...........The RBI has raised concerns about the global economic factors, categorically stating that despite a slowing economy, the outlook for commodity prices is uncertain. The bank has also raised concerns about increased subsidy burdens on account of a truant monsoon. ..........
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.
Friday, August 3, 2012
Why the RBI preferred an SLR cut
........The RBI did not have to wait for two and a half years to realise that repo is not really the solution to inflation. The RBI had targeted repo because the interest rate that the banks charge remains above the inflation rate. The real rate of interest — as the difference between the two is called — has to be positive to ensure that people do not give up their savings habit and debtors are not subsidised by creditors. There was a more relevant reason why the RBI did not cut the repo rate.............
Why small could be big for Chidambaram
.....The RBI, currently headed by Duvvuri Subbarao who has had a distinguished stint in the finance ministry before taking charge at the central bank, has already made it clear that its hands are largely tied as far as reducing interest rates to spur growth is concerned. It has reduced rates 50 bps in April and cut the statutory liquidity ratio (SLR) by 100 basis points (one percentage point) on 31 July to allow some banks to lend to productive sectors. But beyond that, monetary policy can achieve precious little. The ball is now clearly in New Delhi’s court. And Chidambaram will have to be the principal player.......
Thursday, August 2, 2012
Shyamala Gopinath appointed CCIL chief
Mumbai, Aug 1: Shyamala Gopinath, former RBI Deputy Governor, has been appointed as the chairperson of Clearing Corporation of India Ltd (CCIL). And R. Sridharan, former Managing Director of SBI, has been appointed as the Managing Director of CCIL. The Corporation provides exclusive clearing and settlement for transactions in the money, government securities and foreign exchange markets.
HBL
Portfolios of Executive Directors
Shri V.K.Sharma
1. Customer Service Department
2. Department of Currency Management
3. Financial Markets Department
4. Rural Planning & Credit Department
Shri G.Gopalakrishna
1. Department of Communication
2. Secretary's Department
3. Department of Banking Supervision
4. Financial Stability Unit
Shri D.K.Mohanty
1. Department of Economic & Policy Research
2. Department of Statistics & Information Management
3. Monetary Policy Department
Shri S.Karuppasamy
1.Legal Department
2. Premises Department
3. Urban Banks Department
4. Right to Information Act (also First Appellate Authority)
Shri R.Gandhi
1. Human Resource Management Department (including Rajbhasha)
2. Department of External Investments & Operations
3. Internal Debt Management Department
4. Central Security Cell
Shri P.Vijaya Bhaskar
1. Department of Non-Banking Supervision
2. Risk Management Department
3. Department of Expenditure & Budgetary Control
4. Alternate Appellate Authority (Under RIA)
1. Department of Banking Operations & Development
2. Department of Government & Bank Accounts
3. Inspection Department
Shri G. Padmanabhan
1. Department of Information Technology
2. Department of Payment & Settlement Systems
3. Foreign Exchange Department
1.Deposit Insurance and Credit Guarantee Corporation
Shri V.S.Das retired........
'Das'bodh we learnt from him.............
I had the wonderful opportunity of working with Shri Das in DGBA for about a year. I got good exposure in various activities in the Bank being with him even though it was for a short period. His rich knowledge, cool composure at any time of crisis, value for human relationship are all the great qualities in him. I have never seen him raising his voice even under utmost pressure. He always carried his team with enthusiasm and it is a great pleasure working with him. I wish him all good health and success for all the future assignment he takes up. My best wishes to his family also. We will definitely miss Mr. Das’s professional expertise and his friendship in the Bank.
- Pushkala Ranganathan, PPS to the Governor
A Man with Vision, Sweet Tongued & Cool Headed as he can be described, Shri Das is always happy and will Keep others also happy. Very Sharp in judging and handling the people tactfully, he knows how to get work done from all cadres of people in the bank. With a human touch, he always cares for others’ problems/difficulties/health.
- Shailendra Naravane, PS to ED (K)
बैंकिंग डिपो बनेगा आरबीआई कार्यालय !
कानपुर, नगर संवाददाता : माल रोड स्थित भारतीय रिजर्व बैंक (आरबीआई) कार्यालय अब बैंकिंग डिपो की तरह कार्य करेगा। यहां से शहर और आसपास की सरकारी और गैर सरकारी बैंकों को कैश लेनदेन का कार्य होता रहेगा। जनता से जुड़े अन्य कार्य लखनऊ और उत्तराखंड कार्यालय स्थानांतरित करने की तैयारी है। हालांकि क्षेत्रीय निदेशक ने अभी ऐसे किसी आदेश से इंकार किया है। ...................
Continue reading.................
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Govt didn't do its bit after April, says Subbarao
RBI sets up panel for strengthening rural credit structure
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India's ATM industry is banking on the unbanked
....."Although there has been nearly 23 percent to 25 percent year-on-year growth in the number of ATMs, their deployment has been predominantly in Tier I & II centres," said an RBI statement. "There is a need to expand the reach of ATMs in Tier III to VI centres. In spite of the banks' pioneering efforts in this direction, much needs to be done." This statement was made in connection with a new program just implemented by the RBI. In order to speed up the achievement of its financial inclusion objectives, the central bank announced in April that it would allow, for the first time, the white-labelling of ATMs in India. .....
Govt needs to act on subsidies: RBI
The Reserve Bank on Wednesday listed subsidies and bottlenecks in food supply as issues, among others that need to be addressed by the government for prudent inflation management and sustainable growth............
No implicit message to govt via SLR cut, says Subbarao
RBI Governor Duvvuri Subbarao on Tuesday dismissed the view that the central bank was trying to send a message of intolerance towards higher fiscal deficit and government borrowings through the cut in SLR. “The move was not driven by the need to shift the banks’ portfolio from the government to the private sector,” Subbarao said.......
SLR cut will provide a cushion for banks: Gokarn
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Balancing act
This refers to the editorial “A textbook response” (Business Line, August 1). The RBI has once again done a balancing act by reducing the SLR. This move is bound to increase the flow of liquidity, which will lead to a substantial leap in growth. By not touching policy rates and the cash reserve ratio, the central bank had done well, in view of the existing economic situation. It is now for the Finance Ministry, under a new incumbent, to take steps to control the fiscal deficit (according to the warnings given by the RBI during its previous reviews), expedite reforms and woo prospective investors to revive the economy. Inflation needs to be reined in to mitigate the sufferings of the aam aadmi. The RBI’s directive to relax the norms in forex earnings will help exporters. The poor, especially the senior citizens, will feel encouraged to keep their hard-earned money in banks as the interest rates have been left unchanged.
- Jayant Mukherjee, Kolkata (HBL)
Lack of direction
In its latest latest policy review, the RBI has kept all key rates unchanged except for SLR, which has been brought down to 23 per cent from 24 per cent, infusing additional liquidity of about Rs 62,000 crore. This is expected to help banks channel credit to productive sectors. With global demand receding and capacity utilisation being low, one has to be on guard on the effects of such a measure. With gloom all around, both at the global and local levels, and poor monsoon adding to the woes, there is a lack of direction from all concerned to bring the economy back on the rails. The new Finance Minister should take some bold steps to ensure forex inflows into a sagging economy.
- Srinivasan V Chennai (HBL)
Public sector banks in a complex world
Recent press reports have quoted a spate of instructions of an operational nature from the Union ministry of finance to public sector banks. (The Reserve Bank of India and a previous governor have protested against the interference.) Before coming to the issues,.........
E-payment facility to cover entire state by January 2013
....The launching of the new payment would increase staff productivity, enhance the customer’s satisfaction and minimise the transaction costs for the state government and the bankers, thereby compressing the time and avoid embezzlement of funds,” said J K Mohapatra, principal secretary (finance) at the launching ceremony. V Ramachandra Rao, Regional Director-RBI, Gargi Kaul, Principal Accountant General and P P Nath, Director of Treasuries and Inspection were present at the launching ceremony........
HC restrains sale of benami property in Rs 600 cr bank scam
Hearing a petition alleging siphoning of Rs 600 crore by Board of Directors in Pen Urban Cooperative Bank in Raigad district of Maharashtra, the Bombay High Court today restrained owners of 39 properties held in benami names from selling or creating third party rights. Justice D D Sinha and Justice Vijaya Kapse-Tahilramani also asked Reserve Bank of India to make its stand clear on September 26, the next date of hearing...........
Police freeze 'fake' bank accounts
....Bhandge said that he will be approaching the Reserve Bank of India (RBI) to show the negligence approach that the banks take while opening a new account. "The arrested accused said the bank use to handover the bank passbook, cheque book and debit card immediately after opening account instead of sending the documents on the address mentioned in the account. If the banks has followed this procedure then they could have easily identified the fraud," he said.......
Time to junk the status quo
......Only two days ago, Reserve Bank of India governor Duvvuri Subbarao withstood mounting pressure to cut interest rates from local businesses who had been arguing that the steep cost of raising loans had upset their capacity expansion plans. A status quo on interest rates, however, isn't good news for millions of families caught in a pincer attack of rising prices and high borrowing costs. Surging food costs have shrunk household incomes, as consumers have to pay more for the same goods.........
Muted demand for credit growth going ahead: Bankers
....While RBI’s assessment that interest rate cut is not likely to drive GDP growth but might push up inflation, Samiran Chakrabarty of Standard Chartered Bank questions what will make this assumption change. “Unless we get a clear answer to that regardless of how much GDP falls, the argument could easily be that interest rates are not the primary drivers of growth today, so why even cut them? To me, we are going by 5.6% GDP growth for the next release but I do not think even that will be big enough for RBI to shift their bias more towards growth.”........
‘Best’ practices: West and the rest
......Together with the deft monetary management that the Reserve Bank of India under Y. V. Reddy displayed in 2008-09, the ethical practices of banks like SBI, for those times, provide instances that the Indian financial sector can justifiably be proud of. And it also evidence that our own practices are sometimes as or much superior to those deemed as best of the West.
India to continue facing stagflation-type situation: Report
....Stagflation is a situation when economic growth of a country stagnates while inflation is rising. Considering inflation would persist above the Reserve Bank's comfort zone for longer, it said, "We are reducing our expectation of further monetary policy easing to 50 basis points (0.5 percent) by December, 2012 from our earlier expectation of 75 bps (0.75 percent)".......
Few hopes from Chidambaram
.....Chidambaram slashed taxes while believing that a Laffer Curve (which suggests that tax cuts can generate additional revenue) would ensure that total tax collections would rise. He also reduced import duties, took the first steps of opening up the insurance sector, launched a controversial tax amnesty scheme and increased FII (foreign institutional investor) investment limits. Few pay attention these days to a landmark agreement with the RBI that ended the malignant practice of compulsorily monetizing the fiscal deficit through the issue of ad hoc Treasury Bills.......
Wednesday, August 1, 2012
Empanelment for promotion to the post of Executive Director
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Message from Mint Road: Inflation still enemy number one
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| Reserve Bank of India (RBI) Governor D Subbarao (C) along with Deputy Governors, left to right, Anand Sinha, K C Chakrabarty, Subir Gokarn and H R Khan during RBI’s 1st Quarter monetary policy review meeting in Mumbai on Tuesday |
.....................“The primary focus of monetary policy remains inflation control in order to secure a sustainable growth path over the medium-term. While monetary actions over the past two years may have contributed to the growth slowdown – an unavoidable consequence – several other factors have played a significant role. In the current circumstances, lowering policy rates will only aggravate inflationary impulses without necessarily stimulating growth.”........................
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RBI's stance on low growth will weigh in inflation: Gokarn
Why Subbarao is the last man standing in a world gone mad
Subbarao’s credibility rises with firm policy stance
.....“Nail-biting global economic conditions have compelled central banks in advanced and emerging economies to cut rates, and moderate domestic economic growth has drummed up pressures on the RBI to act. However, the RBI kept cool and stayed focused on its objective, which helps cement its credibility.”........
RBI policy reflects cautious stance: Montek
......."As far as looking ahead is concerned, the RBI has taken a slightly cautious stance because of its concerns that inflation is sticky. I have no difficulty with that," ............
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RBI decision to retain interest rates 'right move': Kaushik Basu
Describing the RBI decision of not cutting key interest rates to check price rise as the "right move", outgoing Chief Economic Advisor Kaushik Basu on Tuesday expressed hope that inflation would come down to below 7% in September. "My expectation is that inflation in the month of September will go below 7 per cent," he said while commenting on the RBI decision to keep interest rates unchanged for the second time in a row.............
Read - DNA
RBI POLICY: Rangarajan says right balance struck by holding repo steady, cutting SLR
"The reduction in SLR will provide additional liquidity to the banking system and it will also prevent to some extent the crowding out,"..........
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If I G Patel had been finance minister...
What sort of finance minister would the distinguished policy-oriented economist Dr I G Patel have made? This is an interesting counterfactual proposition worth pondering in this review, since he was the first choice of Prime Minister P V Narasimha Rao for this position in 1991. If he hadn’t declined the offer, Dr Patel would have been the architect of India’s reforms............
RBI takes a balanced view
.....The central bank has taken a balanced view of the existing situation and refrained from making changes in the policy rates and the Cash Reserve Ratio. It has correctly articulated its stance by saying that the management of inflation is its primary focus in the formulation of monetary policy........
No move to ban banks from selling gold coins: RBI
Contrary to speculation that the Reserve Bank may ban banks from selling gold coins, Governor D Subbarao today said there was no such proposal at present as the proportion of gold coin sale by banks was very small. “The answer is no! because gold coins themselves are a very small proportion of the total import of gold,” Subbarao told reporters at the customary post-policy interaction, when asked if the RBI is contemplating such a ban.............
RBI has made a very prudent move: Sajjid Chinoy, JP Morgan
..... It was very prudent. The risk to inflation has been on the upside and that is never an environment where you want to stoke inflationary expectations even further by cutting rates. We have to accept the fact that growth is going to slow a below trend, but this is not fundamentally a monetary problem. This is now a real sector problem over which the RBI has very limited leg room...........
Why RBI’s fears about India’s growing current account deficit are misplaced
.... exposition of the risk-averse view came recently from YV Reddy, former RBI Governor, at the annual NCAER-Brookings India Policy Forum. He said the government viewed a CAD of 2.5% of GDP as a safe average. Obviously the CAD could fluctuate around this. Reddy said the international climate had deteriorated greatly in the last year, necessitating a new look at safety limits. The world economy was in turmoil, with the eurozone in dire straits and slowdowns across the globe. Financial flows and currency rates seemed far more volatile than earlier. Many Indian companies had difficulties raising foreign loans......
RBI worried about growth, inflation, ‘twin’ deficits: Ten facts
The Reserve Bank of India’s statement on the first quarter monetary policy highlights concerns on growth, inflation and deficits in that order. The statement issued on Tuesday has words like ‘growth’ 67 times, ‘inflation’ 58 times and ‘deficit’ 16 times............
A textbook response
......banks can lower lending rates only if their cost of deposits comes down (difficult when the public has alternative savings avenues in gold or real estate) or they are able to borrow cheaper from the RBI. By turning down the latter option, and also keeping the CRR unchanged, the RBI has basically made it impossible for banks to cut rates........
SLR cut expands repertoire of policy tools
RBI has developed a knack in bowling googlies at market analysts, using “gotcha” manoeuvres to confound. And, ex post, these measures are the sort that make you go “I should have thought of that and seen that coming”................
Read - FE
DON’T READ TOO MUCH INTO SLR CUT
.........Why did the Reserve Bank of India (RBI) cut banks’ statutory liquidity ratio (SLR), or the percentage of deposits that banks are required to invest in government bonds? One explanation could be that RBI governor D. Subbarao is extremely serious about the central bank’s fight against the government’s fiscal profligacy. RBI has been repeatedly stressing the limitations of monetary policy and wants the government to get its act together to fight a persistently high inflation and ensure sustainable growth. Cutting down SLR is another salvo as it will .........
On hold for all the right reasons
Reserve Bank of India’s (RBI) policy review on Tuesday continued from where it had left off in June: holding rates on inflation concerns. This time it wasn’t as dramatic a decision as in June when the market had completely convinced itself that a rate cut was cast in stone. Rather with fears of inflation turning rabid on higher food prices given the weak monsoon, the market had resigned itself to no rate cuts this time............
Monetary policy options becoming limited
Expectations of economists from the July monetary policy of the Reserve Bank of India (RBI) had been minimal. The message in the June policy and in the speeches of the RBI governor that followed was clear and forceful: inflation is well above RBI’s comfort level, at this juncture interest rate cuts are unlikely to propel growth and fiscal consolidation is a pre-condition for monetary policy easing. The RBI statement on Tuesday reiterates these three messages and this consistency, to us, is one of the key takeaways from the July policy.............
Of growth, inflation, rates and internal security
......So, the economic question narrows down to a choice between which is worse: high inflation rate or low economic growth. By and large economists are arguing for keeping interest rates high until the government fixes its fiscal backyard in a wider context of global uncertainty. Why should RBI do the government’s job, they ask. Besides, if the inflation rate is allowed to skyrocket, it will have repercussions on internal security, as food prices get out of the hands of the poor. There will be food riots, they argue. The good news here: no government likes a high inflation rate, so the issue will get political backing......
A let-down for industry, say chambers
........Reacting to the monetary policy review by the Reserve Bank of India on Tuesday, Assocham said here that industry was disappointed with the key policy rates being unchanged..........
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Real estate industry unhappy over RBI's policy
Real estate firms and property consultants today expressed disappointment over RBI's decision to keep rates unchanged and said the sector urgently needs cut in interest rates to boost housing demand. "There is once again disappointment from RBI. There was no change in the rates in previous policy announcement and the real estate sector was expecting a rate cut this time," said Lalit Jain, President of the apex realtors' body CREDAI. "We don't see any positive policies from government which will boost the real estate sector and economy as well," he added..........
CBDT extends I-T returns filing date to 31st August
The Central Board of Direct Taxes (CBDT) has extended the due date for filing income tax (I-T) returns for assessment year 2012-13 to 31st August from 31st July. This means, you can file your I-T returns for FY2011-12 till 31st August....................
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RBI to review new rules for priority sector lending
.......“Evidently, there are still some open issues on priority sector lending.... I think some of the suggestions were quite reasonable. We decided that in the next 15 days, there will be a meeting at the operational level and (another) meeting at the bank chairmen level. It is not clear what we will change but, certainly, we will have an open mind,” Subbarao told reporters after the first quarter review of monetary policy for 2012-13........
RBI inks MoUs with UK, Norway regulators
....The Reserve Bank has signed memoranda of understanding with regulators of UK and Norway among others to promote greater co-operation and sharing of supervisory information. The MoU with the Financial Services Authority (FSA), UK was signed by RBI executive director P Vijaya Bhaskar and Andrew Bailey, Director of FSA .......
Now, exporters to retain 100% forex earnings
...... its quarterly monetary policy review on Tuesday, RBI has henceforth allowed credit of 100 per cent foreign exchange earnings to be kept in the EEFC accounts subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into rupees on or before the last day of the succeeding calendar month after adjusting for utilisation of the balances. Presently, exporters can retain only 50 per cent of the export proceeds in EEFC accounts......
Tuesday, July 31, 2012
FinMin secy DK Mittal's grandstanding irks bankers, RBI
Two weeks back, a strong statement by RBI Governor D Subbarao on the government's dictatorial style of exercising ownership in state-owned bank triggered mixed reactions among bank bosses
...............Periodic cold war between RBI and the department of financial services is nothing new. But it always makes headlines whenever it surfaces.
"Micro management of banks"
"In a recent article on "Micro management of banks", Shri Vishvanathan, a brilliant banker who had served SBI with great distinction, has identified a few operational issues on which problems are likely to be encountered if Government were to micromanage PSBs and issue directives on such operational issues. One of them relates to classification of loan assets as NPAs which goes against the directives of the RBI. This is a serious matter and cannot be left unattended. Statutory auditors would have difficulty in determining whether a loan asset is to be classified as NPA or not on the basis of conflicting directives of Government/RBI. This would have an impact on the reckoning of even the Capital adequacy ratio of the bank. RBI would, therefore, have to take up the matter early with the Government ( if not already done) and the matter should be sorted out. It would be advisable for RBI to tell the Government that they should leave such matters to the RBI and refrain from issuing directives on operational issues in future."
- A. Chandramouliswaran (via e-mail)
Poor human resource management practices in Indian public sector could lead to a serious setback
.....More than a year back, the RBI governor made a plea for a level playing field for PSU banks with enough freedom to hire executives and employees on competitive terms. This should have been seen in a wider perspective. Recently, the RBI too opted for recruiting short-term (for three years) executive interns on contract basis. The RBI has tried out most of the options like accelerated promotion, foreign postings, deputation to subsidiaries, assignment to higher quality training programme and paid holiday with family for its employees. As large disparities between the pay and perks in institutions with similar responsibilities across public/private sectors had not been appropriately addressed, the RBI’s new hiring scheme also did not attract talent.........
RBI needs to come out clean on NPAs
............The RBI’s suggestion of a two-year “regulatory forbearance” for withdrawing the standard classification benefits needs an urgent recall. Notwithstanding this, the banks need to explicitly start recognizing these loans as NPAs as they have suffered considerable diminution in the realizable fair values of the securities assigned to cover them. They have necessarily to be recognized and also provided for entirely in the year of occurrence. It is certainly not correct to defer it to future years when the profits of subsequent years take the hit. The RBI shouldn’t venture into the realm of prudent and accepted international accounting practices by suggesting such deferrals.............
Amid slowdown, Polaris aims to be among top 5 in financial tech
...........One of the biggest wins in India was with the Reserve Bank of India (RBI). Polaris’ end-to-end Intellect Core Banking System implementation at RBI includes system integration and maintenance of software for a period of 10 years and the deal is valued at $55 million........
Wipro gets core banking for NABARD banks
.....Considering that the recent regulatory reforms by RBI are expected to make the Indian banking scenario more competitive, this initiative will equip co-operative banks with cost effective technology and robust infrastructure to support their growth and help them keep pace. "More importantly it will change the face of rural banking by making e-banking facilities available to the rural customer," .........
Coins worth crores of rupees are lying dormant in Mumbai's temples
Coins worth crores of rupees are lying dormant in huge hundis of Mumbai's over 5,000 temples, blocking coins' circulation as these hundis are opened every three to four months. This results in an artificial shortage of coins. To mitigate the shortage of coins, the Endowment dept of the Government should instruct temples to empty all their hundis once in a week and deposit coins in the bank for bringing it back into circulation. Maharashtra alone accounts for over 1.5- lakh temples, where coins worth Rs 20 crore are said to be lying dormant in hundis.
P S Shetty, Thane (West) - FPJ
Evergreen no more
......Last week’s recommendations show that the Reserve Bank of India is finally running out of patience. It needs banks to clear up these bad loans before they become a systemic problem. That, however, puts India in a tricky situation. Government-dictated targets – designed to fuel economic growth – are partly to blame for forcing the public sector banks to grow their books too fast in the first place. Now that the country’s economy is slowing, politicians will be pressuring banks to lend more, not less, and any restructuring that puts voters’ jobs at risk is bound to meet heavy resistance........
Reserve Bank of India urges corporates to cut forex speculation
.......Large amounts of speculation by corporates had triggered huge moves in the Indian currency, prompting the central bank to impose curbs on foreign exchange derivative products, Reserve Bank of India Executive Director G. Padmanabhan said in a speech on Saturday that was published on the website on Monday. "The Reserve Bank believes that corporates should be concentrating more on their core business to generate returns rather than looking to generate alpha from diversifying into trading in forex markets," Padmanabhan said.......
When ‘animal spirits’ reigned
......Today, there are no ‘animal spirits’ to drive investments. With corporate profits, household incomes and government finances all under pressure, the domestic savings rate, too, has fallen. All this, even as the CAD has crossed 4 per cent of GDP. India, ironically perhaps, needs foreign capital more now than during its investment boom last decade! ........
Loan recasts to get tougher for companies
..........More importantly, the RBI panel suggested to do away with regulatory forbearance regarding asset classification and provisioning in two years. If indeed that happens, banks have to make provisions for anywhere between 5% and 15% for any loan the moment it gets restructured. Currently, banks need to make a 2% provision on standard assets that they restructure, and a provision of up to 15% if the restructured loans turn bad. The provision requirement on restructured accounts should be increased to 5%, the panel said. RBI has sought feedback to the Mahapatra panel proposals until 21 August.......
An SSC pass understands that inflation today has nothing to do with RBI
.....If you have a matriculation degree, you will understand that India’s inflation has got nothing to do with the RBI’s policies. Your inflation is largely international commodity price driven. Your local interest rate policies have got nothing to do with that. We have seen that inflation has remained stubbornly high no matter what Mint Street has done. You should have understood this one commonsensical thing,” .........
Dr Subbarao, why give the economy an undeserved rate cut?
It’s no fun being Duvvuri Subbarao. Every month everyone looks to him to deliver interest rate cuts, and he is damned if he does, damned if he doesn’t................
Growth ball in govt’s court, says RBI
The Reserve Bank of India (RBI) on Monday warned that patchy monsoons can knock up prices and trim farm sector and national income growth, obliquely hinting that the central bank was unlikely to cut interest rates. It complained of a cramped “monetary policy space” on the eve of its quarterly review........
Which inflation is RBI targeting?
In the last one and a half months, a fierce debate is raging regarding the validity of RBI monetary policy actions against the backdrop of inflation numbers. RBI has given a new twist to this debate with the Governor recently espousing the need to develop a producer price index (PPI) and reiterating its position that increase in interest rates by RBI alone cannot explain the current investment slowdown. No prizes for guessing that we at Ficci would be on the other side of the debate. However, our endeavour in this piece is not to re-emphasise the relevance of a rate cut, but to open up a new area of debate by focusing on the rationality of the RBI policymaking............
India's central bank set to hold interest rates steady
......"With upside risks to inflation, we believe that there is limited room for the RBI -- at this juncture -- to support growth through a cut in the repo rate,"......
Economy is now at a critical juncture: RBI
....Economy is now at a critical juncture,” the RBI said, where revival can be supported by restoring confidence through policy actions to encourage investment. Maintaining that inflation is likely to be sticky during 2012-13, the RBI said, “Inflation and macro-risks will condition growth-enabling policy actions with a view to supporting recovery in a non-inflationary manner.”.......
Losing momentum
A day before it makes its next monetary policy move, the Reserve Bank of India (RBI) has reiterated that the Indian economy continues to run into headwinds..........
Time for surprises is over; Bet on no rate-cut: YES Bank
: So, status quo policy is what you expect. But the RBI has made very clear that it has little room to maneuver. To quote the RBI, “The fiscal and monetary space to stimulate the economy remains limited in the presence of an already large fiscal deficit and persistent inflation.” So, does the battle between the government and the RBI wage on?
A: Unfortunately, yes. This time the RBI has gone a step further and prescribed a revival of growth to the government, reiterating that a lot of confidence-building is to essentially come from government policy actions.....
RBI Warns of More Inflationary Pressures From Poor Rains
......Noting that the benefits from the declining global commodity prices were partly offset by the falling rupee, it said "the near-term inflation trajectory could remain sticky and conditioned by a number of risks that emanate from the unsatisfactory progress and distribution of the monsoons, higher MSPs announced for kharif crops and the impact of the exchange rate pass-through." The report warned the path of inflation may also be impacted by the timing and magnitude of administered price revisions even though such adjustments have become necessary to reduce pressure on the medium-term inflation from expansionary fiscal policy........
It’s up to New Delhi to fix the economy: RBI
Says interest rates can no longer be blamed for slowdown
The Reserve Bank of India (RBI) has painted a sombre picture of the economy because of government inaction on reforms and rising inflation. It has also put the onus of reviving growth on the government. For this, it has said, subsidies and expenditure have to be cut. Interest rates, RBI has said, are no longer the cause of the economy’s slowdown.....................
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Outlook for economy remains weak
....“Decisive policy action backed by credible commitment to a long-term strategy for correcting macroeconomic imbalances and stimulating investment is crucial at this stage to revive confidence as well as provide space for monetary policy to help sustain growth while keeping inflation under control,”.
Status quo hint in RBI text
......In an unequivocal message to Prime Minister Manmohan Singh, who now looks after the finance ministry, the RBI said the fiscal deficit target for 2012-13 was at a risk of being breached because of likely overshooting of subsidies and a shortfall in receipts. The central bank, therefore, asked the Centre to concentrate on setting its fiscal house in order by curtailing subsidies and significantly boosting government capital expenditure to provide an investment stimulus to the economy, which would help crowd-in private investment........
RBI Must Stand Firm
.....Eventually, India's central bank will have to relent on decade-high interest rates to help boost the economy. The RBI surprised the market three months ago with a half-percentage-point cut. But there can surely be no surprises this time around......
Inflation a big worry, RBI says on policy eve
...... “The capacity of investment to respond to monetary policy actions to stimulate growth is conditional on an improvement in non-monetary factors that have impacted investment in the current cycle,” .........
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RBI Says India Inflation Risks Significant Even as Growth Slows
.....“The Reserve Bank is facing a dilemma on policy action in the current stagflation-type environment,”..........
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RBI macro survey sees FY13 GDP growth at 6.5%
........"Risks to inflation remain from unsatisfactory monsoon and increases in MSP even as growth slowdown eases demand pressures. While core inflationary pressures are currently muted, a continued rise in real wages may spill over to core inflation." While RBI did not indicate to cut rates amid the ongoing threat of high inflation rate, it fully recognised the threat of waning GDP growth that needs to be revived by lifting the investors' confidence.............
Public versus private
....The regulators have also decimated the profitability of various pieces of the financial services industry over the last few years and thus shrunk the profit pool for financial services. First we had Sebi go after the mutual funds and insurance sectors, destroying the manufacturer margins as well as severely denting the economics of third-party distribution. Then gold loans and microfinance came into the regulators’ cross-hairs, and their business models will have to be re-jigged. The whole capital markets piece is bleeding, with no signs of profitability — and the RBI has significantly tightened priority-sector norms, making these targets much harder to achieve without self-origination of assets. Thankfully the RBI seems to have pulled back on the new non-banking financial corporations’ priority sector and securitisation guidelines, or even that sector may have undergone a profit shock.......
Non-bank credit flow doubles
Flow of credit to the commercial sector from sources other than banks doubled in the first quarter of the current financial year, the Reserve Bank of India (RBI) said in the macroeconomic and monetary development report on Monday. While credit growth was in line with projection, it is expected to fall, the central bank said a day ahead of the first quarter monetary policy review. Bank credit grew by 17.4 per cent in mid-July 2012 from 16.8 per cent at end of March 2012. RBI had projected credit growth of 17 per cent for the current financial year. “Hence, credit growth is in line with the indicative trajectory of 17 per cent for the year. Anecdotal evidence from bankers suggests that there may be some deceleration ahead,” the report said..........
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