Need to revolutionise banks’ HR management

....While we are facing a crunch of manpower – can we use our retired people in some way – we are paying them pension and reasonable medical benefits already – can some contracts not be worked out for them? Again, can we not provide some empowerment to them to leverage on their inherent loyalty? They could be useful in brand building efforts, or perhaps, in our financial inclusion initiatives. It is, definitely, an avenue that could be explored.........

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Managing gold, a policy challenge - K Kanagasabapathy

The RBI can learn a trick or two from Turkey in order to absorb gold into the financial system, thereby turning it into a productive asset

....The RBI Act, 1934, permits the Reserve Bank to purchase and sell gold. It does not apparently permit allowing banks to hold CRR balances in terms of gold. However, the Banking Regulation Act, 1949, permits banks to maintain SLR in gold. One way out is to amend the RBI Act to permit CRR balances in gold. But, given the flexibility at the disposal of RBI, it can prescribe a liquidity ratio — combining both CRR and SLR — which will bring gold under the ambit, along with cash balances and investments in government securities.......

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Rajendra Prasad's bank a/c kept alive after 50 yrs

.....Prasad's account is perhaps the only bank account in the country which is not only open and functional but also seen interest income being added to it . Usually after the death of a bank account holder, the money in there is passed on to the legal heirs on completion of certain formalities. Gupta said no one has come till date to claim for the money........

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RBI for customer-friendly savings bank deposit rate policies

....“The big banks have yet to respond to this...Reserve Bank looks forward to more active play in the Saving Bank segment with banks coming out with some customer friendly innovations especially aimed at attracting low income households, presently outside the banking sector,” ........

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RBI vision document on payments: An evaluation

.....it is commendable that RBI has released a payments vision document. Such a document gives an opportunity for us to understand the mind of a government agency, and discuss and debate its priorities and actions. But writing a vision statement is a chance to step away from the familiarity of set ways and ask the big questions. RBI should not squander this opportunity.

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Is There a Problem with RBI’s Communication?

.......Previous RBI Governors, including Mr. Subbarao’s predecessor Y.V. Reddy, would only share their outlook on India’s economy and interest rates once a quarter, and then in language that was almost impenetrable. Mr. Subbarao changed the rules. He instituted mid-quarter policy meetings and set up calls with analysts to get inputs on the economy. The bank began to release the minutes of its advisory committee meetings on interest rates. “At a very personal level, I would like to de-mystify the office of the Governor,” Mr. Subbarao said in 2009......

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Twice bitten, now shy: RBI keeps close watch on inflation

Even after entering a rate reversal cycle, the Reserve Bank of India (RBI) is refusing to give up on its fight against inflation. Caught off-guard on inflation projections in the past two years, it is maintaining a hawkish stance. Yesterday, RBI Governor D Subbarao said the central bank was "deeply sensitive" to the problem. "We are committed to bringing inflation under control. It has been our effort over the last two years and will continue to be our effort," he said.......

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Improving the domestic payment system

The Royal Monetary Authority (RMA) will tie-up with the Reserve Bank of India sometime between the third or fourth quarter of this year, on the cross border connectivity to enable the shared payment network. This plan falls under the Bhutan Financial Switch (BFS) project, which is being done in collaboration with all the commercial banks and the RMA.........

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India has scope to cut government borrowing: R Gopalan

India still has some scope to reduce government borrowing, Economic Affairs Secretary R Gopalan said on Thursday on the sidelines of the Reserve Bank of India's board meeting........

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All eyes on RBI as China, Britain and Europe central banks cut rates

Central banks in China, Britain and Europe have wielded monetary levers to stimulate their economies, raising hopes the Reserve Bank of India (RBI) could do the same at home soon. But experts said Governor D Subbarao would wait to see inflation cool before obliging with a rate cut........

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Rate-fixing scam forces NSE, dealers to find ways to improve rate calculation method

.... Last year, the Reserve Bank of India (RBI) came out with a cryptic communique, the implications of which were lost beyond the money markets of Nariman Point and Bandra. But it unsettled the game plan for many punters in the currency market and forced some to change tack.  The innocuous circular was a simple announcement on how the central bank was changing the way it calculates the daily 'reference rate' for some of the major foreign exchange rates. The RBI had done this for the first time and there was a reason for it......

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Micro finance institutions: RBI concerned on monitoring deficiences

........"The central government is bringing out a law to govern the MFI and has proposed RBI as the regulator. The concern is whether we have the set up to oversee small MFIs without affecting the quality of supervision.".............

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Financial inclusion: Are 63,000 more ATMs enough?

....At present, the country has more than 90,000 ATMs, according to the Reserve Bank of India. In a bid to encourage ATM transactions, the central bank had recently allowed non-bank entities to set up, own and operate ATMs, labelled white label ATMs. According to the RBI, ATM adoption by customers has modified personal banking in India and banks have played a major role in this.......

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Risk Management - The New Accelerator

HYDERABAD CHAPTER MEETING Risk Management - The New Accelerator Aug 04, 2012 9:00 AM Cost : Free Meeting Venue Hotel Katriya, Raj Bhavan Road

9:00 – 10:00 Registration, Tea, Coffee & Networking 10:00 – 11:00 Plenary Session 10.00-10.05: Welcome address: Manoj Agarwal, Group Editor, Banking Frontiers 10.05-10.15: Introduction to the Conference: B. Yerram Raju, Regional Director, PRMIA, Hyderabad Chapter 10.15-11.00: Keynote Address by Chief Guest: Dr. D. Subbarao, Governor, Reserve Bank of India 11:00 – 11:30 Tea, Coffee, Networking, Exhibition Visit 11:30 – 13:00 Panel Discussion: Basel III – Capital Responses Panel: CEO/CROs of 10-12 Banks M. Narendra, Chairman & Managing Director, Indian Overseas Bank B. A. Prabhakara, Chairman & Managing Director, Andhra Bank K. Venkataraman, CEO, Karur Vysya Bank Ltd Srinivasan, CEO, Federal Bank Ltd. Vijay Krishnaswamy, Member, Steering Committee, PRMIA, London and Consultant, Hyman Robertson LlP, London, the Financial Consultancy Group. Confirmation from the rest is awaited. Moderator: Amitabha Guha, Former Dy. Managing Director, State Bank of India Rapporteur: B. Yerram Raju, Regional Director, PRMIA, Hyderabad 13.00 - 13.45 Lunch, Networking, Exhibition Visit 13:45 – 15:15 Panel Discussion: Technology and Operational Risks Panel: Experts from Leading Technology Service providers and Basabi Bhattacharya, Regional Director, PRMIA, Kolkata Chapter Moderator: Prof. Satchidananda Sogala, Founder & CEO , Srichid Technologies Private Limited & Regional Director, PRMIA, Bangalore Chapter Rapporteur: V.N.Sastry, Professor, IDRBT, and Member, Steering Committee, PRMIA, Hyderabad 15:15 – 15:30 Tea, Coffee, Networking, Exhibition Visit 15:30 – 16:30 Panel Discussion: People and Process Risks Panel: R. Bhaskaran, Director, Indian Institute of Banking and Finance, Mumbai. G. Ravi Prakash, President, HR, CRISIL, and other experts from banking and finance industry Moderator: M. Sitarama Murthy, Former Managing Director, State Bank of Mysore and Steering Committee Member, PRMIA, Hyderabad Rapporteur: N.N. Nigam, Formerly Chief Vigilance Officer & Steering Committee Member, PRMIA, Hyderabad 16:30 – 17:30 Rapporteurs Summary Vote of Thanks: M. Sanjaya, Former General Manager, RPCD, RBI & Steering Committee Member, PRMIA, Hyderabad Map data ©2012 - Terms of Use Map Satellite Hybrid

www.prmia.org

A Higher Standard For Risk Professionals

Master Class On External Commercial Borrowings (ECB’s) and Trade Credits

......To encourage better usage of these financial funding tools and also to update and inform Corporates various rules, regulations and risk management issues related to the ECBs and Trade Credits, ASSOCHAM in association with JIMS Rohini, New Delhi is conducting one day Master Class on “External Commercial Borrowings and Trade Credits” on 9.30 A.M, Thursday, 19^th July 2012, ASSOCHAM House, 47 Prithviraj Road, New Delhi. The program will have a key note address by Sr. Official, Foreign Exchange Dept., Reserve Bank of India, New Delhi followed by technical session by eminent speakers drawn from banking sector ......

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The future of urban co-operative banks in Ahmednagar district

To foretell what would be the fate of urban co-operative banks (UCBs) in the next 25 years is like predicting whether there would be timely and sufficient rainfall in Ahmednagar district. It is very difficult to talk about the future of any banking institutions. I have seen an unparalleled change in banking industry over the last 25 years. Acceptance of deposits, lending and investment in government securities as dictated by Reserve Bank of India still continues to be hardcore of banking but money transfers in no time and similar services based on computer systems and internet services through service delivery channels and payment gateways has acquired a tremendous significance..........

Read - DNA

Wishes pour in as rosaiah turns 79



RBI Governor D. Subbarao greets Governor K. Rosaiah at Raj Bhavan in Chennai on Wednesday

‘Banks must look at last mile in micro finance’

Financial inclusion is a necessity, a pre-requisite for growth

Is there a business case for banks to do the ‘last mile’ themselves in micro finance operations? Urging them to ponder over this, the Reserve Bank of India (RBI) Governor, D. Subbarao, asked banks to look at the feasibility of ‘re-occupying the last mile’ in micro finance operations............

Read - The Hindu

Subbarao says banks treating no-frills a/cs as nuisance

Reserve Bank of India Governor D Subbarao on Wednesday expressed disappointment that frontline branch mangers treated low-income household customers as an intrusion into their time and business, and were treating “no frills” accounts as a nuisance. “The general impression I got is that frontline branch managers treat ‘no frills’ accounts as a ‘nuisance’ and low income households as an intrusion into their time and their business. This is disappointing to say the least,”.............

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India Struggles to Cushion Rupee's Fall

For almost a year, India's central bank has spent billions of dollars to support the beleaguered rupee. And yet the currency is Asia's worst-performing against the U.S. dollar over the past year. The fruitless efforts by the Reserve Bank of India shows how central banks, especially in emerging markets, often are powerless to manage pressures on their currencies if international market forces are ranged against them..............

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SC restrains RBI on approval to foreign law firms

....The court said "it is clarified that the Reserve Bank of India shall not grant any permission to the foreign law firms to open liaison offices in India under Section 29 of the Foreign Exchange Regulation Act, 1973". The expression "to practice the profession of law" under Section 29 of the Advocates Act, 1961 covered "the persons practicing litigious matters as well as non-litigious matters other than contemplated in para 63(ii) of the impugned order...", the court said........

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Disappointing to see banks with low customer footfalls: Subbarao

Guv says banks should look at financial inclusion as an opportunity to build fortune at the bottom of the pyramid

The Reserve Bank of India (RBI’s) Governor Duvvuri Subbarao today said that there is a disappointingly large number of cases of bank branches with low customer footfalls. The Business Correspondent (BCs) will drift off after a few months and ‘no frills accounts’ which remain largely inoperative. In his oration speech as part of Indian Overseas Bank’s Platinum Jubilee celebrations at Chennai on Wednesday Duvvuri Subbarao, Governor, Reserve Bank of India said that banks should look upon financial inclusion not as an obligation but as an opportunity to build fortune at the bottom of the pyramid.............

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Have banks misled investors by inaccurate reporting of NPAs?

.....Dr Chakrabarty could not have been unaware of the practices of reporting of NPAs in PSBs as he was the CMD of two public sector banks- Indian bank, one time a weak PSB, and Punjab National bank-prior to his becoming the deputy governor. Generally speaking, banks in the past endevoured to show diminished figure of NPAs, in such of those loans where the departure from the strict criteria of identification of NPA, was 'minor' which the statutory auditor accepted as reasonable.....

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TN's diversification model to help address risks: Gokarn

Tamil Nadu has managed to show resilience during the bad times mainly due its diversification, which can be a good example on how diversification is a best way for lesser risk, says Reserve Bank of India (RBI's) Deputy Governor Subir Gokarn..............

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RBI will focus on progress of south west monsoon: Subir Gokharn

CHENNAI: The Reserve Bank of India would pay more attention to the progress of the south west monsoon as it goes into its "policy date", RBI Deputy Governor Subir Gokharn said .........

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RBI wants loan rates to be more transparent

“One problem that has persisted even after the introduction of the base rate system relates to the lack of transparency in the customer-specific spread charged to a borrower over the base rate,”........

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Current account deficit has put pressure on rupee: RBI

.....“I don’t think the rupee movements are directly correlated with open market operations but are being driven by judgements on liquidity conditions and will continue to be driven by conditions on liquidity – whatever is causing the liquidity stress whether it is foreign exchange markets or something else,”......

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RBI says no co-relation between OMOs, rupee

....."I don't think you can directly correlate the rupee movement with the OMOs," Gokarn on sidelines of an industry event in the southern city of Chennai, where the RBI's two-day board meeting began on Wednesday. "OMOs are being driven by judgements about liquidity conditions and they will continue to be driven by judgements about liquidity conditions, whatever is causing liquidity stress, whether it is foreign exchange market or something else.".......

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Decision analysis for interest rates

....Several analysts applauded the Reserve Bank of India’s (RBI’s) resisting cutting interest rates despite declining growth. Some quoted monetary theory to justify this; others praised the regulator’s standing-up-to-government stance. Meanwhile, the nation groaned, waiting for relief. Is this just the vaunted animal spirits in reverse, that perceive a half-full glass as half-empty? Or is there substance to the frustration of those who function in the real-world marketplace, who deliver products or services and expect rational solutions?....

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Current account deficit a major cause for rupee fall: Gokarn

....India’s current account deficit has been a major factor for the downward movement of the rupee. As the current account deficit corrects, be it due to lower oil prices, increased exports or lower imports, it will have the reverse effect, said Dr Subir Gokarn, Deputy Governor, Reserve Bank of India. .......

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Discount on debit card-payment acceptance postponed to Sept 1: RBI

The Reserve Bank today said reduction in merchant discount rate (MDR) for purchases made by debit card payment to 0.75-1 per cent, which was to be effective from July 1, will now be applicable from September 1 due to some operational issues.................

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Finance ministry pushes for lower third-party ATM fee to increase financial inclusion

 The finance ministry will push for lower third-party ATM charges in a bid to increase financial inclusion, risking further unpleasantness between the government and the Reserve Bank of India, which is not enthused by the idea...............

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Micro-lending norms to be eased in phases: Subbarao

.....where floating rate loans are concerned, existing customers have been disadvantaged vis-à-vis new customers with similar credit ratings, resulting in complaints about discrimination. To address this, the Reserve Bank has constituted a working group under the chairmanship of Deputy Governor, Mr Anand Sinha, to determine the principles that must govern proper, transparent and non-discriminatory pricing of credit. The working group is expected to submit its report by August 2012....

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RBI may relax norms to revive microfinance industry

Microfinance institutions (MFIs) in the country can breathe easy as the Reserve Bank of India (RBI) is likely to relax some of the norms pertaining to their net worth, capital adequacy and provisioning needs. The relaxations are expected to help troubled micro-lenders emerge out of the crisis. "The rollout of the new regulatory regime has run into some bottlenecks. Some MFIs are unable to comply with the qualifying asset criterion for registering as NBFC-MFI, and therefore banks are reluctant to make fresh loans to them as such loans do not qualify as priority sector lending," RBI governor D Subbarao said at an event organised by Indian Overseas Bank to celebrate their platinum jubilee here today.............

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Finance ministry backtracks on bulk deposit cap diktat banks breathe easier

....“There is no instruction by (the) Reserve Bank of India on the proportion of bulk deposits to total deposits. Banks have their internal policy on these deposits. These are short-term deposits, primarily meant to bridge the asset liability gap in the short run,”.....

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RBI should look at Islamic banking afresh: Khurshid

The Law Minister, Mr Salman Khurshid, said on Thursday that he had written to the Planning Commission and the Reserve Bank of India (RBI) on the issue of Islamic banking. He said he was quite hopeful that the RBI would look at the issue afresh and soon come up with its views after deciding on the technical issues..............

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Of Economics, Policy and Development : An Intellectual Journey by I. G . Patel

Dr. Duvvuri Subbarao , Governor, Reserve Bank of India has kindly consented to release the book, in the presence of  Dr Y.V. Reddy and Professor Alaknanda Patel.

Date: Monday 16 July, 2012 at 5.00 pm 

 

Venue: Reserve Bank of India Auditorium, Mumbai

The economist as saviour

.....It is perhaps not an accident that Dr. Singh has chosen to surround himself with economic advisors of very different intellectual persuasions. His longstanding policy aide, Montek Singh Ahluwalia, can be dubbed a neo-liberal, a traditional neo-classical economist. The chairman of Dr. Singh’s council of economic advisors, Chakravarti Rangarajan, is in fact a traditional monetarist, and proud to be so. On the other hand, the more recently inducted policy wonk Kaushik Basu, chief economic advisor to the Government of India, is more of a post-Keynesian. What this diverse intellectual upbringing of India’s key economic policymakers has meant is that Indian policy has not been orthodox, but flexible. Skidelsky also dubbed Keynes a “Practical Visionary” — a description that aptly describes Manmohan Singh as well. As a “practical visionary”, Dr. Singh listens to the advice he likes and rejects what he does not........

Read - The Hindu

Indusind Bank opens it's first Currency Chest

IndusInd Bank opened its first Currency Chest in Mumbai – at the Bank's Thane Branch. Mr. Shekhar Bhatnagar, General Manager, Reserve Bank of India, Belapur inaugurated the Currency Chest in the presence of Mr. Romesh Sobti, MD & CEO, IndusInd Bank Ltd and other senior officials of the Bank...........

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File complaint after paying credit card dues : Banking Ombudsman

Credit card users should pay their bills first and then lodge the complaint in case of a dispute with the card provider, said Banking Ombudsman (New Delhi) M Rajeshwar Rao. This will protect them from the risk of paying more in case the decision is in favour of the card provider, according to Rao. Customers should read terms and condition carefully so that disputes can be avoided, he said. It is advisable, in case of credit card disputes, to pay the dues and subsequently file complaint against the credit card company, he added.........

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May we finally have some clarity please, Mr Prime Minister?

....If finance ministry officials were quoted as saying the interest rates need to be brought down, the central bank did quite something else, holding on to rates at its last mid-quarter policy review. This was also preceded by a strange event of two RBI Deputy Governors even giving contrasting signals on the direction interest rates should take. Not great news for a business community starved of growth momentum.........

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Slumdog City Retail Banking to Boom With Wireless: Tech

....For a start, the Reserve Bank of India requires wireless companies or “non-banks” to partner with banks to offer mobile banking services, leading to tight controls on business. One reason is that only banks are permitted in India to accept deposits for maturity of less than one year. “Going for a bank-led model was a conscious decision,” Alpana Killawala, spokeswoman at the central bank, wrote in an e-mailed response to questions from Bloomberg News. The regulator is also concerned about “customer service issues”associated with the telecommunications company-led model, such as insufficiency of funds at the paying outlet, she wrote. ....

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Gujarat's urban co-op banks fight Madhavpura's ghosts

...... senior RBI official associated with regulation of UCBs said the prudential norms to regulate these banks were very much in place then. But the apex bank was much liberal. There was a sharp rise in the deposit bases of UCBs and many banks were unable to manage the sudden growth. Some crooks took the advantage of gaps. Taking a leaf from that episode, RBI put freeze on any expansion in activities by UCBs, till they brought their houses in order. It banned opening of new branches. The dual control (UCBs come under the regulatory oversight of RBI and the registrar of cooperative societies) has always hampered effective regulation. RBI formed state-specific task forces to deal issues of UCBs. It identified weak but viable banks and firmed up their revival plans. If that failed, road was open for merger with stronger UCBs. In extreme cases, it could go for liquidation.......

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Allow co-operative banks to be listed: Greater Bank CEO

To ensure that they survive and thrive, the top 50 urban co-operative banks (UCBs) should be allowed to be listed on stock exchanges, said a senior co-operative banker........

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URBAN CO- OPERATIVE BANKS NEED THEIR SHARE OF RECOGNITION

....in fact UCBs need to be given some kind of support, relaxations. Facilities available to commercial banks such as refinance facility, interest subsidies on various loans such as housing, educational, SME etc. need to be given to UCBs also. Instead they are made to follow international prudential norms, fulfil the various ideal parameters without considering their size, category, area of operation and in case of failing to comply these norms, various restrictions are imposed by RBI on their branch opening, dividend distribution, lending operations. Various such issues affecting UCBs are forwarded to RBI from time to time for taking policy decisions. However slow moving approach adopted by RBI for resolving these issues act as a hindrance in the growth and development of UCBs.......

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Banking must go hi- tech to address socio- financial inclusion

......Urban co- operative banks can play a pivotal role in the " real last mile socio- financial inclusion". They can bridge the gap of the staggering geographical disparity, socio- economic categories and the pervasive divides such as physical inaccessibility, cost of access, lack of awareness and trust deficit. Co- operative banks are better equipped to address these issues, given their widespread reach, lower operating costs, flexibility, and deep- rooted connections with the local communities, which, in turn, inspire trust.
With an effective technological application and modernization approach, urban co- operative banks can expand their reach even further; improve operational efficiency and address customer needs more effectively.....


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Fallout of a Crisis: The Future of Microfinance in India After Andhra Pradesh

....Janalakshmi, an MFI headquartered in Bangalore, is using a biometric scanner in the field where a thumb print verifies loan collections and disbursements in order to reduce an agent’s time with each client and reduce fraud risk. The use of innovative technology also extends to customer-facing applications. Moving microfinance into a cashless process has benefits for every player in the value chain as it reduces human resource labor, creates electronic records and transaction information in real-time and is ultimately more convenient for the client. The use of mobile technology ......

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Financial inclusion plans of banks in India - An opportunity for innovative product development

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RBI in its own way is accommodating quantitative easing policies through OMOs

....However, the RBI in its own way is accommodating such policies through its purchases of government bonds. This brings us to the point that inflation in India comes from the non-tradable rather than the tradable sectors. CPI inflation running at 10.36% not converging to WPI at 7.55% captures this idea. Inflation in the non-tradable sector is in th remit of RBI monetary policy and probably has its roots in RBI's QE policy........

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India’s Unbanked Poor

...........However, despite the policy initiatives and efforts of non-governmental institutions, significant proportion of the nation, primarily those who dwell in rural areas, continue to be outside the coverage of the formal banking system. RBI’s own reports suggest that almost 40 percent of Indians lack access to even the most basic kind of financial services.................

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Not by ‘animal spirits’ alone

....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......

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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........

Indian Bank Sector's Horoscope............

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,” .....

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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," ..............

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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. .....

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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. .....

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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.......

Read - BS

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....... 

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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......

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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...........

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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....

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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.....

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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........

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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....... 

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