuring financial inclusion. While both the regulator and the ministry are passionate about providing banking services at low cost to the disadvantaged, a difference of opinion between the two has confused bankers...................

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A road India needs to travel

India has had a long history of initiatives to bring about financial inclusion since 1947. The Reserve Bank of India (RBI) and the ministry of finance have been striving to achieve financial inclusion through a series of programmes starting with nationalisation of the Imperial Bank to State Bank of India in 1955, introduction of cooperative banks, State takeover of major banks in the 1960s, opening of regional rural banks, priority sector lending programme, banking correspondent model, the no-frills account etc. However, all these initiatives have met with limited success..........

Read - Hindustan Times

The forex problem

This refers to my article “Ways to handle forex crisis” (Business Line, May 24). Inter alia, I have proposed that the Reserve Bank of India (RBI) open a refinance window for foreign exchange loans issued by commercial banks. When the bank intervenes in the market to stabilise the exchange rate, it sells dollars absorbing rupees, thus causing a shortage of liquidity, apart from a decline in reserves. To offset the shortage, it has to engage in a debt buyback operation. If the suggestion on a refinance window is adopted, the problem of rupee liquidity will not arise as the transactions will be in forex. The reserves lent will return to the bank when repayments are made, apart from the RBI earning a better yield than what it is now.

- A.Seshan (HBL)

Rupee slide: Why is the RBI not doing anything?

..........The inter-bank forex market would immediately drop within the said band. Why is RBI not taking such a step? Possibly, the RBI is a little uncertain that such an action would deplete forex reserves of the country (hovering around $290 billion) with the belief that authorised dealers would be on a dollar-buying spree at the rate of Rs 49.40. Such a belief is unfounded. India continues to be a highly-regulated forex market. Authorised dealers have to be square or near square in respect of their forex positions as at the close of business hours each day. RBI also prescribes overnight limit of forex position for each bank. No authorised dealer can buy forex from RBI and offload it in the international forex market...........

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RBI cracks down on exporters, banks Rs sees sharp rebound

The Reserve Bank of India (RBI) on Thursday threatened exporters and banks with penal action if they were found violating its instructions on converting dollar funds into the domestic currency in a fortnight.

The central bank’s move came on a day the rupee saw sharp swings —

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Spate of regulations change face of financial sector

....Removal of priority sector status for gold financing firms, loan-to-value (LTV) cap of 60% on gold loans, guidelines on securitization, recommendations for PSL and Usha Thorat committee recommendations for NBFCs intend to bridge the regulatory gap and strengthen balance sheets.............

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Subbarao indicates more interventions over Re slide

.....The rupee has been falling for the last three-four months, especially after some appreciation in January-February. The RBI has taken action to improve current flows and curb speculation. The rupee movement is a function of external factors, the capital account and other factors like balance of payments. Some structural changes are necessary for improvement in the current account,” .......

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Declining value of rupee a heartburn for all

...“The fall in the value of rupee is a gain for exporters. But it is not good for the economy. The government, the RBI, and the finance ministry have to take steps to see that rupee does not fall further. Ultimately, all losses will have to be borne by the common man,”........

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Surge in April inflation a surprise: Subbarao

...We noted that inflation has been a surprise upside for month of April...We will consider how the inflation scenario has evolved. We will take into account the growth statistics and take a decision," RBI Governor D Subbarao said while addressing a press conference after the board meeting...........

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It’s not just about depreciating R

.....The government and RBI need to avoid this trap. The Chairman of the Prime Minister’s Advisory Council, Dr Rangarajan, has been constantly communicating on the exchange rate in the past two weeks. About a week ago he said RBI should not allow temporary ebbs in the capital flows to unduly impact the exchange rate. That gave the impression that RBI would defend the currency by selling dollars in the market. Indeed, RBI did sell dollars in the market on several occasions to counter the speculators. However, the expectation was that RBI will come down with a sledgehammer if the exchange rate weakened beyond R54-55. Those levels have got breached now, creating a further scare in the market. Some feel RBI has been a bit half-hearted.......

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RBI to take steps to arrest rupee fall: Subbarao

Dehradun : "RBI will do whatever is necessary. Some structural changes are necessary for improvement in current account. Meanwhile, the RBI is monitoring the situation and we will do whatever is necessary, consistent with our policy," RBI Governor D Subbarao said while addressing a press conference after a meeting of the central bank board here.................

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Running on empty: Why 8-9% growth isn’t coming back

.......As RBI Governor D Subbarao has repeatedly pointed out, it is these supply-side constraints that have kept inflation unsustainably high, despite extraordinarily high interest rates last year, which in turn choked off yet more growth.......

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The paradox of forex reserves

....One of many ways RBI Governor Subbarao has distinguished himself from his predecessors has been his approach to currency management. He has only intervened to dampen market volatility, not to attempt to influence the overall rate. To be fair, pressure on the rupee during YV Reddy’s tenure was almost exclusively to strengthen, and the paradox of foreign exchange reserves does not apply to appreciation. Stemming persistent appreciation implies accumulating reserves—easier to manage than spending them—making it much more tempting to oppose the market........

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Bharat Co-op Bank to Launch Visa International Debit Card on May 28

Mumbai, May 23: Bharat Co-operative Bank (Mumbai) Limited will launch Visa international debit cards in ‘The International Year of Co-operative’ as bonanza for its customers on Monday May 28. Reserve Bank of India Executive Director S Kuruppaswamy will launch the debit cards in the presence of Visa India and South Africa national group manager Uttam Nayak and Corporation Bank former chief manager B R Bhat at Sai Palace Hotels, Mahakali Caves Road, Andheri (East), at 10.00 am Monday May 28, stated the press release issued by CEO C R Mulky.

 

http://www.daijiworld.com/news/news_disp.asp?n_id=138705

Financial inclusion nearing completion in state

.......It may be noted that during a special meeting of State Level Bankers' Committee (SLBC) chaired by Reserve Bank of India (RBI) Governor D Subbarao, it was decided that banks should open at least 200 brick and mortar branches in unbanked villages. Pursuant to the meeting, the RBI-Bhubaneswar has allocated the remaining 146 centres among different banks of the state. Most of the banks have opted for opening ultra small branches at these centres........

 

Read - Business Standard

Andhra to wait for passage of MFI bill before review of law

......Even as finance minister Pranab Mukherjee tabled the microfinance bill in the Parliament on Wednesday, which allows the apex bank RBI to keep a firm grip on micro lending companies, the Andhra Pradesh government has not lost hope of continuing to reign these players.  “There are fundamental differences between the bill and the AP Act. While at this juncture there cannot be much done, we will wait for sometime, and if the bill is passed, we look at various ways to protect the poor borrower. It is not known now on what exactly could be done, ”.....

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Electronic transactions

The Reserve Bank of India has come out with a new notification on rationalisation of agency commission for Government transaction payable to banks. According to the new guidelines, banks will get Rs 50 a transaction. However, they will get only Rs 12 for an electronic transaction. Electronic transactions involve remittance of funds from the remitter's bank account though the Internet as well as all such transactions which do not involve physical receipt of cash/instruments.

Banks should be encouraged to make customers use the electronic mode, whereas this decision of the RBI will have the opposite effect. Banks may also advise customers to issue cheques for tax payment as that will fetch them more commission. This is a retrograde step.

- S. Kalyanasundaram, Chennai (HBL)

Ways to handle forex crisis

...........It is time the RBI constitutes an expert group to take a total view of the issue of the stability of the forex market, taking cognisance of its interface with monetary, fiscal and debt management policies and come out with feasible recommendations within a month. The group should be broad-based, including all stakeholders. In the meantime, the central bank should continue with administrative and regulatory measures to curb speculation............

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Difficulties in crop loan disbursal due to RBI norms: Chavan

 Maharashtra Chief Minister Prithviraj Chavan today conveyed to Finance Minister Pranab Mukherjee the difficulties being faced by district central cooperative (DCC) banks in crop loan disbursal owing to RBI restrictions.......................

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‘Banks should work for uplift of minorities, farmers in State’

........RBI Governor Subbarao said that Uttarakhand which is in its infant state should try to come at par with other developed State in E-Banking. Banks would be asked to focus on remote areas and maintain proper ratio while opening bank branches at plain and hill areas. Banking sector is ready to extend its network provided State Government extends all required assistance to them. Regional Office of RBI would be further strengthened. Uttarakhand should take advantage of Dehradun’s image as education hub and should try to make other districts too an education hub. He also asked to develop e-banking in the State...........

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U’khand CM for norm relaxation for opening bank branches

......Bahuguna said the benefits of welfare schemes launched by the state and the centre for scheduled caste, scheduled tribes, weaker sections and women would also reach the beneficiaries faster by opening of more bank branches. The Chief Minister said the visit of RBI Governor to the hill state would be a "milestone' and help in expanding banking facilities in the state. During the meeting, Bahuguna said the RBI Governor asked him to facilitate enhanced use of e-transferring of funds, which he said is quite less in Uttarakhand................

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Banking tightens UAE-India ties

..........National Bank of Abu Dhabi (NBAD) has applied for a licence to the Reserve Bank of India to open a branch in Mumbai, its first in India. "India is the biggest trading partner to the UAE so it will make perfect sense for us to be there," said Prakesh Sheth, the head of the international credit and marketing unit at NBAD, at the Arab India Partnership Conference in Abu Dhabi yesterday. "It will be the gateway for the Arab world who want to do investment and business in India and also for Indian companies wanting to set up in the Arab world.".....................

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India Inc frets as clueless Reserve Bank of India struggles with Rupee

As the government blames the crisis in Greece and the Reserve Bank of India waits for New Delhi to act, corporates are sensing the central bank's and policymakers' helplessness to pull back a sinking rupee. Treasury heads of large companies and fund houses voiced concern at a meeting with the RBI last week even as corporates suggested a flurry of measures before it was too late. And chances are, Governor D Subbarao may have to answer questions on a battered currency and on what to do next when the RBI board - which usually discusses the state of the world stuff over tea - meets in idyllic Mussourie on Thursday....................

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Hold It, RBI

The central bank should stop piecemeal intervention in the currency market

The rupee has dipped below . 56 to the dollar, despite intervention by the Reserve Bank of India (RBI). It is time the central bank stopped intervening in a piecemeal fashion. Such intervention serves, at best, to smoothen the path of the rupee’s relentless fall; not to stop or reverse it. At worst, it erodes credibility in the central bank’s ability to influence the currency. In any case, it is not the RBI’s goal to manipulate the exchange rate and hold it at any artificial level. True, no one knows what the appropriate exchange rate is. Players in the currency market are making bets, informed or otherwise. The most informed guess would be the RBI’s. It should signal that it would refrain from intervention till the rupee reaches.............

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RBI policy to check rupee fall is appropriate: Rangarajan

The Reserve Bank of India has taken the right policy to check the rupee’s fall without being too aggressive about it, C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, told CNBC-TV18 in an exclusive interview on Wednesday............

 

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Re breaches 56/$ level; FM dials RBI Governor

On a day the rupee plunged further to touch 56 to a US dollar, Finance Minister Pranab Mukherjee discussed the situation with Reserve Bank of India Governor D Subbarao via videoconference. Sources said that it has been decided that any action in the form of an intervention in the currency market to support the rupee would be taken solely by the central bank....................

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Currency trouble

Depreciation is a problem, but it also presents opportunities

..... The purpose of regulating the currency markets is to arrest speculative trades, which the Reserve Bank of India has been trying to do; but some statements created an ambiguity about government action that has fuelled the rupee’s excessive fall. Quick measures to control the situation are in order.

However, there is little doubt that a correction from the rupee’s levels of last year was warranted and useful.........

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Securitization deals likely to take a hit

Loan securitization deals, or the practice of commercial banks buying out the loan portfolios of non-banking financial companies (NBFCs), may see a significant drop in volume after the Reserve Bank of India (RBI) tightened the norms on such transactions........................

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Rupee: FIEO seeks drastic measures from RBI

Apex exporters' body FIEO today sought "drastic" measures from Reserve Bank like directly selling dollars to oil companies, to arrest the weakness in rupee...................

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New RBI norms to curtail securitisation volume: Icra

The securitisation market is likely to see a drop in the current financial year following the recent Reserve Bank guidelines, according to the rating agency Irca........

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Dhanlaxmi gets RBI's nod on MD recruit, revival in process

The Reserve Bank of India (RBI) has confirmed the appointment of P G Jayakumar, the new managing director of the privately held Dhanlaxmi Bank wherein its board had dislodged the existing management due to poor financial performance. This looks to have scorched all speculations of a possible acquisition of the troubled bank by any bigger bank,..................

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