.....Quite obviously, the Reserve Bank of India, while reviewing the credit policy — the mid-quarter review is scheduled for later on June 18 — would take note of the recent developments affecting the economy. As it happened last week, there were not only planned releases of important statistical data, but some quite strong, unanticipated criticism of the government’s economic management — by global rating agency Standard and Poor’s (S&P). .....
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.
Monday, June 18, 2012
FinMin wants banks to cut rates in sync with RBI's policy action
....According to bankers, the ministry has now said banks should pass on the benefit “entirely” to customers if RBI reduces rates tomorrow. Market participants expect the central bank to cut its key lending rate by 25 bps to boost economic growth. India’s gross domestic product growth rate slowed to a nine-year low of 5.3 per cent in the March quarter. “In the event RBI cuts the CRR (cash reserve ratio, or the portion of cash banks are required to keep with RBI) and the repo rate by 25-50 bps, the finance ministry wants banks to bring down the lending and deposit rates by the same margins,” said a senior public sector bank official on condition of anonymity. He said what had not gone down well with the ministry was the pace of monetary transmission mechanism following RBI’s rate action. Banks were reluctant to cut rates as they say the cost of deposits would not come down in a hurry......
Retail credit boom could hit savings rate: RBI panel
The retail credit boom carries the potential to derail the country's steady savings rate despite a higher economic growth, a high-powered working group, led by RBI Deputy Governor Subir Gokarn, has said.
The group cautioned there will be the downside risk of a stagnant or even lower savings rate due to rising retail credit penetration, which makes consumers to spend in anticipation of future income........
The group cautioned there will be the downside risk of a stagnant or even lower savings rate due to rising retail credit penetration, which makes consumers to spend in anticipation of future income........
Subbarao hemmed in, markets have tailwind
.....However, my sense is the doves will have the last laugh. While the Reserve Bank of India (RBI) governor will not fully abandon a ‘dear money policy’, the tone, guidance and the announcements will be a leap forward to embrace growth.......
Monetary policy: doing nothing is a greater risk
.....Banks’ credit-deposit ratio continues to be high, affecting their ability to lower interest rates. Exports have been falling. The situation in the euro zone remains uncertain. Job losses have started. Given the circumstances, for RBI to do nothing will be a greater risk for the economy than easing policy. The RBI governor has said that some amount of growth must be sacrificed to bring down inflation. The question is, how much growth? If the trend rate of growth is higher than what the latest GDP and IIP figures suggest—and RBI has said it is—then it’s time for monetary stimulus. And since rate cuts won’t work unless there’s adequate liquidity, it’s time to cut CRR.
Will RBI go for a rate cut or will it shock investors with a pause?
....Subbarao's comment last week sums up his predicament. "While Dr Reddy had problems of success, like excess flow of liquidity into the country, I have a problem of problems," he said. YV Reddy, his predecessor, contemplated curbs on dollar inflows while Subbarao is faced with the prospect of luring US dollars into the country. When he announces the mid-quarter macroeconomic review on Monday, the RBI governor will be factoring in a view that was just a murmur a few months ago but is getting louder now - stagflation, a state of low growth and rising prices. India may be the first major economy that may face such a state, economists dread.......
Drastic remedy
This is with reference to the news item “RBI may cut repo rate by 25 bps, keep CRR intact”(Business Line, June 16).The present situation calls for drastic steps by the RBI on June 18. While inflation is on the rise, industry needs some incentive to revive production. It appears that in addition to the repo rate cut, there should also be some cut in the CRR.
- T.R. Anandan Coimbatore (HBL)
Target currency movements, not interest rate, to control inflation: CII
....“India has entered a vicious cycle in which low growth is affecting investor confidence and leading to capital outflows and currency depreciation. This is adding to inflationary pressure forcing the RBI to hold on to higher interest rates than is appropriate for the economy,” ..........
Gold loan firms setting up SRO as RBI tightens screws
............"We feel that RBI has not been comfortable with fast growth of our industry, which led the regulator to tighten norms on banks' exposure to this industry in April and also bring down loan-to-value ratio," Muthoot said. "We want to send out a message to the regulator that we are complying with all its regulations. We are giving them (RBI) time to understand our business model," he said...........
Sunday, June 17, 2012
FM hopes RBI will keep eco situation in mind, adjust policy
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| “The RBI is one of the most respected monetary authorities… I am confident they (RBI) will adjust the monetary policy as we are adjusting fiscal policy,” |
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Bank notes: RBI considers other noteworthy icons
......"The recommendation to print the image of Mahatma Gandhi on the watermark/banknotes was made by the Central Board of RBI in 1993 which was later approved by the Government of India," an RBI spokesperson said. Roy felt that the RBI wasn't doing justice to a country as diverse as India by not showcasing anything else on its currency bills. Dilip Rajgor, a scholar and the author of several books on numismatics, agreed. "India is home to several monuments, dance forms, religions, great scientists. Why are we not considering them on our coins and notes?" he asked. In fact, Rajgor rued that the RBI didn't have any numismatist on the board that approved the design of coins and notes. "Some African countries have Mahatma Gandhi's image on their coins; others have the Taj Mahal; Nepal has the Buddha on some coins," he added. But RBI's ex-governor Bimal Jalan says printing a particular leader's image is decided by the sentiments of the respective nations or states and India is no exception.......
Monetary Governance : Book review by P.P.Ramachandran
Dr. Vasudevan is Adviser on monetary policy to the Central Bank of Nigeria. He held exalted positions in IMF and had served in Reserve Bank of India in several capacities, including that of Executive Director. His book ‘ Central Banking for Emerging Market Economies’ is considered to be the Bible for Central Bankers. He is a prolific writer and imparted a new shape, colour and content to the earlier drab RBI publications, like the Monthly Bulletins and several other Reports
Details
Multi-currency travel cards gain popularity
......The spate of multi-currency card launches has raised doubts if the lenders would continue to offer single-currency cards. While bankers claim they are not in a hurry to phase out single-currency cards, they admit that customers now prefer multi-currency cards as they don’t have to carry more than one card during foreign travel....
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Rural women score in number, urban counterparts in quantum
Women in the rural areas held more bank accounts than their counterparts in semi-urban, urban and metropolitan areas. A total of 5.25 crore accounts had been opened by rural women as of March 2011, according to the latest RBI report on “Basic Statistical Returns of Scheduled Commercial Banks in India”......................
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The whats and whys of currency depreciation
........Under a flexible exchange rate system, the value of currency is determined by its demand and supply. The central bank does not interfere in the market to offset demand or supply factors. Currently, the RBI follows a policy that leans more towards a flexible system.
A new core inflation measure
.........Since March 2010, the Reserve Bank of India (RBI) has been using non-food manufacturing inflation (NFMI) as a core inflation measure for India. NFMI is computed by excluding the prices of primary articles, fuel group and processed food from the WPI. We believe that core inflation measurement for India can be improved by making two changes to the current measure. .....
Odisha: RBI recognized Cooperative Central Bank of Aska
Bhubaneswar: The Cooperative Central Bank of Aska has been extended RBI recognition recently. With the recognition, the cooperative bank, which has been providing loans mainly agricultural loans amounting to Rs 100 crores, can now extend commercial loans............
How the RBI meet on Monday could affect borrowers and retired individuals?
The Reserve Bank of India (RBI) will review its Monetary Policy on June 18, 2012. In this meet it is likely that the RBI could cut the repo rate and/or the CRR. A cut in the repo rate (the rate at which RBI lends money to banks) and the CRR (a proportion of deposits that banks have to keep with RBI), would ensure that cost of funds for banks get cheaper..........
Growth is not in RBI’s hands; but a short rally is possible
.....In India we have the Reserve Bank standing alone trying to fight inflation with tight money, on the one hand, but on the other hand, deficit financing by the government loosens money supply. Then we have the government refusing to deregulate and create growth that could not only lick inflation but cut deficits through increased tax receipts. So as one looks at the RBI for relief, don’t expect anything that will give investors the confidence to take a long term view of the economy.........
Kharif MSPs: Subbarao ‘ka bad luck heech kuch kharab hai’
......An individual mouthing the same lines like Aamir Khan in Rangeela 17 years back, right now, must be Duvvuri Subbarao, the governor of the Reserve Bank of India (RBI). The government of India seems to be in the mood to make his job tougher by the day..........
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Do interest rate changes matter?
........The patterns so far suggest that, if the RBI does bite the bullet and deliver further rate cuts in this policy, one can expect an impact on industrial output twelve months down the line. However, in that regard, they might have to keep in mind that “patience is a virtue”.
3 reasons to justify rate cut on June 18
......In particular, a clear source of solace for RBI is that even though the rupee has depreciated significantly in recent months, imported inflation has actually declined progressively to 9.5% in May 2012 from a high of 13.8% in November 2011 (possibly factoring in the decline in crude prices from a high of 125$/bbl to less than 100$/bbl over this period). This trend is discernible and is likely to provide much-needed elbow room to RBI to cut rates in the forthcoming policy.......
Bias to remain positive
Amid economic and political developments, markets recorded choppy movement this week. The outcome of the elections in Greece and the Reserve Bank of India’s policy review on Monday are likely to decide market trends next week.......................
Read - BS
Read - BS
Junking of the Indian economy
The prospect of the prime minister running the finance ministry, with help from the Montek-Ranjarajan duo is making Indian businessmen jittery. With the economic indicators worsening every week, a large section of India Inc feels that managing the economy is a full time job and needs a strong, reform minded helmsman at North Block..............
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Nationalized banks come to farmers' rescue
...... meeting of the state-level banking committee (SLBC) called by Chavan on Thursday in Mumbai agreed to fill up the gap in farm loans sector created by the inability of the six DCCBs to carry on operations following restrictions imposed on them by the Reserve Bank of India. These cooperative banks, which had gone deep into red following the old government-securities scam as well as other bad loans, were put on a leash recently by the RBI......
Pink Panther Manmohan has another stroke of luck
..........Narasimha Rao became PM as the Congress power-brokers couldn’t agree on anyone else. Rao’s first choice for FM was apparently IG Patel, a former RBI Governor and Director of the London School of Economics, but he said no. Manmohan was in...........
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Canara Bank Recruitment of Clerks Project 2012
Canara Bank will start its recruitment process for filling up 2000 vacant posts of Clerical Cadre from 18 June 2012. The recruitment process of the bank will end on 1 July 2012. Candidates who have completed their Graduation/ Higher Secondary School and have a valid IBPS Score card can apply for the post..............
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Saturday, June 16, 2012
RBI’s rate cut dilemma: Five possible outcomes on 18 June
- 25bps cut both in repo rate and CRR
- 25 bps cut in repo rate , no CRR cut
- No repo rate cut, 50bps cut in CRR
- 25bps cut in repo rate, 50bps cut in CRR
- No change in rates or CRR
‘RBI has to be sensitive to poor'
....Reserve Bank of India Governor, Duvvuri Subba Rao on Tuesday said that inflation could not be controlled without sacrificing growth and stressed that the Central Bank must be sensitive to the silent voice of millions of poor while deciding on interest rates. Delivering a memorial lecture on “Reserve Bank of India—making a difference in everyday life” organised to mark the fifth death anniversary of former IAS officer, K. Obayya, he referred to the demand of corporates to reduce high interest rates and to the criticism that RBI's tightening did not reduce inflation but ended up stifling growth......
Non-Andhra Pradesh microfinance institutions exhibiting signs of recovery: Microfinance Insitutions Network
Two years after the Andhra Pradesh microfinance crisis brought the microfinance sector to its knees, microfinance institutions (MFIs), especially those based outside Andhra Pradesh are showing signs of recovery, a report put out by Microfinance Insitutions Network (MFIN), a self-regulatory body of 46 RBI registered NBFC-MFIs, has claimed...................
Business correspondent model at near-zero cost may fail with deep negative impact
....Hence, any servicing by the BC and/or their agents mandatorily requires a good financial literacy component as well. This aspect of financial literacy is also a necessity now given what happened in Indian micro-finance over the last few years and is perhaps in keeping with RBI’s drive for greater financial literacy and transparency at the grass-roots......
Monetary policy
........The repeated concerns expressed by the RBI Governor and analysts about inadequacy of supportive fiscal measures from the Government to make monetary policy fructify have all been ignored under the plea of ‘coalition compulsions'. But when it comes to issue of ‘diktat' to Mint Road, even on matters which come well within the mandated powers of the RBI, North Block is very liberal.
My View on "RBI, the favourite whipping boy : S S Tarapore"
There is no comparison between Pranab Mukerji of 1982 with the Pranab Mukerji of 2102 as he is now out and out a politician!! Finance Minister has not only blamed the Governor, according to SST, for the present economic situation but has been allowing his officials to undermine the authority of the Governor by expressing views on interest rates. As I had earlier commented, it is to the credit of the Governor that he is entirely guided by his own reasoning and analysis of the situation and has not bothered about the views of the officials of the Government. SST has cleverly avoided criticising the Deputy Governor( Dr.KCB) for commenting on matters which legitimatley pertain to the Deputy Governor( Dr. Subir Gokarn).SST could be very critical if needed and one wonders why he has chosen to be diplomatic in his observations on the remarks of the Deputy Governors. While he was in service, the other Deputy Governors did not go public on matters which are his responsibility and if they had done it, would he not have taken his protest to the Governor?- A.Chandramouliswaran
Today's economic crisis is not a repeat of 1991, says RBI chief
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Should Subbarao now build warehouses?
..Every time the government goes wrong with its policy measures, it looks for quick fix solutions. More often than not the RBI is expected to use its monetary tools to set things right. Inflation, oil prices, rupee depreciation. The RBI is supposed to have solutions for each of these. Despite Dr Subbarao hardly mincing words with regard to the government's ineptness in handling inflation, his views have found no takers. Other governors with the Reserve Bank of India (RBI) have also cited marginal room for interest rate cuts. Quite understandably since the government's wasteful spending has gone to gargantuan proportions. But once again, all eyes are fixed on the upcoming policy review that could ease liquidity further. That would ease growth pressures, albeit temporarily. But we will not be surprised if this time a prudent Dr Subbarao should propose building the warehouses too! After all, our government does not seem to realize that the best solution to tackle inflation is ensuring better storage of food grains. On one hand the government is allowing surplus produce to rot in the open during monsoons. There is also a proposal to offer wheat at dirt cheap prices to industries. On the other hand, high MSPs (Minimum Support Prices) are being doled out to appease farmers. All of this if tackled with better warehouses and logistics could solve the inflation problem for good. And that would leave the RBI with more time to look into crucial matters, rather than quarter on quarter inflation control. Well, if the government remains tongue tied and paralyzed, it would eventually be pertinent for the more hands-on regulators to take some radical steps.......
Stock market bets on Greece polls and RBI rate cut
Key benchmark indices, on Friday, surged to attain their highest closing level in over 6 weeks as traders seem to have strong hope that central banks worldwide, including RBI, are likely to take concerted steps to contain damages in case Greece exits Euro zone................
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Bond traders gear up for key RBI decision
....Federal bond prices inched lower on Friday as investors turned more cautious ahead of a key Reserve Bank of India (RBI) policy review, though expectations are still for at least a 25 basis point cut in interest rates. The RBI reviews its policy stance on Monday with markets also expecting a potential cut in the cash reserve ratio, or the money lenders must park with the central bank. However, some of the expectations for more aggressive rate cuts were left in doubt after the central bank governor said inflation cannot be controlled without sacrificing growth in the near-term.......
With inflation untamed, will RBI act freely?
...........Not only the economist and stock market veteran are pitching for the rate cut but industry body like Assocham has also sought immediate cut in the short term lending rate and CRR by at least 100 basis points. Department of Financial Services Secretary D K Mittal, too batted for a CRR cut. The country's largest bank, SBI, too requested RBI for a one percent CRR cut and favours CRR cut over repo rate cut.
Repo rate cut by RBI would be ineffective: HSBC
.....NEW DELHI: A cut in India's repo rate would be "ineffective" given the liquidity deficit in the country, and would be "the wrong medicine" to boost growth, HSBC said in a note on Friday. "We think deeper structural reforms are needed instead, and soon," HSBC wrote......
Leg room for rate cut: Kaushik Basu
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No shortcuts for RBI
....There is little RBI can do about those. Debt flows respond to differences in the domestic and foreign interest rates. Cutting rates at this juncture would make India a less attractive destination for debt flows. From RBI’s point of view, if it wishes to pursue the stability of the rupee as an objective of monetary policy, cutting interest rates could increase the pressure on the rupee to depreciate.....
Slowdown vs inflation: RBI will be in 50:50 mindset on rate cut
........The odds are even of a rate cut beyond 25 basis points, in this scenario. A lot, of course, depends the political pressure on the RBI to cut rates.
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RBI won't ease significantly for 2 qtrs: Franklin Templeton
Markets are closely watching the Reserve Bank of India’s move in the upcoming monetary policy on June18. As per consensus estimates, the central bank would announce a 25bps repo rate cut at least.
However, given the inflationary pressure and widening fiscal deficit R Sukumar of Franklin Templeton Investments believes that the market should not expect a very sharp sustained fall in interest rates from the current level in the next two quarters..............
There is legroom for rate cut
New Delhi, Jun 15: The Finance Ministry sees scope for a policy rate cut by the Reserve Bank of India at the monetary policy review meeting on Monday. With core inflation holding where it was, there is a legroom indeed for a rate cut, Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, told reporters here. He highlighted that although inflation had gone up quite a bit, core inflation had in fact gone down only a tiny bit. “Usually monetary policy is directed towards core inflation,” Dr Basu pointed out. He said that RBI had a very tough act to undertake three days from now. This is because inflation had not gone down quite as much, while growth has gone down a lot.
HBL
May drop lending rates further if RBI cuts 50bps: SBI
Pratip Chaudhuri, Chairman, State Bank of India said that the latest round of cuts are different from the cuts undertaken in May. If the RBI announces a 50 bps rate cut, then the bank is willing to drop lending rates first, informed Chaudhuri. He further added that lending rates are conditional on CRR cut and therefore, he is not committing a base rate cut at this point......
SBI cuts SME, agri loan rates by 50-350 bps
..........“The cost of deposits have not come down as deposit rates are still at higher levels. We would take a call on both the base rate and deposit rate after the monetary policy review (by RBI) on Monday.”.........
'Banks to see moderate growth in FY13'
....We maintain our view that FY13 will be another tough year for the banking sector. The macro environment is likely to remain difficult, particularly in contrast to the sharp recovery of FY10,” it said.
Overall credit and deposit growth will remain sluggish, with deposits at 16 per cent and credit at 17 per cent. It will be on account of low investment activity as well as tight interest rates, the report said, adding RBI will continue to fight inflation which is heading north........
Emerging Entrepreneurs
Bangalore, June 15: Polaris Financial Technology Ltd has announced that it has won the HP AllianceONE Partner of the Year Award in the Converged Infrastructure Solutions category. The company in a release said that this was in recognition for the Central Bank Core Banking Solution implemented at the Reserve Bank of India. Mr K. Srinivasan, Executive Vice-President, Polaris, said: “Intellect CBS for central banks is the first integrated money and securities solution that comes with depository and security settlement with DVP-3 (delivery versus payment) capability.’’
HBL
ICICI Bank has evolved from corporate to day-to-day bank: Chanda Kochhar
....."There have been two big changes on the corporate side of our business. In the past, we were mainly focused on large-ticket deals, whereas today we are in the day-to-day banking business and a lot of this is executed through branches," Kochhar said. "On the retail side, our focus was through the outside structure but now business is done through the branches. Over and above that deposit taking and regular servicing is conducted through branches. Basically, we have transitioned," Kochhar said in an interview published by global investment banking major Morgan Stanley......
NABARD offers more funds to Rajasthan
.......The NABARD chief found the godown facilities in Rajasthan weak and offered Rs.250-350 crore for construction of storage spaces. “We are willing to provide loans at a reduced rate of 9 per cent and an additional incentive of 2.5 per cent for timely repayment,” Dr. Bakshi said. He offered a separate line of credit to the Rajasthan State Cooperative Bank for financing the primary agriculture cooperative societies in Tonk district in the wake of RBI taking control of the bank. He advised the cooperative banks in the State to adopt core banking maximum by March 31, 2013.
Friday, June 15, 2012
RBI, the favourite whipping boy : S S Tarapore
........Thirty years ago, the RBI undertook an unprecedented monetary tightening. For the first time, there was a Calling Attention Motion in the Rajya Sabha, in January-March 1982, on monetary policy, and the Opposition unleashed a savage attack on the RBI and, in particular, the then Governor, Dr I. G.Patel. The Finance Minister undertook a brilliant defence of the RBI and its Governor and also made it clear that anything the Opposition wished to say should be directed to the government and not the RBI Governor. It is imperative that today's policymakers and others participating in the debate read the Rajya Sabha proceedings. The then Finance Minister was none other than Mr Pranab Mukherjee..........
.......What would be the appropriate monetary policy response on June 18. Given the current inflation rate and the wide CAD and further likely depreciation of the rupee and the hesitation of investors to move funds to India, the ideal policy would be to raise policy interest rates and increase the cash reserve ratio. Given the diktat from North Block to ease monetary policy, the RBI would be performing its duty if it engages in a battle of attrition as Dr Chakrabarty has competently done. At the least, the RBI should strongly resist any policy easing on June 18. The RBI Governor, Dr Subbarao's task is not enviable and the RBI needs public support and understanding so that it is not made the favourite whipping boy of the government.
Pranab-da is busy; it’s back to Subbarao to steer the economy
and he went to Hari Dwar............
Shri.P.A.Kumarji died of a stroke on June 11,2012. He had gone to Haridwar with a group on a religious tour to Badrinath. He was 65 years old. Kumarji was a Grade C Officer in Ahmedabad Office and had opted for voluntary retirement. He is survived by his wife and two sons. May his soul rest in peace.
As reported by P.P.Ramachandran. (via e-mail)
HC admits NBFC's plea against RBI
.................In the Writ Petition, AICL also has challenged the legality and validity of the circulars of RBI dated September 28, 2006, May 24, 2007 and January 2, 2009 as the circulars are ultra vires the provisions of the Reserve Bank of India Act. Reserve Bank of India under Section 45-L has powers to issue directions but shall have due regard to the condition in which and the objects for which the institution has been established, its statutory responsibilities, if any, and the effect of the business of such financial institution is likely to have on the trends in the money and capital markets.
RBI broadens scope of prepaid payment instruments
.....The central bank has asked issuers of the instruments to ensure that under no circumstances is more than one active instrument issued to the same holder by the same issuer. The scope of the prepaid payment instruments has been broadened after a review of the way the issuance and acceptance market has developed, the RBI said........
Credit societies to act as BCs for farm credit in Maharashtra
.....The decision was taken at the state-level banking committee meeting here today which was attended by representatives from the RBI, top officials of nationalised banks and the chief minister himself. A total of Rs 750 crore has been disbursed to four lakh farmers in the affected districts while Rs 500 crore more is yet to be disbursed, the press note said. At the meeting, Chavan asked the Maharashtra State Co-operative Bank to take lead in facilitating flow of these funds by helping the nationalised banks and RRBs, the statement said.......
Public sector banks must not be burdened with social costs
......As far as the finance ministry is concerned, India, it would appear, is back to the days of bank nationalisation in 1969! The clock has virtually been turned back on the post-reform period after implementation of the Narasimham Committee Report, when banks came to be seen as commercial entities rather than as vehicles of government's social agenda.....................
RBI move on remittance to help strengthen rupee
....K. P. Padmakumar, Executive Director of Muthoot Finance Limited, and former chairman of Federal Bank, told The Hindu that the RBI move was a positive measure for the non-resident Keralites. “It is bound to boost the remittances and contribute to the improvement of the value of rupee. The measure will enhance dollar inflow as the transaction involves dollar purchase by the banks or the designated dealer involved in the deal,” he said. “Ever since the value of the rupee started declining, rupee remittance has become an attractive proposition. The RBI has been under pressure to raise the remittance limit,” he said.......
Record NRI deposits not enough to stem rupee fall
Non-resident Indians' bank deposits have risen to record highs in April as they sought to benefit from higher interest rates here, more than double the yields offered in developed countries. However, being just a drop in the ocean, it couldn't do much to shore up the rupee's value.............
The rupee's good news : Jamal Mecklai
I received a congratulatory email a couple of weeks ago from someone who reads my columns and with whom I occasionally correspond. He reminded me that in an article published in January, I had forecast that the rupee would range between 47 and 57 against the dollar this year, and that, with the year nearly half done, my forecast was still holding. His big question was: will this range hold for the rest of the year?...........
Fresh setbacks set the stage for RBI action
.....While many economists said that the current high inflationary scenario did not warrant a rate cut by RBI, they maintain that the absence of credible fiscal and policy measures could still force the hand of the central bank. Finance minister Pranab Mukherjee said he is confident that the range of inflation will be 6.5-7.5% throughout the year. “I hope if (the) monsoon is quite good, then it would be possible that this type of pressures would be sorted out,” he added.....
Pundits prune RBI rate cut forecasts
.....“We believe an independent central bank should not signal policy easing immediately as risks to inflation are strong. Core inflation (non-food manufactured products) is unlikely to come off significantly in the near-term and slower growth is essential to keep a lid on inflationary expectations in the economy given the loose fiscal stance,”.....
Inflation can't be curbed without sacrificing growth: RBI Governor
........."You cannot control inflation without sacrificing some growth. After all, you have to contain demand. When you contain demand, growth comes down. So there is no way of bringing down inflation without sacrificing some growth," ..........
Read - Hindustan Times
Cut in policy rate likely, CRR may not change
......The Reserve Bank of India (RBI) is expected to cut the policy rate by 25-50 basis points in its mid-quarter monetary policy review on Monday, a poll of 25 respondents conducted by Business Standard showed. However, views were fairly divided on whether the central bank would opt for a reduction in banks’ cash reserve ratio (CRR) as well. Almost 90 per cent of those polled — economists and market participants from banks, brokerages and primary dealers — expect RBI to draw comfort from stable core inflation and give preference to supporting growth........
Rate cuts won't help
Apropos “Monetary policy isn’t a popularity contest” (June 13), rate cuts alone are not a remedy for slowing growth. Growth is a function of an effective and a proactive policy mix — monetary as well as fiscal. It is erroneous to hold high interest rates responsible for the slowing growth rate. In the absence of investments and productivity-led fiscal initiatives by the Centre, monetary manoeuvres of the Reserve Bank of India (RBI) will remain ineffective. We need to boost investor sentiments and focus on productivity growth.
- Venkatesh N Hubli (BS)
RBI: ready to support India’s economy?
.........If New Delhi could only turn its attention away from national elections in 2014 – and, in the short term, from the all-absorbing matter of this month’s election for the ceremonial position of president – the RBI might be able to hold a consistent line. But that, clearly, would be asking too much.
Inflation woes not over yet
.....The current mess in the Indian economy—especially the toxic combination of slowing growth and persistent inflation—has its roots in bad economic management by the government in New Delhi. Fiscal profligacy, combined with a complete lack of commitment to economic reforms, has brought the economy down to its knees with global shocks adding to the pain. It will take more than a hasty rate cut by RBI to correct matters. There will be a long slog ahead, and while the Indian central bank could be asked to take a risk in case of a total economic collapse, the time is not right now. Despite the pressure, governor D. Subbarao should hold fire on Monday.........
Rise in Indian inflation fails to quell rate cut view
....A Reuters poll after the GDP figures predicted the RBI will cut its repo rate by 25 bps to 7.75 percent on Monday to support growth. “There is no room left for any fiscal stimulus, so to trigger growth, the RBI has to lower policy rates,” said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai. Still, India’s central bankers face tough choices with inflation at relatively high levels.
Indian economy is in stagflation: Moody's
....."Yet with the inflation numbers now being driven by supply-side factors, and with the currency being pushed downwards...and India's weaker growth prospects, we think that the RBI could cut rates without it putting too much upward pressure on inflation," said Moody's Analytics. However, it said the Reserve Bank of India (RBI) cannot be "too aggressive" while inflation remains a problem.......
What is core – inflation or expectation? Ask RBI
Inflation numbers for May are out, and as expected it is higher. A disappointed market declined, fearing the Reserve Bank of India may hold its policy rate when it reviews its monetary policy on 18 June. Select economists are not in favour of a rate cut, but the markets and industry honchos desperately seek one. So what will be the RBI’s consideration while taking a decision on the rate?..........
Financial stability panel takes up Eurozone contingency plan
.....The sub-committee meeting, chaired by Reserve Bank of India (RBI) Governor D. Subbarao, also discussed concerns on slowing growth, persistent inflationary pressures, growing twin deficits and negative market perceptions, said a statement issued by the RBI after the meeting. RBI Deputy Governor K.C. Chakrabarthy told reporters that a contingency plan on Eurozone was being worked. "A separate committee is working on that," he said......................
We are doing our best: RBI
....Mr. Chakrabarty said the apex bank had taken whatever measures were necessary and possible within its purview. “The RBI is doing whatever best that can be done. All are doing their jobs and the rupee is stable now,” he said. Mr. Chakrabarty was addressing reporters on the sidelines of a meeting of the Financial Stability Development Council (FSDC), convened to review the development in global economy, with specific focus on the eurozone and the U.S., and their consequences for India. The RBI Deputy Governor said, in reply to a query that the RBI had taken necessary measures to stabilise the currency. RBI Governor D. Subbarao, IRDA Chairman J. Harinarayan, SEBI Chairman U. K. Sinha, PFRDA Chairman Yogesh Agrawal in addition to RBI Deputy Governors Subir Gokarn, Anand Sinha and Executive Director V. S. Das were among those attended the meeting.......
FSDC forms working group to look into issues related to financial institutions
The Sub-Committee of the Financial Stability Development Council or FSDC has decided to form a working group to examine issues involved in framing a proposal for a comprehensive resolution regime in the country for all types of financial institutions. The decision was taken at an FSDC meeting, chaired by Reserve Bank of India Governor D Subbarao...............
Maharashtra CM Prithviraj Chavan requests banks to help DCCBs
.....CM Chavan said that RBI should categorize the loans given by Commercial Banks to PACS as direct finance to agriculture instead of present practice of treating them as indirect finance. CM Chavan said that in 7 districts of Maharashtra the RBI has imposed certain restrictions on the District Central Co-operative Banks over accepting deposits. This is creating problems in these districts as these DCCBs are not able to fulfill their crop lending targets. He said that since such type of advance is treated as indirect finance to agriculture, commercial banks are not in a position to get interest subvention and also not in a position to lend at 7% to PACS. Mr.Chavan appealed to RBI for speedy disposal of this issue would go a long way in increasing finance to farmers in these districts. .........
Read - ET
Farmers to get loans from commercial banks directly
| RURAL FOCUS |
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Sea change in commodity futures market
.......On the user side, a lot more is to be done. A policy push requiring big size actual users who could hedge price on futures market to mandatorily hedge at least a part on Indian markets. The Reserve Bank of India (RBI) may permit banks which actively lend for post-harvest funding requirements against commodity collaterals to directly hedge for price risk on commodity markets. These regulatory initiatives will enable the NCFMs to help ‘commercialisation’ of Indian agriculture, and in creating efficient linkages between agricultural marketing, lending and price risk management. Law makers, instead of doubting the usefulness of these markets, should empower the regulator to ensure that these markets to discharge their expected economic function by passing the amendment bill to the FCR Act.
Hotels' apex body asks government to remove infrastructure riders
............."Infrastructure status to hospitality industry under the RBI's infrastructure lending list would mean bank loan repayment periods will be extended to 10 -15 years and the interest rate would settle around 3-4% which would translate into lower input costs. If the interest burdens are reduced, tariffs may come down by 2-3%," .......................
Banks offer cheaper second loans to existing borrowers
...."Customers with a good track record and a long relationship with the bank are offered a preferential rate of interest," said an HDFC spokesperson. The Reserve Bank of India (RBI) has asked banks to be cautious as a higher-than-expected hike in interest rates could have an adverse impact on the asset quality of banks. However, 80% of borrowers in India have a good credit history, according to records available with the Credit Information Bureau (India) Ltd (CIBIL) - the agency that tracks the credit history of borrowers and assesses their credit worthiness.......
Read - Hindustan Times
Read - Hindustan Times
Thursday, June 14, 2012
Dr.K.C.Chakraborty reappointed
In exercise of the powers conferred by clause (a) of sub-sectin (10 read with sub-section (4) of section 8 of the Reserve Bank of India Act, 1934, the Central Government hereby re-appoints Dr.K.C.Chakraborty (DoB: 27.06.1952), as Deputy Governor, Reserve Bank of India for a further period of three months beyond 14th June 2012 or until further orders, whichever is earlier.
KCC in media.........
Read Economic Times........
Read Times of India...........
Read Indian Express............
Read The Hindu..........
Read Moneycontrol..........
Read FirstPost..........
Read NDTV.........
Read Business Standard..........
Read Economic Times........
Read Times of India...........
Read Business Standard..........
चिट्ठियों से ऑनलाइन फ्रॉड रोकेगी RBI
.........आरबीआई के क्षेत्रीय निदेशक के आर दास ने बताया कि बैंक ने यूपी-उत्तराखंड के 2600 डाकघरों से करार किया है। इन डाकघरों को लॉटरी स्कैम से बचाने संबंधी संदेश लिखी मुहरें दी जाएंगी। इन्हें वे प्रत्येक चिट्ठी पर लगाएंगे। जिससे घर-घर में जागरूकता फैलेगी। इसी प्रकार रेलवे स्टेशन के डिस्प्ले बोर्ड के जरिए भी संदेश का प्रचार-प्रसार किया जाएगा। वहीं रेडियो पर भी लॉटरी स्कैम से बचने और फौरन किन विभागों को सूचित किया जाए, इसके बारे में बताया जाएगा।
Read............
Counterfeit currency: Threat to internal security
The World is observing ‘Anti-Counterfeiting Day’ on 13th June 2012; however India is still struggling to come out of the clutches of fake currency issue. The latest report by Home Affairs Ministry notifies that large quantities of ‘Fake Indian Currency Note’ (FICN) are pumped into India from countries like Pakistan, Nepal, Bangladesh, Sri Lanka, Malaysia, Thailand, and the UAE. Shocking but true, reports by the Reserve Bank of India (RBI) reveal that the practice of counterfeit currency is almost as old as the printing of currency. At some period in history, it was considered treasonous enough to warrant punishment by death. It was in 1650 AD that paper money was developed and counterfeiting flourished, especially within America where counterfeit money was more common than genuine money.............
MFI sector upbeat as banks open fists, Bill
........Separately, the MFIN is also in dialogue with the Reserve Bank of India to extend the deadline for meeting the new provisioning and capital adequacy norms beyond April 2013. If the central government also obliges with the new MFI Act, hopefully a new chapter could be opened in the microfinance sector.
Financial services regulation: Is there a future for NBFCs?
....... Usha Thorat committee’s recommendations and PSL (Priority Sector Lending) guidelines are still to come and are likely to reduce leverage and ROEs for NBFCs, given that capital requirements are expected to increase with Tier- 1 increasing from 10% to 12%. ....................
RBI asks banks to improve IT governance
......"It is expected that all banks adopt appropriate frameworks for both IT and IS governance and put in place the proper structure and systems," RBI said in a notification. The RBI has also requested banks to take suitable steps in this regard and ensure that the issues relating to governance, information security and business continuity get adequate attention at the Board level.........
Coordination or control?
The edit “Competing exemptions” (June 12) rightly questions the need for bringing telecommunications and banking within the ambit of the Competition Commission of India (CII). The need for coordination between organisations arises from the degree of interdependence of their functions. Such a situation does not seem to exist here. If one of the regulators falters in its responsibility, the remedy is to improve its working rather than a check by another entity. Moreover, regulators in these two sectors – the Telecom Regulatory Authority of India and the Reserve bank of India (RBI) – have very able people running them. So, the idea of putting these sectors under CCI seems to be a camouflage to monitor and control them rather than coordinate their activities. Moreover, the assignment of resolving conflicts between sector regulators and CCI to a Cabinet committee would add layers to the decision-making process that is already fraught with delays.
Y G Chouksey Pune (BS)
RBI directive on erosion of loan collaterals to hit companies
.......A Reserve Bank directive that seeks to protect banks from erosion of loan collaterals is threatening to worsen credit flow to slowdown-hit companies that are lagging in payment of salaries and statutory dues. The RBI has recently instructed banks to ensure that borrowers have no outstanding statutory dues, such as Employees' Provident Fund (EPF) contributions, by seeking an auditor's certificate for such compliance in their credit appraisal process............
RBI asks RRBs, cooperative banks to frame policy on unclaimed accounts
.........On a review, with a view to further strengthen the regulatory framework for inoperative accounts and unclaimed deposits, state and central cooperative banks or regional rural banks are advised 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," RBI said in a circular..................
Read.............
Read.............
My View on "Finance ministry preparing new policy road map for banking sector "
This is the right approach. We must use the existing banking infrastructure simultaneously with creating new ones. The human resources and physical infrastructure in cooperatives and RRBs and to some extent in rural branches of commercial banks were ignored while promoting sophisticated borrowed ideas like SHGs and Banking Correspondents. Cooperatives and RRBs were trained to cater to the rural areas and handle small accounts. When technology invaded from above, they were left in the lurch. The present approach of Centre will give RBI an opportunity to revive a neglected sector.
M G Warrier
Will one more regulator help matters?
With the Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Agency (IRDA), Pension Fund Regulatory & Development Authority (PFRDA), Telecom Regulatory Authority of India (TRAI) and Forward Markets Commission (FMC), India already has a plethora of regulators trying to set things right in the economic flux. It seems there is one more on its way...........
RBI to issue Rs 20 denomination notes with rupee symbol
Reserve Bank Wednesday said it will soon issue banknotes of Rs 20 denomination with the rupee symbol and inset letter R in the Mahatma Gandhi Series-2005 notes........
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Read.....
Corporate india vs Government: Full circle
.......The group flaunts an endless supply of cash while wrapping its lack of financial transparency into a strange corporate philosophy called ‘corporate materialism’ which proclaims that “in the last 33 years not even a single rupee of dividend has been declared by the group and not even a single rupee has been shared from the profit by anybody.” Will anyone explain how the RBI or the ministry of corporate affairs have allowed a group with this weird financial claim to collect over Rs70,000 crore of public money (according to its own newspaper advertisements)? Or how the group has the funds to sponsor the Indian cricket team for so many years? Sahara claims to have spent an astounding Rs1,085 crore on sports and social activities until the end of June 2010..................
Reading RBI’s tea leaves
.....One way of reading the tea leaves is to look at what RBI has done in the past when growth slowed down dramatically. You don’t have to go too far back—in the third quarter of FY09, at the time of the Lehman crisis, GDP growth fell to 5.8%, better than the Jan-March 2012 GDP growth rate of 5.3%. What did RBI do at the time? .......
Read - Mint
Read - Mint
Corporation Bank expects 1% cut in CRR
Mangalore-headquartered Corporation Bank expects Reserve Bank to cut CRR (cash reserve ratio) by 100 basis points in its next week's mid-quarter policy review to facilitate liquidity flow into the system. "We would welcome the rate (CRR) cut at least by 100 basis points. That would send a right message also. We feel the worst (on financial front) is over. If they cut the CRR by one per cent, the system will get Rs 65,000 crore," said Ajai Kumar, Chairman and Managing Director, Corporation Bank. ...........
Revive Growth with Focus
......In tandem, the RBI would do well to ease liquidity, so as to incentivise heightened economic activity. It needs to mandate a lower cash reserve ratio for commercial banks, given the easier trend in crude prices and the reduction in the core inflation rate. Additionally , the monetary authority needs to indicate lower cost of funds by further reducing its repo rate..............
Dear money policy compromises growth
.....The RBI's approach from mid-2010 to keep interest rates high in order to control inflation only set growth expectations back and de-energised the economy. It rested on a simplistic assumption that money supply is all that mattered. By raising interest rates, the liquidity in the system would dry up as borrowers opted out of fund-raising to complete projects. This would also reduce overall demand in the economy, as households would save, attracted by higher interest rates, and reduce consumption expenditures.........
Why we need a large CRR slash, not a rate cut
.....A rate cut without comfortable liquidity conditions is unlikely to lead to significant reduction in lending rates. Therefore, even if the RBI chooses to cut the repo rate on June 18, it may not be very effective without easier liquidity conditions than what exist now. A lower CRR will also increase RBI’s ability to intervene in the forex market without putting too much strain on inter-bank liquidity. A large CRR cut would allow banks to cut their lending rates immediately, while only a 25 bps cut may only have a salutary impact on lending rates.......
Why a rate cut on 18 June will aggravate India’s problems
Even though Dalal Street is eagerly awaiting an interest rate cut after the weak April industry output, Chetan Ahya, Managing Director, Morgan Stanley has warned that premature easing by RBI may aggravate the economy’s current problems...............
ATM companies top small banks in valuation
............ What has set the market on fire is RBI's two-year-old decision to allow accountholders free access to any ATM across the country. Although access is free for customers, banks pay each other a transaction fee every time their depositors access ATMs of other banks. This has turned ATMs into profit centres for banks and the number of machines has grown from 60,000 in March 2010 to 75,000 last year and is now a few hundred short of the one-lakh milestone.......................
India ranks 23rd in financial literacy among 28 countries says Visa
....India is the third-largest growing economy of the world apart from being one of the highly preferred investment destinations. However, when it comes to financial literacy among Indians, results are quite dismal. A survey revealed that more than 70% of Indian respondents cannot manage their personal economic emergence for more than three months. Of course, poor financial planning is the key reason.......
Could This Be India's Golden Moment?
The first quarter of this year saw India’s economy grow a mere 5.3 percent, the slowest rate in nine years. The single biggest factor has been the hefty increase in benchmark interest rates by the Reserve Bank of India over the past two years—from 4.25 percent in January 2010 to 8.5 percent in January 2012. While the central bank’s motivation has been to keep inflation in check, a direct side effect of the interest rate hikes has been a rapid cool-down of the pace of investments in infrastructure and the manufacturing sector................
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