....Not much, other than asking the RBI to reduce interest rates in the hope that will appease organised economy stakeholders. Right now the RBI is not willing to play the appeasement game. Its interest rate policy has not caused the slowdown as much as stakeholders, partly blindsided by New Delhi policymakers, would like to believe. In an inflationary situation, caused by global circumstances and policy ineptitude, the RBI stands out as an exemplary model for commitment to its mandate, more so under circumstances of flippancy and weary helplessness in New Delhi......
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.
Wednesday, July 4, 2012
Ganeshaspeaks: No major overhauls for Indian banking sector
.....What lies ahead for Banking sector in India and the Indian stock markets? Taking into account the base period (01-01-2002) and the date of launching (23-06-2003) of Bank Nifty, Ganesha has prepared the Horoscope of the Indian banking sector. Looking at the planetary positions in the chart, Ganesha predicts the possible implications of the RBI's current monetary policy, particularly regarding to the repo rate and CRR........
Tripura mulls against Non-Banking Institutions
.....The existing laws are not sufficient to stop such illegal financial business of the NBFCs unless Ministry of Finance, Reserve Bank of India (RBI), Insurance Regulatory Development Authority (IRDA) or Securities and Exchange Board of India (SEBI) do not make coordinated effort,” .....
Interest rate hurting; RBI should cut rate gradually: Kamath
High interest rate is hurting the common man and RBI should cut interest rate gradually to spur economic growth, ICICI Bank Chairman K V Kamath has said. "I would think that we cannot dismantle rate which is very high. We have to do it gradually ... To kick-start demand at the hands of retails individual that's where large part of growth would come from," ..............
Assocham wants RBI to cut policy rates by 100 bps
.....Assocham representatives met the RBI Governor, Dr D Subbarao, on Tuesday to put forth their suggestions to reduce both the repo rate (the interest rate at which banks borrow funds from RBI) and the cash reserve ratio (the slice of deposits that banks park with the RBI) by 100 bps to support credit growth and investments. .....
Sebi probe widens to Fema breach
....The new findings broaden the scope of the violations and raise questions over breaches of the Foreign Exchange Management Act (Fema), which deals with laws relating to foreign exchange to facilitate external trade and payments and promote the orderly development and maintenance of the foreign exchange market in India. If indeed this happens, the Reserve Bank of India may step in as Fema violations are investigated by the banking regulator. .....
Exchange rate factors in high current account deficit: Dhawal Dalal
....In our view, RBI will continue to watch economic indicators to determine the trajectory of inflation and steps taken by the government to control fiscal deficit before deciding on rate cuts. Currently, the CPI (inflation), a measure of consumer prices, is approximately (at) 10 per cent. If we have a poor monsoon this year, it could result in higher food prices, translating into higher inflation. Hence, most market participants don’t expect RBI to cut rates in July at this point. As far as other central banks are concerned, monetary policies continue to observe deteriorating growth in their respective economies and are repositioning themselves for a loose monetary policy.......
Financial system risk rising: RBI
......“The problem in Europe is a bad news for the Indian banking system only to the extent that the European banks will not subscribe to bond issuances of Indian banks,” said Raman of Canara Bank. “They are major buyers of our bonds and the shrinkage in their balance sheet spells trouble for our overseas funding requirement.” The RBI report said any change in India’s external rating could have “cliff effects”, impacting both the availability and the cost of foreign currency borrowing for Indian banks and firms. The effect will not have any impact on domestic credit availability even as specialized types of financing such as structured long-term finance, project finance and trade finance could be impacted, the central bank said.
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Final GAAR guidelines will remove investor suspicions: C Rangarajan
....The trade-off between growth and inflation is purely a short-term phenomenon. Over the medium term, there is no such trade-off. Over the medium to long term, high growth is possible only in an environment of low inflation. However, even in the short run, the primary responsibility of a central bank is to control inflation. RBI’s ability to adopt an easier stance would be facilitated if headline inflation, particularly non-food manufacturing inflation, begins to show signs of a decline. At the moment, I agree with RBI’s policy. But growth is certainly important. As soon as we get clear signs of a declining trend, action towards an easier monetary policy can be taken.......
Is India moving towards a stagflation-like situation?
.....Stagflation has, historically, been caused by expansionary policies that exacerbate supply shortfalls. But, the grievance has been that the Reserve Bank of India has been choking growth by raising interest rates and that the government has withdrawn the stimulus. If this were so, there is again a strong case for not terming the situation close to stagflation......
NRIs will now have to pay service tax for sending money home
....According to the Reserve Bank of India data there are 30 million NRIs. Currently no other country imposes tax on remittances and India would be one of the first.........
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SBI waives minimum balance for savings accounts
The country's largest lender, State Bank of India (SBI), Tuesday announced that it has done away with the minimum balance requirement for savings accounts for both existing and new customers...........
CAD’s bad, real bad: and external debt is looking worse
......In the context of the Reserve Bank’s moves to further increase external borrowing in order to bring in short-term capital flows into the country and boost the rupee, we are probably building up problems for the future – unless exports can be shored up........
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IDBI Bank concludes first transaction through RBI's web-based NDS OM module
.........IDBI Bank concludes first transaction of its gilt account holders (GAHs) through RBI’s web-based Negotiated Dealing System (NDS) OM module. With this, the bank has become the first Primary Member in the country to enable such deal in the Indian market................
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Muted response to RBI's government securities trading facility for corporates
....The Reserve Bank of India's web-based platform meant for corporates to trade in government securities got off to a slow start on Monday, with just IDBI Bank letting one of its customers to access the trading platform directly.....
Read - ET
Syndicate Bank brings small enterprises under one roof
....According to the guidelines of Central Government and Reserve Bank of India, the bank has taken steps for increased flow of credit to micro, small and medium enterprises sector....
Nagendra Murthy is new MD of TMB
....The RBI, it is learnt, cleared the air by formally communicating the appointment of Mr Nagendra Murthy as MD of TMB late last week. The board met in Bangalore on Tuesday to stamp its approval.....
Tuesday, July 3, 2012
Can PM Revive the Economy?
.....Perhaps the finance minister believed that RBI would be better counsel. But Governor D. Subbarao seemed reluctant to give his best advice. Mukherjee and Subbarao have a frosty relationship, professionally and personally. Says a senior official, "In the last few months, there has been a complete breakdown in communication between RBI and finance ministry." Mukherjee and Subbarao have consistently disagreed on the correct level of interest rates for over a year. On June 16, just a week before he left office, Mukherjee signalled his desire to see a lower interest rate. "Keeping in view of all current factors, I am confident that the RBI will adjust monetary policy as we are adjusting the fiscal policy," he said at the National Banking and Insurance conference organised by industry body Assocham. Two days later, in his quarterly review of monetary policy, Subbarao, in a direct snub to the finance minister, left interest rates unchanged. He also rubbished Mukherjee's diagnosis and prescriptions for the fiscal deficit........
Comparing Balance Sheets: RBI with Select Central Banks
.....In this report, we compare RBI’s balance sheet with balance sheets of select central banks. The select central banks are Federal Reserve, European Central Bank and Swiss National Bank (SNB). These central banks are selected as they have cornered most of the attention with respect to central bank policies in the recent crisis. For Euroarea region, we analyse combined balance sheet of ECB and seventeen national central banks (NCBs) to provide a more comprehensive picture. This arrangement is called European System of Central Banks (ESCB). As above are developed economy central banks, we also cover Banco Central Do Brasil (BCB) in our analysis. This will help us compare RBI balance sheet with that of a developing economy central bank like BCB.......
RBI questions, but provides no answers
.....But how is one to read the entire report? A financial stability report is to outline the risks involved in the system as well as economy, which it does adequately. But are we to be worried about it? Worried, probably no, but concerned, yes. This holds for the financial system because there are some very disturbing signs on the quality of assets as well as interconnectedness of banks. The ones pertaining to the economy are clearly well known and hence do not really come as a shock. But RBI does not offer any solution for either the economy or the financial system. Therefore, the report tends to read like a note of caution on all aspects, highlighting the risks and the worst-case scenarios for various aspects. Therefore, it reads more like the ‘weaknesses’ and ‘threats’ part of the SWOT analysis, leaving out the strengths and opportunities........
RBI rate cut may be further delayed: Citi
.....With the RBI time again indicating that its priority is inflation and the economy may have to sacrifice growth to bring down inflation, it is very unlikely that the central bank will cut its policy rate in the next policy review on 31 July. “With inflation likely to remain sticky and rating actions coupled with the RBI’s latest policy stressing on the need to address supply-side imbalances, this once again put the onus on the govt to create a positive investment environment and implement tax and subsidy reforms,” ....
Another feather in Sandip's hat.........................
Dear Mr. Ghose,
I am pleased to write to you about the Thought Leaders Award scheduled on 30th June from 7:00pm onwards at Taj Lands End (Bandra-Mumbai). The award is to recognise the futurist who is recognized among their peer mentors for innovative ideas and has demonstrated the confidence to promote or share those ideas as actionable, distilled insights.
The awards are a part of the Global Change Management forum scheduled on 29th and 30th June and are hosted by the Thought Leaders International, Asian Confederation of Business, Stars of the Industry Group & World HRD Congress. The Global Change Management and Leadership forum along with the gala award ceremony will bring several Thought Leaders and Change Management Professionals under one roof. The Theme for the forum is “Mastering Change in a Hyperactive Business Environment”.
I am pleased to write to you that the Jury and Council of Board Members would like to confer you with the “Thought Leader Award” (Human Resource). This is in recognition of your remarkable progress in initiating changes in its process-remarkable enough for others in the same industry to follow your example. The Award will consist of a Trophy and a Citation. Request you to please honour us with your presence and receive the award in person. A line of confirmation will be highly appreciated.
Yours Sincerely,
David Paulson Dr. R L Bhatia
Chairman Founder
Awards & Academic Committee World CSR Day
Govt banks ask RBI to consider alternative on raising equity
State-run banks have urged the Reserve Bank of India (RBI) to consider perpetual non-cumulative preference shares (PNCPS) as part of their core Tier-I capital under Basel-III norms. This will ensure government banks do not have to rush for equity capital in the current uncertain macroeconomic environment....................
The problem of the rupee
....the Reserve Bank of India withdrew the 25 paise coin from circulation, acknowledging the plummeting value of India’s currency. Since this demonetization of the 25 paise, the Rupee itself has had a rather close shave, buffeted as it has been by 9% inflation at home and a 23% decline in its value vis-Ã -vis the US Dollar. In the present scenario of universal economic gloom the Rupee suddenly appears unattractive, but it certainly has had its days of glory.............
Breaking the bank
.......The low level of reserves at Indian banks may be encouraging them to fudge the numbers. Most banks reported allowances of less than the RBI’s minimum of 70 per cent of probable losses on total NPAs. At 69 per cent, Indian banks’ average level of reserves of bad loans is far below China’s 252 per cent and Indonesia’s 212 per cent. Setting aside greater provisions will hurt the banks’ bottom lines. But without a bigger buffer, the banks’ bad habits will only worsen.
Traders lean towards RBI benchmark rate
.....The trading community calls this “deals on a fix” or “fixing deals”. Such deals use RBI’s reference rates. RBI calculates reference rates after taking into account rates from several banks at around 12 pm. The rate is declared within the next hour.......
The Microfinance Route to Financial Inclusion
Microfinance has now become a movement that envisions an inclusive world in which low-income households have permanent access to a range of high quality and affordable financial services offered by a range of retail providers of financial services.......
Sidbi to mentor budding small entrepreneurs
......Meanwhile, Sidbi is seeking a Reserve Bank of India licence for the SME Rating Agency of India (SMERA), which has already secured the approval of the Securities and Exchange Board of India (Sebi).
“A RBI licence would facilitate bank financing for MSMEs using the SMERA platform. Sebi approval had only facilitated financing through issuance of bonds,” ........
India gets first mortgage guarantee entity, an NHB joint venture
.....The company will have processes for approving lenders and housing loans for guarantee cover and help in maintaining the asset quality of lending institutions. “Adapting itself to the Indian context with a range of customised products for the lending industry and borrowing community, the company will operate under the regulatory jurisdiction of RBI,” .....
21st-century banking
.....The Reserve Bank of India has, according to reports, turned down the finance ministry’s suggestion that electronic funds transfers, or e-transactions in general, be made free for bank customers. The main reason cited for this is that no product or service should be offered free, as then it would not be commercially viable and so would not be scaled up. This needs to be contested......
Can we have banking without charges & penalties?
.....A few days back, the finance minister in his parting gift to the banking public had asked the banks to provide electronic transfer of funds from one bank to another free of all charges. But as the saying goes in Kannada, "Devaru Kottru Pujari Bida" meaning "God wants to give but the priest is coming in the way", a RBI official has firmly declined to accede to the wishes of the FM as he feels that free electronic fund transfer is not viable for the banks. We can, however, empathize with the RBI official, because the officials of RBI generally do not have the practical experience of retail banking and consequently he may not know the nitty-gritty of branch banking. Banking has undergone a metamorphosis and with the introduction of core banking solutions, technology plays a major role in the functioning of branches, thereby saving substantial cost of operations for the banks. And to consider that it is not economical to offer e-transfer facility free of charges is in variance with reality......
Canara Bank launches technology-enabled Kisan credit card scheme
....The National Payment Corporation of India (NPCI) has developed the debit cards for Kisan credit card borrowers under its brand name of 'RuPay' cards. The credit facility of Kisan Credit Card enabled through debit cards will help farmers not only avail the loan from the bank but also would provide the convenience of drawing cash from ATMs of Canara Bank as well as others.....
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HDFC Bank launches credit card for doctors
Private sector lender HDFC Bank rolled out credit cards for doctors to cater to medical fraternity's specific needs, as part of its plans to launch total one million credit cards in current fiscal to deepen its presence in credit cards space,............
SBI launches Business Debit Card for SME and business customers on foundation day
....The event was attended by its Chairman Shri Pratip Chaudhuri, Dr. Subir Gokarn , Dy .Governor , RBI, Bank's Managing Directors Shri Hemant Contractor and Shri A. Krishnakumar, other Central Board Directors, past Chairmen of the Bank, executives of Public / Private Sector Banks, eminent business persons and staff members along with their families......
........On the occasion, the Bank also launched for its SME and business customers, State Bank Business Debit card, having an array of attractive features including Cash Deposit facility, option of setting up Point of Sale terminals etc.......
Monday, July 2, 2012
Clear skies cloud rate-cut hopes
.....RBI Governor D Subbarao in a seminar organised by the Confederation of Indian Industries on June 19 admitted that monsoon will play a key role in determining the central bank’s actions on interest rates. “When I joined service, I did not worry about monsoons. But when I first went as sub-collector in Andhra Pradesh, there was drought in one of the districts and then I realised how not only economic prospects but also emotional well-being are tied to the monsoons. Then I moved away from the field and stopped chasing monsoons. So, at the end of my career, when I’m at the RBI, I sort of look at monsoons with lot of anxiety, love and lot of expectations. It is very important for us,” he added........
Subbarao stresses on importance of local language
....“Every bank should conduct a Town Hall event in a chosen State entirely in the local language. In this regard, they may coordinate with Reserve Bank’s Customer Service Department and Department of Communication to draw up a programme. This will be our collective effort to reach out to people in their own language,” he said while awarding Rajbhasha shields at Mumbai last week........
Will you miss the finance minister?
.......Mukherjee also made sure that RBI lost its autonomy by empowering the finance ministry to resolve all disputes between regulators. The original idea was to end the turf war between the capital market regulator and the insurance regulator on unit-linked insurance plans; but the finance ministry smartly used that opportunity to set up a statutory joint panel, headed by the finance minister, to resolve any such disputes among any of the financial sector regulators. RBI wanted the government to take a relook at the proposal to set up a statutory panel, but Mukherjee didn’t budge. The decisions of a statutory panel are binding and, to that extent, the finance ministry has become the super regulator, eroding RBI’s autonomy..........
Coordination between RBI, Central Govt need of the hour - T.V. Gopalakrishnan
The preamble of the Reserve Bank of India Act 1934 says ‘Whereas it is expedient to constitute a Reserve Bank of India to regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.’ This gives an impression that the Reserve Bank has complete grip on the economy and the financial system where the Central Government, State governments, various markets, financial and other institutions and varieties of instruments and people interact and carry out transactions involving transformation of information and high technology. But, it has its own limitations and unless and until the Central Government gives full support and functional autonomy in letter and spirit, implementation of the preamble is practically rendered difficult..........
A wish list for the Common Person - S.S.Tarapore
With the change of guard at the Ministry of Finance, every pressure group will have its own wish list. In the din of all this the Common Person's voice will be totally drowned but this voice must be heard and what could be the wish list? First, the Common Person has no defence against inflation. The current inflation rate on a year- on- year basis is 7.8% on the Wholesale Price Index ( WPI) and 10.4% on the Consumer Price Index ( CPI) is clearly outside the RBI's comfort zone of 5% and the long- term cherished goal of a 3% inflation. All wings of policy must work relentlessly towards this objective.......
Centre not doing enough on fake currency: Parrikar
........"Whatever Reserve Bank of India pumps in (genuine currency) is flushed out by Pakistan. There is a massive influx of duplicate notes in the market," Parrikar told an annual general body meeting of Goa Chamber of Commerce and Industry (GCCI) in Panaji Saturday evening.........
Padmanabhaswamy Temple: Expert committee to start temple inventory of vault A
....The RBI is finalizing the design for the strong rooms that will strengthen the vault security. The advanced gemology equipment procured from Germany has also arrived and will be installed at the workstation tomorrow. When asked if the presence of an underground tunnel linking the temple to the sea would change the design of the RBI's vault, Nair said, "The committee fully supports the scientists from the Centre for Earth Science Studies in their study. But no information regarding the presence of a tunnel has been passed on to us."
Challenges and opportunities ahead for banks
......The RBI has come out with the phased roadmap for Basel- III framework implementation for the next five years. The need for risk capital as well as growth capital is likely to lead to higher capital requirement for the sector. ......
My View on "Micro Finance in India"
The need of the hour is GOI and RBI taking note of the changed scenario, post-emergence of commercial MFIs and move fast towards timely regulatory solutions. Although uniform regulations would be ideal, considering the multiplicity of agencies operating in the area, it would be desirable to restate the roles of the existing regulators and supervisors through an appropriate guidance from the central bank, after appropriate consultations, instead of micro-management based on study reports influenced by views of stakeholders many a time limited to narrow constituency interests. This initiative could cover NBFCs, MFIs enjoying bank credit and cooperatives which would leave only a minority of players in the field. Time is running out as delay of roughly six months would mean crossing one recovery-cycle of micro-credit, by which time, beyond financial losses to the lenders, considerable loss of faith in the system can take place. The MFI issue has already grown beyond reasonable proportions and become a Centre-state issue with political implications. Even where legislative support from state or Centre is necessary, the central bank must provide guidance. It will be near impossible for the stakeholders to arrive at a consensus on costs and margins in a lucrative business like this. Some MFIs have taken the controversy as an excuse for moving to other pastures leaving the Self Help Groups (SHGs) and small borrowers in lurch or have shifted their area of operation from one state to the other where state governments accommodate their recalcitrant behavior. Delay in finding a solution will, therefore, mean closure of livelihood occupations for millions of MFI borrowers who depend on short term credit for carrying on with the ventures they have taken up with hope.
- M G Warrier
Bank credit to farm, SME sectors forms over a third of bad loans
medium enterprises (MSMEs) were the main contributors to banks’ bad loans in 2011-12. Agriculture and MSMEs used up only a fifth of bank credit, but they accounted for 36 per cent of banks’ non-performing loans, data from the RBI’s latest Financial Stability Report show.
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Debt repayments due within a year amount to half of forex reserves
.....A Reserve Bank of India (RBI) press release says: “The ratio of short-term debt by residual maturity to foreign exchange reserves worked out to 50.1% at end-March 2012.” ......
Managing expectations the wrong way
......On June 25, the Reserve Bank of India, in consultation with the government, announced a package of measures aimed at boosting dollar flows into the country. The fact that it has commanded so little attention so far is most certainly because the context in which it was announced, the extraordinary hype before it was made and its inevitable failure to lift the sentiment of the markets have all become prime topics for discussion, completely overshadowing the RBI’s package. A closer look at the extraordinary developments would throw up many useful lessons for policy-makers and lay people alike.....
Heed the BoP warning
......Which is exactly how the warning issued by RBI, however carefully worded, should be interpreted. It is implicitly stating that there is only so much the central bank can do. It has probably reached the limits of its policy capacities. From here on, therefore, the inability of the government to contain the fiscal deficit slippage would exact a severe macroeconomic price from an economy that is already struggling.
Stagflation
.....There is no agreement among commentators if the current situation can be termed as stagflation. The monetary policy dilemma in India is very similar to what a central bank would face during stagflation. If the Reserve Bank of India lowers rates to support growth, it will risk fuelling inflation, and if it raises rates further, it might end up affecting the growth momentum....
RBI launches online platform for trading in G-secs
....The newly launched online trading platform is an additional facility to the existing system for trading by GAHs through primary dealers. RBI further said that the access to the module will be subject to controls by the respective primary dealers.......
Rural scheme wages go online in Ganjam
,,,,The wages would be directly transferred to their account through the Regional Electronic Clearing Services (RECS), provided by the Reserve Bank of India (RBI), without intimating the district authorities. The block authorities are only to intimate the amount to be given to the beneficiary, he added. "It will help in quick payment of the wages to the beneficiaries and also to arrest the corruption on payment of the amount," the officer said.....
Finance ministry, Sebi likely to recast regulations to allow companies to use ‘call & put options’ in M&A
......Ministry officials will soon meet with Sebi and the Reserve Bank of India to work out details of the new rules, including incorporating safeguards to check speculation, a finance ministry official told ET. "The norms need to be revised in line with today's economic realities and changes in the capital market," the official said.........
A very curious slowdown
The RBI data on the industry wise deployment of credit show that between 23 March 2012 and 18 May 2012 loan outstandings to the coal, petroleum and natural gas industries went down from Rs. 70,060 crore to Rs. 62,770 crore.........
Rupee volatility is here to stay: Rashesh Shah, Edelweiss Group
The rupee has lost almost a fourth of its value against the dollar in last one year. This fall has created a chorus of demands from industry as well as sections of the political establishment that the Reserve Bank of India (RBI) should step in and use its foreign exchange reserves to stabilise the value of the rupee. The RBI, on the other hand, has been categorical that it will only step in to curtail the volatility and not to support the value of rupee at some pre-determined price............
Ill blow the trade winds
....In sharp focus is the fact that the widest ever CAD has kept India’s BoP in negative territory for the second quarter in a row, forcing the RBI to dip into its foreign exchange reserves. Once again, the BoP data highlights the huge risks in depending on volatile portfolio capital flows. A related development contributing to the economy’s vulnerability is the high level of external debt, especially of the short-term variety. Key vulnerability indicators like the debt-GDP ratio and debt-service ratio deteriorated during last year. However, despite being aware of the serious pitfalls, the government and the RBI have shown a penchant for short-termism.......
Sunday, July 1, 2012
Celebrations mark SBI's Bank Day in Lucknow
.....State Bank of India celebrated its Bank Day on Saturday. On this occasion, SBI (main branch) organised a self-help group awareness camp and a mela at Moti Mahal which was inaugurated by Rabi Mishra, Regional Director (Uttar Pradesh and Uttarakhand), Reserve Bank of India in the presence of N Krishnan, chief general manager, NABARD and K Ramachandran, chief general manager, SBI, Lucknow Circle. In the evening, as a part of the celebrations, a melange of cultural events were organised by the Bank with the active participation of the staff members.....
Cops still clueless on Silsako wetland money source
....We had sent some of samples collected from the wetland to RBI, which confirmed that the notes were real. But we have no lead in the case so far," said an official from the district SP office. "The area is quite huge and surrounded by hotels, illegal settlements and education institutes. It is hard to find out the source of the money," added the official. He added that at least Rs 1.5 lakh was fished out that day........
Staff protests RBI call to close coin counters
.....After RBI’s announcement, four recognised associations of the bank representing officers and employees had requested the bank to desist from closing the RBI counters as they served larger public interest. Protesting the decision taken by the RBI management, the members of the associations all over India staged demonstration in front of the offices on Thursday.......
‘Friends’ lends a helping hand
......“Most of the support for the organisation is from the RBI Staff Quarters, Besant Nagar. We collect old clothes and give it to people who need them,” said Bhavana, Organising Secretary, adding, “We are thankful to Rammohan and Usha, staff of RBI, for their support.”..........
Micro Finance in India
....The bill, introduced in May 2012, will aim to help the RBI set performance benchmarks for different sectors. These standards will be regarding justifiable means for recovering loan and other operational methods of the MFIs. The RBI is also supposed to establish a microfinance fund that will be used for providing them loans, seed capital, and grants. This fund will also be used to provide training to professionals who are working in this sector.........
Insuring stress
Given how sharply the economy has slowed, it’s not surprising the quality of banks’ balance sheets is worsening. RBI says as much in its latest Financial Stability Report (FSR), citing a stress test that reveals a deterioration in their capital position..............
Rebrand Or Perish
20 Leaders of IIT KGP IN The Glorious 60 years
....The book has a foreword by Dr Duvvuri Subbarao, Governor, RBI, and an introduction by Dr Damodar Acharya, Director, IIT Kharagpur. The book, published by Random House India and priced at Rs 150, makes for inspirational read for IITians......
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Allahabad Bank awarded RBI Rajbhasa shield
Allahabad Bank has been honoured with 3 prizes by Reserve Bank of India for 2010-11 for outstanding implementation of official language policy of the bank. J P Dua, chairman & managing director of the bank received the prizes from the RBI Governor Dr D Subbarao in Mumbai on Friday.
Volatility Is A Word
The Reserve Bank gives its Governor the best statistics possible in the country; he should invest in better macroeconomic theorists to interpret them
The economy continues to generate unfavourable news. It has been so prolific in bad news that just reporting it can be mistaken for being alarmist. However, the governor of the Reserve Bank took a recent opportunity to ask whether 2012 is going to be a repeat of 1991. A large payments deficit had coincided with a large fiscal deficit in 1991; the same combination is to be seen in 2012. We are happy that he has taken the initiative to ask the question. His answer is predictable: that it is not. And the reasons he gives are good, fair and dubious. He is right that the share of services in national income has gone up. But to argue then that services are more stable and will give stability to income variations is wrong........
Urban Co-op Banks resist RBI’s stringent norms
The cooperative banking scene has witnessed a steep decline in financial standards and it explains the RBI laying down stringent rules for checking a bank’s financial health. However, the evolution of the strict norms by the RBI has ruffled the cooperative banking sector’s feathers..........
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Majority of SMEs call RBI decision of not easing monetary policy ‘unjustified’: Survey
whopping 93% of industries in the SME sector opine that the Reserve Bank of India's (RBI) decision to keep the interest rate unchanged was completely out of line, according to a quick poll conducted by the apex industry body ASSOCHAM...........
Urban Co-op Banks resist RBI’s stringent norms
The cooperative banking scene has witnessed a steep decline in financial standards and it explains the RBI laying down stringent rules for checking a bank’s financial health. However, the evolution of the strict norms by the RBI has ruffled the cooperative banking sector’s feathers............
What’s Your NPA?
Kamlesh Chandra Chakraborty is not one to mince words. On 28 June, the senior-most Deputy Governor of the Reserve Bank of India (RBI) gave bank chiefs an earful on bad loans. “You have misguided your investors for the past five years by not giving your proper NPA (non-performing assets) figures.”.....
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More inter-bank links warrant greater monitoring
.......RBI said the degree of loss to the system due to failure of the ‘most connected’ bank had risen from 12 per cent of capital of the banking system to over 16 per cent in 2011. “Financial stability considerations, therefore, warrant that the risks posed by the increased interconnectedness of the few banks in the inner core to be carefully monitored, through rigorous microprudential supervision of these entities,” said RBI.........
Impact of forex volatility on rupee
....The exchange rate regime in India can also be described as a “bounded float” with the removal of restrictions on many capital account transactions in the past few years. While the RBI does not target the exchange rate, nor has a fixed band for nominal or real exchange rates to guide interventions, the capital account management framework helps in the bounded float.....
Exchange rate: Fixed or floating?
.....The Reserve Bank of India’s selective control in the forex market has been unable to control the free fall in the value of rupee in the recent months. This raises a fundamental question as to whether the RBI should consider alternative exchange rate policy options......
Banks' gold coin imports a concern
.....For banks, selling gold coins was a lucrative proposition, as they earned Rs 100-150 for every gm of gold sold. State Bank of India Chairman Pratip Chaudhuri said, “Banks took to gold coins because customers needed them. Private sector banks were doing brisk business. So, we thought we were losing out on an opportunity and viable business.” He added gold was taking away foreign exchange and some people were possibly holding gold as the nearest proposition to holding dollars.
Read - BS
Read - BS
Saturday, June 30, 2012
Tweak financial regulation - Y.V.Reddy
.........In revisiting the issue of regulation in conjunction with competition and ownership, it is necessary to recognise the lessons from public sector banking in the 1970s and 1980s, particularly in developing and emerging market economies. The problems in the past with public sector banking were on due to financial repression attributable to macroeconomic policies, the lack of appropriate global standards of regulation, the existence of monopoly status, and technological obsolescence, in addition to standards of governance in public systems in general, and public ownership in particular..........
Monetary policy for villages only
India has two economies: One for the urban rich and the other for the rural poor. The RBI should encourage the wealthy to invest in rural India by reducing interest rates there.
Like Mr Kapil Sibal’s policy of ‘one nation, one examination,’ the Reserve Bank of India has a policy of ‘one nation, one interest rate’: it offers the same rate whether it is a rich city such as Mumbai or a poor village in Keonjhar, Odisha. The fact that it has not produced the desired results has made no impact on the central bank. .................
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International Conference on Risk Management and Fraud Detention
.....Mr. Vijaya Bhaskar, ED of RBI explained in detail the regulatory expectations. He said that fraud is an area of concern as it undermines the trust, which is the foundation stone of the banking business. He emphasized that the three lines of defense against Fraud – the employees, the systems and controls and the external agencies like the regulator and law enforcement agencies- should be strengthened. He insisted that for establishing a strong anti fraud culture the first two lines are to be robust. .........
E-payment facility for all MGNREGA beneficiaries by Oct
.....Over six million households registered in the state under MGNREGA will benefit from the facility. The RBI Deputy Governor also rolled out an improved model of electronic receipts of the state government. The new model envisages a mechanism where the agency banks will forward the particulars of electronic receipt transactions on the day following the day of transaction to RBI-Bhubaneswar instead of sending to the cyber treasury. RBI will process the e-receipt files, debit the accounts of banks and credit the account of the state government instantaneously with the amount of e-receipts. The Central bank will also generate e-scrolls and forward the same to the cyber treasury.........
Former Bank of Maharashtra chairman Anup Sankar Bhattacharya takes over as director of IBPS
Former Bank of Maharashtra chairman Anup Sankar Bhattacharya has taken over as the director of Institute of Banking Personnel Selection or IBPS, which conducts common admission tests for bank recruitment. Bhattacharya will replace M Balachandran who is resigning today.......
What keeps rupee under pressure
The Reserve Bank of India announced details on balance of payment. Balance of payment is typically the sum of all transactions made between nations for a specific duration.............
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Read...........
‘India must cut subsidies, push reforms to defend rupee’
......The Indian rupee is likely to slide further and might soon touch 58 to the dollar as regulatory measures by the central bank are unlikely to have any significant impact on the currency, analysts say.
“The monetary policy has its limitations. The RBI intervention won’t do much as the issue is structural,” .........
NBFCs at business concentration risk
.....share of non-banking finance companies in the gold loan business has risen sharply with total asset size increasing to Rs 44,510 crore in 2011- 2012 from just Rs 5,480 crore at the end of March 2009, increasing the concentration risk in the business as the growth is contributed by two main companies, according to the Reserve Bank of India Financial Stability report released on Thursday.........
Price stability and financial stability – an emerging market
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| Deepak Mohanty |
Address by Mr Deepak Mohanty, Executive Director of the Reserve Bank of India, in the 2012 Central Bank of Nigeria (CBN) Board Retreat, Cape Town, South Africa, 27 June 2012.
......Drawing from a wider mandate, monetary policy in India has evolved to have multiple objectives of price stability, financial stability and growth. These objectives are not inherently contradictory, rather mutually reinforcing. The Reserve Bank’s approach recognises that price and financial stability are important for sustaining high levels of growth which is the ultimate objective of public policy. The Reserve Bank’s approach to financial stability has been proactive and preventive rather than reactive. Its role as monetary policy authority, well integrated with macroprudential regulation and microprudential supervision, with an implicit mandate for systemic oversight has enabled the Reserve Bank to exploit the synergiesacross various dimensions..........
Banks must behave responsibly, says Chakrabarty
RBI to take best possible steps to check Rupee slide: Chakrabarty
New Delhi: The Reserve Bank on Friday said it will continue to take "best possible" steps to contain the slide of Indian rupee. "Whatever best possible...What Reserve Bank needs to do, Reserve Bank will continue to do that," RBI Deputy Governor K C Chakrabarty said on the sidelines of IIMA's Citi Financial Literacy Symposium here...........
RBI says about 9% of bank branches most reluctant to lend
The reluctance of bank branches to lend to the poor is hampering effective implementation of the Manmohan Singh government's financial inclusion scheme, being promoted as an antidote to the rising income inequality. Reserve Bank of India has found that 9% of the country's 92,690 bank branches are the most reluctant in lending. Their credit-deposit, or CD, ratio is less than 25%. Loan disbursals through these offices fell by 15.4% year-on-year to December 2011 as against a 4% rise in the corresponding period in 2009-10.................
RBI imposes Rs2 lakh penalty on Rajasthan bank for excessive service charges
The action by the apex bank should serve as a pointer to other banks—big and small—that charge excessive service charges
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs2 lakh on the Bundi Urban Co-operative Bank located at Bundi in Rajasthan. According to a press release, the bank has been penalised for "repeated violations of Reserve Bank of India (RBI) directives relating to donation and levy of service charges on customers". A show-cause notice was sent to the bank, but the central bank found the response unsatisfactory. Levying monetary penalty for violation of RBI guidelines on services charges to customers is the first of its kind by the RBI. The action by the apex bank should serve as a pointer to other banks-big and small-that charge excessive service charges.
Moneylife
Current account deficit swells
.....“The stress witnessed in India’s Balance of Payments (BoP) in the third quarter continued during the fourth quarter of 2011-12 as well due to large increase in imports,” .........
Read - The Hindu
Read - The Hindu
RBI warning as BoP deeper in red
..........Reflecting India’s growing vulnerability on the external sector, all the key parameters of the balance of payments (BoP) are flashing amber.................
Banking on Pranab
........At the moment, it’s a problem of plenty. Omarpur, a small town on the way to Mukherjee’s home in Jangipur, has seen 20 banks spring up in the last couple of years. From private banks like ICICI Bank and Axis Bank to Bangiya Gramin Vikash Bank (a regional rural bank) and state-owned United Bank of India, the people of Omarpur are clearly spoilt for choice. There are too many banks chasing too few customers. Customers are therefore treated like royalty here. So intense is the competition among banks in Omarpur that in the last one year, around four branch managers have sought transfers because they found it impossible to meet the business targets assigned them...................
Gold loan business model worries RBI
RBI on Thursday expressed concerns that the business model of gold loan companies is driven by borrowings, of which, bank finance forms the major component and is increasing at a fast rate. Any adverse development in recovery by these NBFCs or an adverse movement in gold prices may have a spill-over impact on the asset quality of the banks, the central bank said in its financial stability report.
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So much of glitter
The spirited advice by a Reserve Bank of India official that Indians — especially the poor — must keep away from investing in gold because such investments are speculative, is unlikely to be heeded by many. This recent suggestion has been made by Reserve Bank of India Deputy Governor KC Chakrabarty obviously because huge amounts of gold imports are adding to the country’s current account deficit and dragging the value of the rupee down. Mr Chakrabarty’s concern is understandable..............
KYC: An effective tool to fight money laundering
Money laundering poses a serious threat to the health of India’s financial sector. It is the process by which criminals conceal the origin and ownership of the proceeds of crime by legitimising illegally obtained money, channelising surreptitiously through legitimate business channels and integrating those to the financial system through ways like bank deposits, investments or transfer. Financial institutions like banks, insurance companies and stock markets are most vulnerable to such intrusion and therefore, the need to protect these institutions from the debilitating effect of laundered money. This is intended to be achieved by implementation of Know Your Customers (KYC) policy and Customer Due Diligence (CDD) guidelines across the financial sector...........
“Expedite smart cards scheme”
.... A.J. George, Assistant General Manager of Reserve Bank of India (RBI), reviewed the banking indicators of the district. While expressing broad satisfaction, he pointed out with concern that advances to minorities was only 2 per cent instead of the mandated 10 per cent. He urged bankers to focus on this section and also improved their reporting.......
SEBI’s ED Usha Narayanan demits office
......She also served in IOSCO’s inspection committee, RBI’s conflict of interest committee and the Government of India committee on ADR/GDR/FCCB policy......
RBI's diktat capping debit card charges could spur usage
Come July 1, and you could see retailers across the country urging you to use your debit cards instead of credit cards. The reason? The recent directive from RBI asking banks to charge a maximum of 0.75-1% (of amount swiped) on debit card transactions at point-of-sale (POS) terminals. The objective is to make it cheaper for retailers to operate the POS infrastructure and thereby encourage use of debit cards over credit cards.............
With fees halved, kirana shops may accept debit cards
......However, there is some confusion on who will reduce charges as the MDR is shared by the card issuing bank, Visa and MasterCard and the bank that has installed the point of sales terminal (acquiring bank). At present, the onus of recovering MDR is on the accquiring bank although most of it goes to the issuing bank. Card companies are seeking clarity from RBI on the extent of reduction by each player.......
Friday, June 29, 2012
D Subbarao dampens fiscal stimulus hopes
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