......The meeting, which will be held in Hyderabad, is also expected to analyse the reasons behind the depreciating Indian currency. The FSDC sub-committee is scheduled to meet just ahead of the Reserve Bank of India’s mid-quarterly monetary policy review on June 18. The RBI is widely expected to cut key rates by at least 0.25 per cent to ease liquidity and stimulate lending..........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Tuesday, June 12, 2012
RBI may stand pat now, cut 50 bps in July
The Reserve Bank of India (RBI) is unlikely to cut policy rates this month. Chances are, it could slash 50 basis points (bps) in July than by a smaller measure in June because by then, it will have more certainty on data – be it on growth, inflation, monsoon or the global economy.......................
RBI rate cut alone seen unlikely to spur cheaper loans
A rate cut by the Indian central bank next week will not be enough to spur banks to lower lending rates immediately, bankers said on Monday. Instead, Indian banks, saddled with high-cost, long-term deposits and narrowing profit margins, are hoping for a cut in the cash reserve ratio, which would boost liquidity and in turn lower the cost of funds, and would allow them to ease deposit and lending rates...............
Macro-economic situation calls for a pro-growth monetary policy
.....Given this situation, one can expect a 25 basis point cut in policy rates (repo and reverse repo) and a 50 basis point cut in the Cash Reserve Ratio (CRR) in the RBI's Mid-Quarter Review. The reduction of policy rates, however, is only one part of the story. For growth to pick up, it has to be urgently accompanied by strong policy actions by the Government, including movement in the second generation reform process.......................
Don't blame RBI for poor GDP, govt action vital: Munjal
Q: Does industry feel that the Reserve Bank of India has crimped growth?
A: Actually, it's not the Reserve Bank alone. The economy is in the present situation partially because of extreme monetary tightening and partially because the government is unable to take fiscal initiative. In the current situation, oil prices have softened over time and inflation has not gone up. So there is headroom, according to a Reserve Bank deputy governor, to improve liquidity in the banking system and to lower interest rates at the same time. But it has been suggested that government also take fiscal decisions.............
RBI: Hard choices, easy options
.........The situation facing the Reserve Bank of India (RBI) as it formulates its mid-quarter review of monetary policy is depressing. The growth rate for the last quarter of 2011-12 was 5.3 per cent, the lowest in many years. What is disheartening is that it continued a trend that started in ...............
RBI to meet export bodies on June 21
The Reserve Bank of India will meet representatives of export associations, industry bodies and banks on June 21 to discuss issues such as exchange rate volatility, export credit and also procedural issues affecting India's exports. This meeting will come close on the heels of the announcement of the annual supplement to the Foreign Trade Policy. India's merchandise exports grew 20 per cent in dollar terms during 2011-12 to $302 billion...........
Banks to take call on fixed deposit rates after policy review
Mid-size public sector banks would wait till the mid-term policy review by the Reserve Bank of India before taking a call on reducing interest rates on fixed deposits, top officials said today.....................
Banks want timeline set for firms to exit debt recast mechanism
......Bankers say the Reserve Bank of India could enhance the provisioning requirement for restructured accounts classified as standard advances to 5 per cent from 2 per cent. The enhanced provisioning requirement, whereby more capital will need to be set aside to cover possible defaults, will ensure that banks show urgency in the restructuring and exit of companies from the CDR process..........
Realtors rain EMI sweeteners
Home loan customers now have a reason to smile even before the Reserve Bank of India’s much-awaited credit policy review on June 18, where the central bank is widely expected to slash rates. In a bid to increase sales without lowering prices, real estate developers in Mumbai and the National Capital Region (NCR) are offering to pay customers’ EMIs till possession..............
Monday, June 11, 2012
SBI breaches RBI norms on RIL exposure for 4th year in 2011-12
State-run banking giant SBI has said it temporarily exceeded RBI-prescribed credit exposure limit for the fourth year in a row in 2011-12 with regard to loans given to Mukesh Ambani-led Reliance Industries..........
Cutting the Gordian knot
Contradictory statements from RBI officials hurt market sentiments
........... Early last week, RBI deputy governor Subir Gokarn rekindled the hope when he said that the central bank has some elbow room to reduce policy rates following a moderation in core inflation and drop in global oil prices. Liquidity in the banking system is in “comfort zone” as of now, said Gokarn, citing a recent drop in banks’ daily borrowings from RBI and steady, overnight cash rate. According to Gokarn, lower-than-expected economic growth will have some bearing on the central bank’s projection of GDP growth for 2012-13. The stock markets moved up, factoring in a 25-basis points rate cut. By the end of last week, things again turned upside down. KC Chakrabarty, RBI deputy governor, on Friday said inflation was the first priority for the central bank and that policy rates were not that high to restrict growth significantly, watering down the case for an interest rate cut. The stock markets witnessed some quick profit booking as confusion lingered in the market. Chakrabarty doesn’t believe that a drop in policy rates, even if it were as high as 200 basis points, would significantly help India Inc in reducing lending rates. He argued that adequate capacity is available right now to ramp up India’s manufacturing growth back to 8-9 per cent, from the present 2-3 per cent levels, before one could expect any massive investment in new capacities. Policymakers should refrain from sending out confusing signals........................
Avoiding the quicksand
.......................The deepening global crisis has even forced Beijing to act with alacrity. The Chinese Central Bank surprised the world with a 25 basis point cut in interest rate. This is the first time since the global financial crisis in 2008 that China has cut the interest rate. The China move has led Federal Reserve Chairman Ben Bernanke to declare that it would do whatever to protect the U.S. financial system and the economy. It is against this backdrop that the ensuing policy review of Reserve Bank of India on June 18 has raised a huge expectation. It's time the monetary and fiscal authorities spoke a common language and get the country to stay away from the the quicksand.
Let the regulators decide, please
Chief of the Securities and Exchange Board of India UK Sinha rarely speaks out of turn. Irrepressible KC Chakrabarty, deputy governor of the Reserve Bank of India, almost never gives up an opportunity to do so. On Friday, both landed up on the front pages of newspapers for very similar reasons, however. They had both rapped the governments’ handling of the economy. Both criticised the finance ministry for its take on the economy. The criticisms come at a time when the finance minister is just a nod (pun intended) away from moving over to the Rashtrapati Bhavan. Both Sinha and Chakrabarty have sort of made it clear then that there is no one who is now steering the economy from Raisina Hill. So, on June 18, to ask the RBI Governor to nod to a vacant seat and take a call on the rates in what will essentially be a political decision is unfair (Chakrabarty). Later, to expect a new finance minister to cobble up support with the allies and the BJP to pass all those economic bills the government has promised to pass through Parliament (Sinha) also looks very tough.....................
My View on "RBI's KC Chakrabarty counters Gokarn on possibility of rate cut"
The game those who are responsible for policy formulation are playing takes one back to the age-old transactional analysis, with PAC. Kaushik Basu and team can take the 'Parent' position, RBI the 'Adult' slot and Aam Admi the 'Child' position. Between the 'critical parent' and 'the crying child' RBI Governor gets jammed.To add to his embarrassment, his own team members come to open and share their wisdom(Gokarn) and ignorance with public.Top people within the organisation should better use internal forums to share their views and avoid airing divergent views in public on the eve of Governor's deliberations preceding policy announcements.
M G Warrier
Of heads, elbows and rooms
...........The day after the Union finance minister categorically, and quite correctly, ruled out any scope for fiscal stimulus, the Reserve Bank of India (RBI) suddenly discovered elbow room for cutting interest rates to push growth. This is the new anatomy of the Indian economy: since there is no headroom for fiscal stimulus, there has to be elbow room for monetary policy action. The compulsions are clear. Both these policy “guidance”—one negative and one affirmative—came as soon as the data showed that growth had slumped to its lowest level in nine years’ threatening to pull the gross domestic product (GDP) growth to below the comforting number of 6%..........
Central banks, govts have no choice but to act
.....I think we are at a stage where central banks, governments, including India by the way, have absolutely no choice but to act. Actually, to be honest I called 5.5% last week, which people at that time thought that maybe this guy has sort of lost it a little bit... What that actually means is that RBI, which is caught between a rock and a hard place, will act and it will sort of err on the side of ensuring that growth doesn’t completely go off the cliff, and in a sense it will be a mini crisis for India where Delhi will have to act as well........
Some unpleasant forex arithmetic
.....The Reserve Bank of India’s (RBI’s) market intervention strategy and the efficacy of its administrative measures to support the rupee have to be seen from this perspective. In a period when portfolio flows are weak, RBI has to fill this gap by offering dollars from its stock of reserves. The success of “intervention”, thus, depends on what percentage of this $2.5 billion deficit RBI absorbs by supplying dollars. There are again a couple of things about RBI’s intervention strategy that are becoming clearer as the rupee comes under successive rounds of depreciation pressure. First, RBI is unwilling to do much when there is risk aversion all around. This was quite apparent ........
‘Banks not proactive in tracing customers of unclaimed accounts’
In a scathing criticism to the banks, the Reserve Bank of India has said that despite its instructions, banks have not been pro-active in tracing customers linked with unclaimed deposits/inoperative accounts. The central bank said the need to identify the owners of these unclaimed deposits/inoperative accounts is closely linked to KYC due diligence.............
e-fraudsters may use fake RBI letters to dupe you
......The con letter appears to be coming from the Foreign Exchange Transfer Department of RBI where it informs the recipient that he or she has been 'compensated with a sum of £500,000'. The letter is signed by chief general manager-in-charge Salim Gangadharan. It goes a step further and claims that the £500,000 is a legal fund from the UK to the less privileged in India - pensioners, scam victims, orphans, the sick, needy and the poor - and that the application has been pending since 2007.................
Scammers take clue from RBI directive
Scammers seem to be adapting to changes fast, as a spam e-mail offering unclaimed funds in Indian banks has been landing in the in-boxes of scores of email users these days. The RBI recently directed the banks to take steps to disburse the about Rs 1,700 crore that were remaining unclaimed in various bank accounts in the country. Taking the cue, an e-mail with the sender mentioned as Funds Remittance Department of RBI, New Delhi, “informs” that the recipient was entitled to unclaimed fund of $500,000.............
MUCBF appeals CKP coop Bank depositors not to withdraw funds to avoid RBI action
............However, if the depositors continue to withdraw, the bank may face liquidity crunch and in that case, the RBI could impose moratorium and put a cap on further withdrawals. He also said that the Federation had never taken up the case of any co-op bank against which the RBI had taken action but in case of CKP Bank the issue was different and hence the Federation was supporting it, he said. The bank itself had also come up with an advertisement recently saying that its position was sound and the depositors' money was secured........................
42 cooperative banks under RBI scrutiny for rule violation
The Reserve Bank of India has put 42 cooperative banks under a revival programme that involves a thorough scrutiny after the lenders failed to meet critical parameters on minimum capital and net worth.
RBI has barred the lenders from accepting fresh deposits from the public after they missed the 31 March deadline to satisfy the norms. The programme, known as the monitorable action plan (MAP), is a last-ditch effort by the central bank to revive the businesses of distressed banks. The banks have till 30 September to revive their businesses and improve capital adequacy............
Banks push FD schemes ahead of possible interest rate cut by RBI
With expectations of an interest rate cut gaining momentum ahead of the Reserve Bank of India’s (RBI) mid-quarter monetary policy review scheduled for June 18, banks are going all out to promote their deposit schemes and dangling the carrot of higher rates before a possibility of interest rates falling.........
All eyes and hopes rest on RBI
.......However, RBI faces a difficult choice. Which macroeconomic variable does it look at? Double-digit inflation or rapidly decelerating growth—which has already begun to derail the unprecedented momentum that the economy had acquired in the last decade? Undoubtedly, a disciplined Union government could have made all the difference if it had done more than being a mere paper tiger when it came to tackling the fiscal deficit—or gross borrowings of the government. Regardless of which way RBI calls, there are serious consequences for the economy. In more ways than one, it will be the toughest choice faced by RBI governor D. Subbarao; this says something for a man who took charge in the midst of the Lehman crisis that triggered the 2008 global economic crisis. All eyes on RBI then..................
Competition watchdog may look at all sectors
........The DFS and the DoT had sought exemption, saying the sector regulators (the Reserve Bank of India and the Telecom Regulatory Authority of India) had sufficient expertise to deal with cartelisation, monopolistic behaviour or unfair competition. The DFS had argued under the Banking Laws (Amendment) Bill, 2011, Parliament’s standing committee on finance had approved the exemption of bank mergers from the purview of the Competition Act..................
No significant improvement in FY13
.The build-up in the banking sector was attributed to assumptions on the Street the Reserve Bank of India (RBI) will cut repo rates by 50 basis points and the cash reserve ratio by 50 basis points on June 18........
No-frills accounts rise over two-fold in last 2 years
............The Reserve Bank (RBI) has launched the financial inclusion programme to provide financial services to people in unbanked areas. RBI's approach to financial inclusion is aimed at connecting people with the mainstream financial institutions like banks, the apex bank said. "Goal of financial inclusion is better served through mainstream banking institutions as only they have the ability to offer the suite of products required to bring in effective or meaningful financial inclusion," RBI said. The number of business correspondents (BCs), who carry out banking operations on behalf of banks, increased to 96,828 from 33,042, it said..........
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NHB not to up capital requirement for HFCs
.........A committee chaired by former Reserve Bank Deputy Governor Usha Thorat had recently recommended for increasing the minimum capital requirements to 15 percent from the present 12 per cent for non-banking finance companies (NBFCs). In defence of the move not to increase the capital requirements, Verma said HFCs, which include players like HDFC, LIC Housing Finance, Dewan Housing, have a clearly defined business model which has low risks, as compared to NBFCs. "In NBFCs, the portfolios can be widely varying and there can be very quick changes or dynamics in their balance sheets. That is not something which can happen to HFCs,".......................
Repco Bank looks at RBI policy to operate as commercial bank
Chennai-based Repco Bank, a co-operative bank under the Union Ministry of Home, is waiting for the Reserve Bank of India (RBI) to come up with licensing policy, to join the group of commercial banks in the country. The bank is expecting an infusion of around Rs 100 crore in the next three years, to double its business from the present Rs 7,061 crore to Rs 15,000 crore by 2014-15, said a senior executive from the bank............
Sunday, June 10, 2012
Missing Elements
This is a festschrift. The book does not use the word, though. It uses the more pedestrian ‘Essays in Honour of C. Rangarajan’. Festschrift is used in the Prime Minister’s foreword, though, where the PM talks about Rangarajan’s contributions at the Planning Commission, the Reserve Bank of India, 12th Finance Commission and the Economic Advisory Council. Rangarajan needs no introduction. That said, if you plan a festschrift, you need a very good introduction on the person’s contributions to intellectual debate and policy formulation. You also probably have a bibliography of his academic writings. These elements are missing in this volume. A festschrift should also try to capture perspectives from the various spheres and entities the scholar has influenced or associated with. In this case, it should have tried to capture the Planning Commission, Finance Commission and the Economic Advisory Council angles too. But there is not much on that front.
There is an impressive cast — S.S. Tarapore, K. Kanagasabapathy, Balamurali Radhakrishnan, Raghbendra Jha, Joseph Massey, D. Subbarao, Y.V. Reddy, Swayam Prava Mishra, Shyamala Gopinath, Ravi Parthasarathy, Madhu Kannan, Kartikeya Desai and Nitin Desai, K.G. Karmakar, K.C. Chakrabarty, Udaibir Das, Ravi Narain, Ashima Goyal and Kirit Parikh...............
There is an impressive cast — S.S. Tarapore, K. Kanagasabapathy, Balamurali Radhakrishnan, Raghbendra Jha, Joseph Massey, D. Subbarao, Y.V. Reddy, Swayam Prava Mishra, Shyamala Gopinath, Ravi Parthasarathy, Madhu Kannan, Kartikeya Desai and Nitin Desai, K.G. Karmakar, K.C. Chakrabarty, Udaibir Das, Ravi Narain, Ashima Goyal and Kirit Parikh...............
8% tough on global mkt crisis, high deficit: Rakesh Mohan
The RBI's Inflation Dilemma
As economic growth falls, the Reserve Bank of India (RBI) once again faces a decision whether to cut interest rates to spur growth. This would be an easy decision were it not for the fact that inflation has been consistently rising since the start of the year. This is a difficult decision because of the trade offs involved. Cut interest rates to boost growth at the risk that inflation balloons. Or leave interest rates the same and risk that growth continues to tumble. Our assumption with that line of thinking is that inflation is significantly affected by the RBI's interest rate decisions. However, if we look at the causes of inflation, we'd see that most of it is completely out of the RBI's control. And actually, the RBI's decisions will have little impact on inflation.
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When electronic transactions fail…
..........Money transfers through RTGS (Real-Time Gross Settlement) and NEFT (National Electronic Funds Transfer) have become quite popular. But as the latest Annual Report of the Banking Ombudsman points out, complaints regarding non-credit, delayed credit and delayed return of funds in failed transactions are on the rise. The report recounts one such case where the complainant approached the ombudsman alleging inordinate delay on the part of the bank in transferring funds under RTGS.................
Ways to kickstart economic activity
........With our country's GDP growth rate slowing down in the last two quarters, people believe that the RBI is likely to adopt a “quantitative easing” policy to get the economy back on track. What does “quantitative easing” mean? It means that RBI is directly or indirectly making more money available in the economy to boost spending, which in turn boosts economic activity. How does this work?..................
Rising bank bad loans, slowing credit growth
The Finance Ministry is worried that banks' bad loans will go up, especially if credit growth slows down.
The gross non-performing assets of public sector banks have exceeded three per cent for fiscal 2011-12. NPA management will be one of the key issues at a meeting the Finance Minister has called with chiefs of public sector bank and financial institutions on June 12. The agenda note for the meeting says: “As informed by the Reserve Bank of India, at system level, new accretion to NPAs has been much more than the reduction on existing NPAs due to lower level of upgradation and recoveries. Also, despite write-offs, gross NPAs have continued to rise significantly.”............
Go long on rate sensitives till credit policy
.......... Until the policy is announced therefore, it may be worth taking long positions in specific rate-sensitive stocks, or the Bank Nifty. Of course, if the rate cut does satisfy the market, the long position can be maintained. Again, hedging is the prudent way to handle this sort of portfolio, which is dependent on policy action. The other potential hurdle that the RBI faces is incalculable external situations. If the Eurozone goes bust, there will be huge outflows from rupee assets to safe havens like the US Dollar, and maybe the Swiss franc and the yen, as well. If there’s sign of a Euro revival, there may be some outflows anyway into beaten down hard currency assets in the EU. Some currency volatility is guaranteed............
Bias to remain positive
Markets recorded significant gains in the week ended Friday on hope the Reserve Bank of India (RBI) would cut rates in the coming policy review on June 18. From an early week low of 15,749, the Sensex rallied to a high of 16,768, before ending at 16,719, a significant gain of 4.7 per cent. In the process, it also reversed its three-week losing streak. Going ahead, markets are likely to remain fairly volatile, owing to global uncertainties and the coming RBI policy review..............
Reselling the India story: road shows kick off in the Gulf
..... lot of people are ill-informed about India's potential. We want to tell investors, look, it is a robust economy with high savings, demand and investment opportunities," R. Gopalan, economic affairs secretary, told reporters earlier this week. During the June 10-15 road shows, a delegation of officials from the finance ministry, the Reserve Bank of India, the Security and Exchange Board of India and stock exchanges would seek investment through corporate bonds and debt funds, especially in the country's infrastructure sector...........
We want to have close ties with Indian banks: Abdulkarim Ahmed Bucheery
Which Bahrain banks are looking to enter India?
Many of our banks, especially from the Islamic banking sector, are interested in India. All these banks would bring capital, which is very much needed in India. Unfortunately, slow RBI (Reserve Bank of India) process and complicated requirements do deter them from doing so. We had to wait for two years to get the licence for our third branch, whereas when an Indian bank comes to Bahrain, a licence is usually granted within three months. But RBI has been very cooperative and understanding.
Many of our banks, especially from the Islamic banking sector, are interested in India. All these banks would bring capital, which is very much needed in India. Unfortunately, slow RBI (Reserve Bank of India) process and complicated requirements do deter them from doing so. We had to wait for two years to get the licence for our third branch, whereas when an Indian bank comes to Bahrain, a licence is usually granted within three months. But RBI has been very cooperative and understanding.
Is the delay only because of the slow processes or due to other concerns as well?
I think the slow processes basically result from RBI's inability to issue licences for branches. Metropolitan cities in India are overbanked, and RBI would like to direct some banks to villages and rural areas where there are no banking facilities. Banks coming to India for the first time don't want to go to far-off places; they want to be in metropolitan cities
I think the slow processes basically result from RBI's inability to issue licences for branches. Metropolitan cities in India are overbanked, and RBI would like to direct some banks to villages and rural areas where there are no banking facilities. Banks coming to India for the first time don't want to go to far-off places; they want to be in metropolitan cities
Banking on the Muslims: Interest payments rejected under Islamic law could be used to help the poor of India
Thousands of crores lying unaccounted in banks across the country and belonging to Muslims could be used for the uplift of the poor section of the community, provided the Reserve Bank of India (RBI) gives the go-ahead. A move to such an effect has been put forward to the Union finance ministry by the National Commission for Minorities (NCM) chairman Wajahat Habibullah. Habibullah's idea is based on the Islamic tenet which considers giving and receiving interest against the cause of the religion. This has resulted in a huge amount of money lying unaccounted in banks, which the NCM hopes could be somehow made use of for the benefit of Muslims in India. And one of them is opening the doors to 'interest-free' banking in India for the community.............
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Saturday, June 9, 2012
RBI's KC Chakrabarty counters Gokarn on possibility of rate cut
MUMBAI: Reserve Bank of India Deputy Governor KC Chakrabarty on Friday said interest rates in India were not too high to impact growth, throwing cold water on hopes of central bank action to revive a sputtering economy. This comes only days after fellow Deputy Governor Subir Gokarn raised expectations of a rate cut by saying moderate core inflation and softening global crude prices offered the central bank room to lower policy rates..............
Sensitisation programme on currency notes
A programme was organised by the Lead District Office and the Bankers' Club here for probationary officers/ newly recruited officers of various banks in the district to sensitise them on currency notes. Officials from the Reserve Bank of India spoke on various features of the currency notes, detection of fake notes, clean note policy, and note exchange policy, among others, a release here on Friday said. V.Ashokan, Deputy General Manager of Syndicate Bank, inaugurated a seminar. He said bankers had big role to play in implementing the decisions of the government and the RBI. E.K. Revikumar, Manager, RBI, engaged the sessions. A.A. Kumar, RBI Assistant General Manager, V.S. Jayaram, Lead District Chief Manager, C.V. Jayachandran, secretary, Bankers Club, and N.Mohanan spoke.
HBL
Impact of policy rate hikes on GDP growth being ‘overplayed'
.....“I don't think that our interest rates are that high, or the policy rates are so high that they should significantly affect growth. Growth is affected due to a variety of reasons and this (policy rate) is just one of them,” ......
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Low GDP growth not due to high interest rates: RBI Deputy Governor
Mumbai, June 8: The Reserve Bank Deputy Governor, Mr K.C. Chakrabarty, today sought to stave off criticism that the nine-year low GDP growth was primarily due to the 20-month high interest rate regime, saying it was driven by a host of other factors. “I don’t think that the interest rates are that high, or our policy rates are that high that should significantly affect growth. Growth is being affected for a variety of reasons. We are overplaying the interest rate aspect (for low growth). It may be one of the reasons,” Mr Chakrabarty told the Skoch summit here......
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No rate cut: RBI should help the rupee, not politicians
...........Subbarao should hold his horses. He should instead look to Big Ben and Moderate Mario for cues, not North Block. US Fed Chairman Ben Bernanke, despite signs of a slowing US economy, declined to send smoke signals that would suggest that another round of quantitative easing (QE3) or some other form of monetary stimulus is round the corner...........
Why India Should Not Follow China in Cutting Rates
.......Inflation risks are still high. The Reserve Bank of India can risk raising inflation (further) by cutting rates, when prices are (already) at an elevated level,” Taimur Baig, Chief Economist, Global Markets Research at Deutsche Bank wrote in a note titled 'RBI Should Not Be Cutting Rates on June 18, But Would It Anyway?' ..................
Credit policy: Will RBI bite the bullet on June 18?
A rate cut from RBI seems to be the demand of the hour. The industry wants it, the government wants it and market players want it. The ball is now in RBI's court..............................
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Chinese checkers
The 25 basis points rate cut by People’s Bank of China (from 6.56% to 6.31%), a first since the 2008 global economic crisis, is the most clear signal that India too—as the other engine of global growth—needs to get back into this role. Despite the comments by KC Chakrabarty, deputy governor of RBI, rates are hurting..............
RBI must cut rates to stimulate growth: Basu
............ In his personal opinion, the Reserve Bank of India should cut policy rates to support growth. India should take advantage of the depreciating rupee to boost exports, Dr Basu said. “We should take advantage of the depreciating rupee. Much of this depreciation is because of external factors and many other world currencies have also depreciated.” .....................
Not possible to grow at 7.5%, domestic factors slowing growth: Montek
.....That level is not comfortable, Ahluwalia said, adding that the central bank needs to do a “balancing act”. “Monetary policy needs to be forward looking, (there is) too much emphasis is being laid on the short term rate,” he said. “Lowering the rate would be a good signal, but there are a number of other factors.” The RBI is scheduled to hold its mid-quarterly policy review on June 18, and................ Read.........
RBI is way behind the curve
China just reduced interest rates by 25 basis points, the first reduction since 2008. Australia has reduced its interest rates twice in the last month by a cumulative 75 basis points. These decisions have been applauded by all, governments, investors and analysts. RBI reduced interest rates by 50 basis points near the end of April and most analysts (especially those belonging to foreign banks) were severely critical of the RBI decision. Why this asymmetrical treatment? Sometimes I half-believe in conspiracy theories interested in keeping Indian growth down so that Indian governments will be less arrogant!..................
Has RBI just ruled out a rate cut?
........A rate cut would have been possible if inflation was lower. The RBI, so far, hasn’t been able to reign in inflation because of structural rigidities in improving the supply side. It cut repo rates by 0.50 basis points to 8%, in April, a surprise move which caught many investors, savers and the financial community off guard. In fact, the RBI panicked as inflation was actually rising when the central bank had left rates intact for a period of time, after continuously hiking rates, for more than a year, to reign in inflation. Hence...........................
India needs radical change here and now !
.....We, in India, were able to withstand the crisis situations initially because of an insulated rupee and fairly strong fundamentals thanks to an astute Reserve Bank of India (RBI) Governor who refused to institute full convertibility of the rupee. Our bludgeoning domestic middle-class market absorbing all that is produced or imported, booming stock market and good monsoons went into the phases of Shining India of high growth rate.............
RBI raises number of NRI remittances
The Reserve Bank of India, on Friday, permitted non-resident Indians (NRIs) to send remittances more frequently, a step to boost foreign currency inflows and check rupee fall. Resident Indians are now allowed to receive as many as 30 remittances from NRI friends and relatives during a year as against 12 earlier, according to a latest RBI circular. Analysts said the RBI decision would help raise foreign exchange reserves.........
RBI move
Mumbai, June 8: The RBI today allowed resident Indians to receive as many as 30 remittances from NRI friends and relatives during a year against 12 earlier. The apex bank also said it would pump Rs 12,000 crore into the market on June 12 by buying government securities to ease the liquidity situation.
The Telegraph
The Telegraph
Customers seek lower limit on credit cards
...."People are using cards for basic purposes such as air tickets and utilites payment. Also, there are more place where cards are accepted," said Narahari. RBI data shows that at present there are over 90,000 ATMs and 6.5 lakh PoS terminals in the country.
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‘Remit IT dues in advance'
Chennai, June 8: The Reserve Bank of India has advised income-tax assesses to remit their income-tax dues in advance to avoid last- minute rush and long wait in queues. The rush for remitting dues at the bank is generally heavy towards the end of June and it becomes difficult for the RBI to cope with the pressures of receipts, despite providing additional counters, said the RBI in a press release. Apart from the RBI, select branches of nationalised, public and private sector banks in Tamil Nadu are authorised to accept payment of income-tax dues in cash or by cheque.
HBL
RBI to banks on unique ID codes
Banks must assign unique customer identification codes to their new as well as existing clients by May 31, 2013, the Reserve Bank of India said in a notification on Friday. The unique identification code will help in stronger enforcement of know-your-customer norms, and aid banks in identifying customers, tracking the facilities availed, etc.
BS
RBI cuts RTGS deal threshold to Rs1 lakh till Saturday
The threshold limit in RTGS System transactions has been cut to Rs1 lakh from existing Rs 2 lakh until 9th June............
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Friday, June 8, 2012
K C Chakrabarty may get 2-yr extension as RBI dy governor
The government is likely to extend K.C. Chakrabarty’s tenure as Deputy Governor of the Reserve Bank of India (RBI) by two years. Chakrabarty, appointed Deputy Governor in June 2009, was given a three-year term that ends on June 14. The other three deputy governors are Subir Gokarn, Anand Sinha and H R Khan. A Deputy Governor in the central bank can be appointed for five years and the retirement age is 62 — the age limit is 60 for other RBI officials. A candidate has to be younger than 60 to be eligible. An exception to this rule was made during the re-appointment of Shyamala Gopinath in 2009..............
RBI signs MoU with Central Bank of Bahrain
Mumbai: The Reserve Bank has signed a Memorandum of Understanding (MoU) with the Central Bank of Bahrain (CBB) to promote greater co-operation and sharing of supervisory information between the two regulators. The MoU was signed by RBI Executive Director P Vijaya Bhaskar and Khalid Hammad A Rahman, Executive Director of CBB, on May 29, the Reserve Bank said in a statement Thursday...............
RBI: Accounting and accountability
.......Part of the explanation for the failure of RBI may have to do with its misguided monetarist economic mode. That there are plenty of such arcane models floating around can be illustrated with reference to the current debate on the rapid depreciation of the rupee, and what to do about it. Some argue that if RBI wants to prevent its currency from depreciating, and/or depreciating so rapidly, then it should increase interest rates. This analysis was not even appropriate in a fixed exchange rate world, and that world disappeared fully 40 years ago in 1971. For decades now, capital flows, and exchange rates, respond to prospects for economic growth and not to changes in interest rates. That some analysts still peddle this snake oil thesis is surprising..........
'India can get up to $90 bn in 2 years'
....During the roadshows, the finance ministry would highlight the changes that had been brought in the QFI regime, the liberalisation of the external commercial borrowings (ECB) norms and measures taken to deepen India’s bond market. Officials from the Ministry of External Affairs, Securities and Exchange Board of India, Reserve Bank of India (RBI), Bombay Stock Exchange and National Stock Exchange would also be participating in the campaign named - India as an incredible investment destination...................
E-mail lottery fraud: Accused denied bail
...............He had received an e-mail on September 29, 2011 which said he had won a lottery of one million pounds. He also received phone calls from Patel asking him to deposit money in different bank accounts in the name of "fee, anti-terrorist and anti-drug abuse clearance from UNO, transfer charges to RBI and revenue to the government of United Kingdom"...................
Now, public sector banks on ‘USB' drive
‘Ultra-Small Branches' will help improve financial inclusion, says RBI
.........Recently, an RBI circular noted the need for having an intermediate brick and mortar structure (ultra-small branch) between the present base branch and BC locations. The circular suggested that these USBs could be either newly set up or by conversion of the BC outlets. Such USBs should have minimum infrastructure, such as a core banking solution terminal linked to a pass book printer and a safe for cash retention for operating large customer transactions....
Mumbai body seeks PI Patil's suspension
..The Maharashtra police team returning to Mumbai after escorting RBI cash containers was intercepted by the Pernem police on March 15 at Patradevi and 10 officials of Maharashtra police, which included PI Shivaji Raut, were detained. According to the notice served by the advocates of the organization, friendship between PI Patil and the arrested PI let the offenders go scot free.............
RBI’s Chakrabarty explores financial education in emerging markets
Kamalesh Chandra Chakrabarty, a Deputy Governor of the Reserve Bank of India, delivered a speech on June 5 that explored the benefits of extending financial education in emerging markets. Speaking at a literacy forum in Mumbai, Chakrabarty said that financial education "essentially involves two elements, one of access and the other of literacy". He explained that financial education should commence at school level, so students could act as "ambassadors" to spread financial knowledge to the wider community.................
Bank boards asked to take stock of unclaimed deposits
........In a circular to all banks, RBI has said that lenders should put in place a board approved policy on classification of unclaimed deposits; grievance redressal mechanism for quick resolution of complaints, record keeping and periodic review of such accounts. Four years back in August 2008 RBI had asked banks find the whereabouts of the customers and their legal heirs. At that time RBI had said that banks should review accounts every years wherever there are no transactions. The circular has defined an inactive/inoperative account as one where there has not been any transaction in the account for over a period of two years. Banks have also been directed to reactivate inoperative account without any charge. However, despite these instructions the number of inoperative accounts had only grown. This has compelled the central bank to come out with fresh directives on these funds.
RBI asks banks to set up financial literacy centres
.According to the RBI study, since the counselling centres were set up by banks themselves, there was a fear among borrowers that they might turn into debt collection units. Under the new scheme, FLCCs would continue to function with renewed focus on financial literacy. However, most of the responsibility has now been passed on to banks. This will lead to opening of 630-plus FLCs in all the districts throughout the country. Further, financial literacy activities will also be undertaken by all the rural branches of commercial banks and regional rural banks. RBI has said that it will prepare financial literacy material on its own and distribute it to banks.
Will a change of government give a new direction to economy?
The whole economy is in shambles. The RBI and the central government will have to put their heads together by taking the right steps to boost growth
The present foreign exchange imbroglio and economic crisis faced by our country brings back to memory the near disaster faced in 1991, when the country had to airlift 67 tonnes of gold to pledge with Bank of England and Union Bank of Switzerland to raise $605 million of foreign exchange loan to avert a default in international payments. In January 1991, the foreign exchange reserves of our country had reached a precarious position ..............
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Case for a 75 basis points’ cut
With GDP growth sharply decelerating to 5.3% in the last quarter of 2011-12, RBI Governor D Subbbarao’s job becomes quite easy during the mid-June quarterly review of monetary policy. The bias of the central bank will more pronouncedly shift in favour of propping growth, especially with the latest data set showing a negative growth in manufacturing during January-March 2012................
The stickiness of interest rates
....While SBI may be comfortable with its liquidity, it’s quite another story for the sector. After two rounds of cash reserve ratio cuts, banks are still borrowing Rs.70,000 crore to Rs.1 trillion under the Reserve Bank of India’s (RBI’s) liquidity adjustment facility. Not only that, banks have had to turn to alternative sources of financing such as certificates of deposit (CDs). Is it any wonder then that three-month, six-month and even one-year CD rates remain near their January highs?........
FinMin seeks rate cut by RBI to spur ecomomic growth
Following its commerce counterpart, the finance ministry, too, has pitched for a cut in policy rates by the Reserve Bank of India (RBI) in its policy review scheduled for June 18. This, the ministry said, would spur economic growth, which slipped to a nine-year low of 6.5 per cent in 2011-12. On what the government felt on the interest rate scenario, Economic Affairs Secretary R Gopalan said, “We see a possibility of growth picking up if the interest rates are reasonable.” He said RBI would take into account the inflationary situation as well as external factors, while deciding on its interest rate stance in the policy review.............
De - Jargoned | Monetary policy and its implications
Hopes in the financial markets are getting built around the expected rate cut in the mid-quarter review of the monetary policy on 18 June. But why are markets watching its review so closely?
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JP Morgan Economist: RBI Should Relook Currency Strategy
India's central bank needs to have another look at the way in which it intervenes in the currency markets because its recent dollar sales haven't been able to stop the rupee's slide, a senior economist said Wednesday. "Intervention is a legitimate instrument, but the Reserve Bank of India didn't do it the right way," said Jahangir Aziz, J.P. Morgan senior Asia economist. "The RBI could have intervened in a more strategic manner when the market was willing to accept it as a signal that the RBI is coming out and defending the currency."...................
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Cabinet approves Rs632 crore capital infusion in regional rural banks
....Following recommendations of Reserve Bank of India (RBI) deputy governor Dr KC Chakrabarty, the government had initiated recapitalisation process in 2009-10 for 40 financially weak RRBs, which mainly provide credit to rural and agriculture sectors......
Thursday, June 7, 2012
All rural branches of banks to impart financial literacy: RBI
The Reserve Bank Wednesday said all rural branches of banks will have to impart financial literacy. This move comes after the central bank found Financial Literacy and Credit Counselling Centres (FLCC) were located in the urban and semi-urban areas. "Banks may consider setting up need based FLCs in other locations as well. Financial literacy activities will also be undertaken by all the rural branches of Scheduled Commercial Banks including RRBs," the RBI said in its guidelines on Financial Literacy Centres (FLCs)...........
Aviation ministry seeks ATMs, forex counters for transit passengers in international airports
NEW DELHI: To make life easier for transit travellers and those who apply for visa on arrival, the aviation ministry has requested the Reserve Bank of India to allow ATMs and currency exchange counters before immigration areas in international airports. "Transferring passengers (who spend anywhere between two hours and 24 hours at airport) are required to spend substantially on food and beverages and use other facilities in the transfer area, and spending in foreign currency is not feasible," the ministry has said in a consultation paper on developing India as an aviation hub. Existing Reserve Bank of India guidelines does not allow foreign exchange counters before the immigration in airports' arrival terminals..............
Union Bank ATM for differently-abled
.....An ATM for the differently abled had been specified in the Reserve Bank of India circulars in 2008 and 2009. The central bank had stated that all banking services including ATM cards need to be offered to all customers without any discrimination........
Staff costs higher at public sector banks
....In a speech delivered recently at a conference of public sector HR managers, the RBI Deputy Governor, Dr K. C. Chakraborty, said, “One thing is, thus, loud and clear — the competitive advantage in terms of staff costs that we always thought the public sector banks had is no longer there. ......
Will we get another rate cut from RBI on 18 June?
The Reserve Bank of India will review its monetary policy on 18 June. Will it announce another interest rate cut? The chances seem brighter after central bank Deputy Governor Subir Gokarn said on Monday there is scope to cut interest rates to boost the country’s flagging growth. Gokarn said that the slowdown in growth and a fall in oil prices provided room for a possible interest rate cut.............
RBI Jaipur Receives Fake Notes from Udaipur, case registered
Twenty Three notes in denominations of Rs. 500 and Rs. 1000 were branded as fake by a Manager at Reserve Bank of India, Jaipur while he was in the process of receiving cash from the ‘Chest’ Branches of Udaipur. The Manager has registered a written complaint with the Superintendent of Police, Udaipur against an unidentified person..................
Real import of rupee fall
...........The Government is clearly unwilling to do much about the rapid decline in the value of the rupee. Despite the rupee losing around a quarter of its value against the dollar over the last year, the RBI has not been pushed into making any dramatic interventions in the realm of exchange rates. Instead, the Government has focused on coming to terms with a devalued rupee, even accepting the political dynamite of a sharp increase in petrol prices. The official thinking is clearly on the side of devaluation as an essential step in macroeconomic correction...........
Freedom from prepayment fee
Taking an aggressive stance, the Reserve Bank of India (RBI) has decided that banks cannot levy foreclosure charges or prepayment penalty on home loans on floating rate. The order is to be implemented with immediate effect. In a circular issued on 5 June, RBI warned banks to strictly follow the instructions brought out in its monetary policy statement for 2012-13. The apex bank thinks that removal of foreclosure charges and prepayment penalty on home loans would reduce rate discrimination between existing and new borrowers and competition among banks and hence result in finer pricing of floating rate home loans...........
No penalty on home loan prepayments; but why this half-hearted measure?
RBI says the waiver of pre-payment penalty is applicable only for home loans carrying floating rate of interest. Why are borrowers who had obtained home loans on fixed interest basis being left out?..........
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RBI told banks to be serious while dealing with unclaimed deposits
Reserve Bank of India told banks to spruce up their act in dealing with unclaimed deposits. It has advised to them to put in place a board approved policy on classification of unclaimed deposits, grievance redressal mechanism for quick resolution of complaints, record keeping and periodic review of such accounts. It has also directed banks to conduct the first periodic review of unclaimed deposits by September 30, 2012................
Exploring the challenge of financial education across emerging economies : K C Chakrabarty
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Economic Harakiri
........... If we are to believe the Reserve Bank of India it is the global recession, the financial turmoil in Europe, the stubborn high inflation and the swollen fiscal deficit, everything in short, except its own monetary policies. It has taken the collapse of industrial growth, a panic withdrawal of money from India by foreign institutional investors and a collapse of the rupee to force Pranab Mukherjee to break the code of Omerta and put the blame squarely on the Reserve Bank’s ‘tight monetary policies.’ But when it came to the steps Mukherjee was as much at sea as RBI governor D Subbarao and his advisers. His panacea is to ‘address the imbalance on the fiscal front’, i.e. cut the budget deficit by spending less. The prime minister is obviously of the same opinion...............
India’s economic policy set to undermine RBI’s ‘good’ work
The Reserve Bank of India (RBI) is in danger of losing its vaunted reputation as one of India most trusted institutions as it attempts to maintain its role in promoting price and financial stability against a backdrop of government policies that do not necessarily enhance the RBI's medium-term goals, according to an article published in the latest edition of the Central Banking Journal. The article says the RBI has gained a strong reputation for its commitment to support growth as well as maintaining price stability. Moreover, its detailed intervention in the regulation of banks, financial products and capital flows has also drawn extensive praise during the past five years. The RBI has shown what report author Hugh Sandeman, a financial advisor and journalist, refers to as a "lack of intellectual inhibition in the exercise of old-fashioned common sense"...............
India’s economic growth closely tied to global risk appetite
.....The hopes that the Reserve Bank of India would quickly reduce interest rates, thereby imparting a much-needed boost to investment, have been dashed. Growth has fallen much more than expected, while mastering inflation is proving to be more difficult than envisaged. Add erratic government policies, a large current account deficit, a drying up of capital inflows, a political logjam and a world economy in imminent danger of slipping into a double dip, and you start to wonder how things could possibly get worse. Oh wait, that list seems to have left out El Nino.........
PSU banks dial IT helpline
After a successful stint with IT in financial inclusion, the RBI is now pushing for better reforms in the IT infrastructure of banks, with a special emphasis on PSU banks.
......According to the RBI, one of the objectives of IT initiatives is to lower operating costs, whereby it turns financial inclusion into a profitable business. This, in turn, will help create a huge upside for banks in the form of stable deposits. Also, given how important mobile phones have become as a means for communication, using this technology for funds transfer as well as retail payments holds huge potential. As such, mobile banking is the most happening area of development in the banking sector and is expected to complement, and to an extent replace, the credit/debit card system in the future. “While it has the potential to overcome issues relating to cost, infrastructure and resources; it does pose some new issues of its own,” said Sinha of RBI. RBI has established the National Payment Corporation of India for focused attention on the development and implementation of requisite technologies for enabling new modes of delivery....................
How to attract non-banks to financial services
..... India’s formal financial services sector is yet to meet the growing needs of a large part of the population. When it comes to domestic remittances, 57% of migrant workers in India use hawala couriers and other informal channels to remit money, according to a recent study. Another perspective is India’s informal lending economy. Analysts estimate that almost 40% of the participants in India’s informal economy resort to chit funds, barter and moneylenders for financing.It’s logical that an informal sector thrives in the absence of convenient, reliable, speedy and regulated financial services..........
Growth, India's highest priority
.....Mismatches between growing demand and constrained supply, leading to persistent inflation. The Reserve Bank of India’s (RBI’s) raising interest rates to tackle this has only compounded the problem of reduced profits and investments, made worse by central and state government failures to augment supply...........
Akhilesh asks Nabard to allocate Rs 2,250 cr for Uttar Pradesh
..Referring to RBI ban on 25 non-licenced district cooperative banks, Akhilesh requested Nabard to lift the ban immediately and allow the bank to do banking business......................
Prashant Bhushan intervenes in Sahara-Sebi case, files petition in SC
.....Further, the companies do not follow prudential norms laid down by the Reserve Bank of India (RBI) for banks and non-banking finance companies handling similar or even lesser amounts of public money, the petition alleged. These norms include cash reserve ratio (4.75 per cent), statutory liquidity ratio (25 per cent) and capital adequacy ratio (10 per cent). “The omissions on account of investor protection stipulated in the Sebi Act on the issue of debentures have been detailed in the Sebi order,” the petition said. It also argued the manner in which these unsecured funds have been invested also make them extremely risky.....................
MMCB has Rs320 crore cash & Rs1,625 crore in liabilities
After virtually freeing Ketan Parekh from the obligation of paying all of the Rs1,100 crore he owes to Madhavpura Mercantile Co-operative Bank (MMCB), the Reserve Bank of India (RBI) has left MMCB with a liability of Rs1,625 crore. This is against just Rs320 crore cash that the cooperative bank has in hand.......................
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Justice not in sight for MMCB depositors trial yet to begin
.......Now, with RBI cancelling the banking licence of MMCB, the fate of over 10,000 depositors, remain uncertain, while the key conspirators have managed to get relief from the courts. "The trial had been delayed following various kinds of applications by the accused. It was only after the Gujarat High Court directions on our petition to expedite criminal proceeding against the scam accused in 2011 that the things have now got moving,"..............
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