.....Migrant workers with no local proof of address don’t figure anywhere in the Reserve Bank of India’s (RBI’s) ‘know-your-customer’ guidelines. There is a separate set of guidelines for NRIs, even for migrants from Nepal, but none for migrant labourers. The only privilege RBI has belatedly granted them is that of a bank account. Here is an example of how PPF treats the poor. Though it is called the Public Provident Fund, the word public, according to State Bank of India, does not include poor and migrants who don’t have their own house in the locality.......
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Monday, September 3, 2012
A Question Of Timing
....Chaudhuri may have raised a fair question — whether the current level of CRR is too high — but his logic (and timing) may be flawed. The statutory minimum for CRR is 3 per cent, and the RBI Act does not have any provisions for paying interest on balances, though in a December 2003 report on another policy instrument, the liquidity adjustment facility, the RBI discussed the need for a change in the statute to lower it below 3 per cent, or pay interest on balances......
EMPEROR, LOOK AT YOUR OWN CLOTHES
....why shouldn’t be RBI subjected to Comptroller and Auditor General of India’s (CAG) audit? I am in no way suggesting the central bank is doing things that it should not do. In fact, as an institution it is known for its impeccable integrity and intellectual honesty even as it continuously fights with the finance ministry for its independence, but there is no harm in being scrutinized by CAG and the public accounts committee.
With the changing times, the emperor should look at his own clothes. Otherwise, it loses the right to point fingers at its naked subjects........
Power abuse
Shyamal Majumdar’s column “Time for self-regulation?” (Human Factor, August 31) was well written. There are also a number of such CMDs and executive directors in banks who believe they deserve to be in top positions and look down on their colleagues. It isn’t unusual to hear them pass sarcastic and unacceptable remarks at functionaries at meetings. The behaviour of these top executives is only encouraged by yes-men who aim to get coveted transfers, including postings abroad. Unfortunately, the system has tolerated and supported such officials.
- S Mohan Ram, Mumbai (BS)
The banking system and CRR
..............Therefore, till the time necessary conditions are not created, the banking system will have to live with CRR.
Read - Mint
Banking is not a charitable business: Chakrabarty
Reserve Bank of India’s Deputy Governor K. C. Chakrabarty is someone who speaks his mind. That obviously doesn’t endear him to many. Often times he has ruffled feathers with his forthright views
RBI is never satisfied with anything because our expectation level is much higher. More than RBI, I am concerned if the customer is satisfied. I am satisfied if the customer is satisfied. We are telling the banks to improve.Read - The Hindu
It is not our job to help banks achieve targets: K C Chakrabarty
Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty, in an interview with Rutam Vora, says banks should not complain about the stiff priority-sector targets.,,,,,
Interest rates will come down when inflation softens: RBI
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| On the global economic situation “This is a crisis, absolutely no doubt, it comes once in a lifetime... I can say we shall not be alive when this type of crisis comes next...” |
Read - Mint
On rate cut, St’s split down the middle
Economic growth data for the quarter ended June has left economists and analysts divided on the issue of a reduction in key policy rates by the Reserve bank of India (RBI)..........
Read - DNA
Data Rupture
....In his inaugural address at RBI’s Statistics Day Conference last year, Governor Duvvuri Subbarao went into the need for more data and better data in some detail. He highlighted the lacunae in unemployment, wages and inflation data, but drew special attention to the “analytically bewildering” volatility of IIP data. .....
What role can the banking sector play in getting India back on the path of 10% GDP growth?
..... One, let’s have the FRBM Act and delink monetary policy. Second, free the RBI board and public sector bank boards from irrelevant and unnecessary government interventions. And three, please do not undermine existing institutions. I am specifically referring to the CAG and EC.
My View on "RBI doubles contingency reserve, surplus transfer to Centre falls"
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| M.G.Warrier |
Transfer of RBI's surplus profit to GOI in 2011-12 was Rs 16010 crore which as percentage to gross income is lower by around 10.4 per cent as compared to 2010-11. Obviously, the transfer of ‘surplus income’ to government in a routine manner when the reserves position of the central bank shows a declining trend needs a review. Considering the size of RBI’s balance sheet recouping the reserves position to healthier levels will be a Herculean task.Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks RBI has to absorb from time to time, GOI should support the central bank’s efforts to augment its reserves at least on par with the 12 per cent norm of capital adequacy RBI expects from banks it supervises. But despite a transfer of `2348 crore in 2011-12, from income to ADR raising its level to `18214 crore as on June 30, 2012, the CR and the ADR together constituted only 9.7 per cent of the total assets of the Reserve Bank as on June 30, 2012 showing a fall of 0.6 per cent from the level of 10.3 per cent during the previous year, taking the original target of 12 per cent further away. It may be recalled that in 2009 the target was almost in sight when the level reached 11.9 per cent. To ensure that temptations of government emanating from external compulsions do not dilute the strength of RBI’s balance sheet, GOI should take measures to augment the share capital of RBI after carrying out appropriate amendments to RBI Act. Till such time RBI should be allowed to retain surplus income by transfer to reserves. Considering the size of its balance sheet and the internal and external pressures on its income generating capabilities, as also the nature of shocks the Bank has to absorb from time to time, the central bank’s reserves need to be augmented on an ongoing basis.
FinMin looking at further consolidation of RRBs to 55
The Finance Ministry is considering a proposal to further consolidate the number of Regional Rural Banks (RRBs) to 55 for improving their efficiency and to better serve the rural economy. There are 82 RRBs sponsored by various public sector banks across the country..........
Speaking At Cornell, India’s Central Bank Governor Endorses Austerity for Growth
.......Subbarao traced the story of India’s growth from the early decades after independence when the country experienced what he called the “Hindu rate of growth”. The phrase suggests that the Hindu philosophy of fatalism is detrimental to economic development. However, it would have been much more appropriate to term India’s modest growth rate under Prime Minister Nehru as the “Communist rate of growth” as India’s early policy makers were enamored by the socialist model of the Soviet Union. But due to a series of economic reforms after the Balance of Payments crisis of 1991, India experienced rapid economic growth driven by a high savings rate, increased productive capacity, and an unprecedented demographic dividend.............
Bank credit to consumer durables down
Bank credit to such categories as professional services, consumer durables, and advances to individuals against shares and bonds declined more sharply between March-end and July 27, 2012, compared with the year-ago period....
CM mulls stringent action against unauthorized NBFCs
GUWAHATI, Sep 1: Chief Minister Tarun Gogoi said stringent action would be taken against the non-banking financial companies (NBFCs) and other such institutions which are raising money from the market without following the Reserve Bank of India (RBI) guidelines. The Chief Minister has also instructed the Finance Department to take action against such unauthorized NBFCs functioning in the State and make a list of such unauthorized NBFCs in the State. It may be mentioned that several NBFCs are functioning in Assam without the RBI’s nod and the Bureau of Investigation of Economic Offences (BIEO) had already started its investigation in this regard.
The Sentinel Assam
SC issues notices to Centre, RBI on PACL’s petition, No Ex parte stay
The Supreme Court has issued notices to the central government, Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI) and others on a petition filed by PACL India Ltd. seeking stay of an order of the Madhya Pradesh High Court. The High Court had on the basis of a preliminary CBI enquiry report noted in its order that the allegations made are “prima facie found to be true” and directed its order to be circulated to different government agencies by way of information.......
Bolder Measures for a Cashless Economy
.....By swiping a debit card, a customer can pay for purchases at a shop directly from her bank account. Consumer convenience is obvious. Merchants do not have to manage cash (for those not evading taxes). But banks benefit in three different ways. Had the customer withdrawn cash a few days earlier from an ATM to spend at the shop, the bank would have incurred cost of ATM withdrawal, lost out on float in the bank account for the few days, and lost out on the fee it earns every time purchase is made on debit card. Government is pleased with debit card-based spending because electronic transactions are traceable for tax purposes. The regulator is happy because the efficiency of banking system goes up. So why is debit card penetration so low?.......
How technology is changing banking
New media and the use of the Internet will make banking easier, cheaper and create new opportunities to tap the already saturated urban market, panellists at Mint’s “IT in Banking Conclave” said. Despite security issues and user reluctance to adopt new media, this form of banking is here to stay..........
Hit by dubious claims, RBI junks ATM cash retraction
CHENNAI: The banks have done away with the cash retraction system in ATMs. The system, which enabled the machine to take back the currency if it is not removed within a certain time, was withdrawn last week after the Reserve Bank of India (RBI) agreed to National Payments Corporation of India's proposal for removing the feature from all ATMs to deal with the increasing number of fraudulent claims about non-receipt of cash.......
Staff Federation slams Dhanlaxmi Bank Management
......Alleging manipulations in the balance sheet, the Bank Employees Federation of India (BEFI) has sent a letter to the Reserve Bank of India on August 26 seeking its intervention in the bank’s activities.........
Inclusion, Sahara style
......The Finance Ministry has offered tax breaks on equities and discounted prized public sector stock. The Reserve Bank of India (RBI) has pushed banks to serve up no-frills bank accounts. The Securities and Exchange Board of India (SEBI) tried everything from minimum public shareholding to electronic IPOs to woo small investors. But they have ignored all this and poured money into gold and property instead. ......
Is your bank locker secure?
.......The Reserve Bank of India says, ‘Banks should exercise due care and necessary precaution for the protection of the lockers provided to the customer.’ Banks may claim to have this in place, but this isn’t true in many cases. For instance, after a robbery at an Indian Overseas Bank branch in Chennai this year, police discovered that most bank branches in the city were yet to install basic safety devices such as security alarms and closed-circuit television (CCTV) cameras..........
Saturday, September 1, 2012
Perspectives on risk and governance - Anand Sinha
Address by Mr Anand Sinha, Deputy Governor of the Reserve Bank of India, at the Risk & Governance Summit, organized by the Indian School of Business, Hyderabad and Deloitte, Mumbai, 23 August 2012
....Before concluding let me briefly touch upon the Reserve Bank’s approach towards risk management. Even at the height of belief in the self correcting nature of free markets, which has now been debunked in the aftermath of crisis, Reserve Bank maintained a stance of conscious gradualism in fostering innovation and permitting sophisticated products in the markets. Reserve Bank’s approach is more guided by the imperatives of ensuring that finance remains linked to the real sector and does not derive dynamics of its own. Given the nature of our economy with wide disparities in the income levels, education and sophistication and the pressing need for ensuring inclusive growth, the market development strategy has been carefully calibrated so as to avert any excesses which could lead to market failures......
Meeting between business correspondents and RBI
Thanjavur : An interactive meeting of business correspondents of various banks with Reserve Bank of India officials was held here recently. Indian Overseas Bank, the lead bank of the district, organised the meeting. C.D.Srinivasan, Chief General Manger, Reserve Bank of India, Mumbai, presided over and interacted with more than 50 business correspondents, service providers, government officials, and bank officials, said a press release issued here by Indian Overseas Bank on Tuesday...
RBI asks people not to invest in illegal finance companies
....."People should not deposit their hard earned capitals in unauthorised and illegal NBFCs and institutions expecting of getting heavy returns. The people should also inform the RBI and the appropriate authorities on these NBFCs' acts and lodge complaints against the banking services," B.B.Sangma, Banking Ombudsman for northeastern states, told reporters......
Visa’s new fraud detection system set to make e-payments more bankable
....“Building customer confidence in the security around electronic payments is important. With the RBI guidelines around securing card transactions in the country, we too have implemented the real-time fraud solution to further strengthen our transaction monitoring capabilities.”.......
RBI: Lowest numbers of ATMs and PoS terminals
Since we Indians do not believe much in making non-cash transactions, the RBI is taking measures to facilitate customers for doing so. With low penetrations of ATMs and POS, the question is-How soon is it possible?.......
Read - Moneylife
Jaipur facing coin crisis, citizens short-changed
........Meanwhile, V.G.Sekar, General Manager (issuance, regional office of RBI) informed DNA that no complaints related to the shortage of coins have been registered so far. “But, if a crisis is being experienced, the RBI will take the required steps to ensure ample availability of coins in the city,” he said.
Read - Daily Bhaskar
Public sector banks: Troubles continue
The Mahapatra Committee recommendations could erode a large portion of public sector banks' net worth
....No wonder, banks are rejecting RBI’s suggestion as providing for NPAs would not only reduce their profit but the provisioning would also hit their balance sheets. If the banks post losses they will have to transfer it to the net worth in the balance sheet which would then be eroded to the extent of these losses. In other words Tier-1 capital of the banks will get affected, thus impacting their ratings and their ability to borrow and lend......
Read - BS
RBI is fighting the right battle
.......RBI’s battle today is to bring down inflationary expectations. Higher inflation does not create a conducive environment for growth. The emphasis to push growth and control inflation has to be on controlling the fiscal deficit and improving the policy environment.
RBI Review
This refers to the article, “Why not have variable CRR rates” ( Business Line, August 30). We should concede that those complying with legal requirements or regulatory stipulations can have personal perceptions at variance from policies which they are implementing as part of their job. RBI Deputy Governor Chakrabarty’s response rejects this principle. Relating CRR to banks’ capital-to-risk-asset ratios, besides being impractical from a timeline angle (assessment of the ratio and prescription of CRR), may have problems in monitoring and compliance. Banks’ financial health-related issues can best be managed by prescribing higher capital adequacy requirements. The RBI should use this opportunity to do a comprehensive review of capital adequacy, SLR and CRR stipulations and margins enjoyed by banks considering the capital needs of public sector and private sector banks, need to include new instruments in the basket of eligible assets under SLR, introduction of disincentives for maintaining excess SLR, and need to make government securities market-friendly so that their share in the SLR can come down, the impact of higher CRR on banks’ profitability, etc.
- M.G. Warrier, Mumbai (HBL)
CRR should not be diluted
....The Reserve Bank of India (Amendment) Act, 2006, gives discretion to the RBI to decide the percentage of scheduled banks’ demand and time liabilities to be maintained as CRR without any ceiling or floor. Consequent to the amendment, the Reserve Bank was also not required to make interest payment on CRR balances. Consequent to the amendment in June 2006, the RBI announced the removal of the floor of 3 per cent and ceiling of 20 per cent in respect of CRR. Thus, in an operational sense, there is no prescribed limit of CRR as in the past......
Read - HBL
CRR - Breaking self imposed silence..........
The widely reported sordid and ugly exchange between the Chairman of SBI and a Deputy Governor of RBI on the Cash Reserve Ratio has forced me to break my self-imposed strict silence on anything economics or finance in India for three reasons: first is the status that the RBI has given me in the Society. During my tenure as Chief Economic Advisor at the Indian Banks’ Association, as one of the Managing Directors of the Asia-Pacific Rural And Agricultural Credit Association, and as Consultant at the National Stock Exchange, I was often called as “the RBI man’ rather than by name or designation. Second, the exchanges are fiercely (and disgustingly) hot but not bright and hence missed the core points. Finally, nobody, not even in this august group, has commented on this.
Now, on the issue (mainly from basic text books): (i) Banks are special financial institutions in the sense that they alone can create money—not mutual funds, or insurance companies or non-banking financial institutions can do this (Not even the Chairman of SBI could deny this). (ii) The Central Bank of a country (in the present context the RBI) has the responsibility of ensuring a sound banking system. For this purpose, it even plays the role of lender of last resort to banks—and not to other types of financial institutions mentioned above. (Again, not even the Chairman of SBI could deny this). (iii) The point noted in (ii) could also be interpreted to denote the Central Bank as an insurer for the banks. Viewed in this perspective, the cash reserves with it are in the nature of “premium” (I used within quotes because it is only a form and strictly NOT; the quantum does not depend upon the risk—the insurer ensures that there is no risk). Almost nobody recognises this point but jump to the next; (iv) CRR is the most effective monetary policy tool: an increase in CRR, by blocking lendable funds, drastically reduces the banks’ ability to lend. (Any undergraduate economics text book will explain this proposition in detail). The fact is, however, different. The exact effect depends upon the structure of the economy and the balance sheet of the Central Bank. When Lord Keynes stated that ‘with a stroke of pen’ the Central Bank could affect the liquidity in the economy, he was referring mainly of the USA of 1930s and that country’s Federal Reserve System. The Indian conditions and the RBI are vastly different. In India, the stated result is possible only under very restrictive conditions. Usually, in India, the effect of a change in CRR is, at best, neutral and, more often, perverse—an increase in CRR adds to the prime money, mainly currency with the public which, in turn, augment bank deposits. This could be proved with the balance sheet of the RBI. It is strange that the Chairman of SBI is not aware of this because, in mid-1980s, the officer in charge of Treasury at SBI had explained the mechanism to me. From this perspective, the Chairman cannot have any grievance.
- Dr. N. Nagarajan, Former Adviser, DEAP (via e-mail)
GDP numbers corroborate our estimates: C Rangarajan
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| RBI would consider inflation numbers before taking a call on the policy rate..... |
Deepak Parekh nominated to CCI's expert advisory group
......"The group has been constituted in a manner that CCI could benefit from the advice of eminent persons representing a wide arena from the Corporate Sector, Academics, NGOs, Regulatory Authorities, Reserve Bank of India, CAG, and Banking & Social Activist etc," the release said. Others on the ten-member panel include former CAG V N Kaul, Biocon CMD Kiran Mazumdar Shaw, former RBI Deputy Governor Rakesh Mohan and NGO activist Rohini Nilekani.
US companies assure support to India's Infrastructure Debt Fund
WASHINGTON: American companies have assured Reserve Bank Governor D Subbarao of their strong support to India's efforts to attract foreign capital for the country's infrastructure development through a sectoral debt fund and other initiatives. In a meeting hosted by US India Business Council(USIBC) last night, the American industry leaders also discussed with Subbarao the need for maintaining 100 per cent foreign ownership of wholly-owned subsidiaries, and transparent priority sector lending norms. ...........
Read - ET
The trend is clear
.....There have been sharp and frequent revisions in important statistics. Consequently, there have been question marks over the policy decisions that had been based on such figures. Data relating to industrial output — the monthly IIP numbers — have drawn the maximum flak, including from the RBI Governor, but scepticism over the GDP figures has grown recently with reports of large revisions in data published as far back as 2007-08......
Healthy competition may help in tackling inflation: Moily
....."Whenever we confront with inflation and many other problems of economy we always look at the RBI and bankers... on what they will do. But, ultimately they can't do anything to contain inflation ... Only fair play of the competition law and competition policy is the solution,"......
'Policy action not enough to prevent downgrade'
Yesterday, Reserve Bank of India (RBI) Governor D Subbarao had said India should be prepared to see its sovereign rating downgraded to ‘junk’. Today’s data on fiscal deficit only buttress his point............
Read - BS
India has no time for banks as crisis worsens
.........A full-fledged crisis, one that could have blown away the precariously-perched India economy off course, was averted in 2008/09 when the Reserve Bank of India agreed to a one-time restructuring for real estate and the aviation sectors. Growth in the next few years after the Lehman-crisis was reasonably strong, leading many to believe that India may have escaped the worst of the US-Europe crisis..........Read - ET
RBI allows QFIs to hedge currency risk of investments
........"It has now been decided to allow QFIs to hedge their currency risk on account of their permissible investments (in equity and debt instruments)," ............
Read - ET
Friday, August 31, 2012
Sacrificing growth to tame inflation: Subbarao to critics
Read.....
RBI Governor D Subbarao for stable taxation and investment regime to attract FDI
NEW YORK: Reserve Bank India Governor D Subbarao has appeared to have joined the debate on the recent controversial retrospective taxation provisions saying there is need to have a stable policy, taxation and investment regime to attract foreign capital. "India has to run a stable policy regime and have a stable taxation and investment regime," he said during his lecture at the Asia Society here.......
U.S. Industry Welcomes Reserve Bank of India Governor
The U.S.-India Business Council (USIBC) today hosted the Governor of the Reserve Bank of India (RBI), Dr. D. Subbarao, for a private meeting of top executives from global financial, manufacturing, and other corporations. The industry representatives, including several CEO-level, heard from the Governor the challenges RBI faces in managing inflation while promoting the growth necessary to keep the engine of India’s economy thriving, all in the midst of many factors beyond the respected institution’s control.......
Time for self-regulation?
Public sector bank chiefs are not always paragons of HR virtue
....Human resource, or HR, development is one of the key portfolios that K C Chakrabarty handles as the Reserve Bank of India (RBI) Deputy Governor. And there is no doubt that he has initiated sweeping administrative reforms to ensure fairness in transfers and postings in the central bank. He is also known for his outspokenness in an organisation that seems to specialise in a language that hides more than it reveals...........
Minting on error: Rs. 5 coins go for Rs. 5,000
Kolkata : ......."Recently, we came across a 5-rupee coin from the Calcutta mint with the normal reverse showing 'XIX Commonwealth Games, 2010- Delhi'. The coin had no denomination," said Sharma, who bought one such piece for Rs. 6,000. "The issue has come to Reserve Bank of India's notice. We are investigating whether there was an error on our part or there is foul play," a senior RBI official said.
Memories framed only remained............
“ I am deeply saddened by the sudden unexpected untimely demise of Ms.Anitha Srinivasan. She was a very friendly, affectionate person with full of zeal and enthusiasm. I recall the support and cooperation she gave for our training programme conducted at RBI, Chandigarh. At a short notice, she handled a session on HR combined with a Quiz which is still Green in my mind. In fact, that was my first programme as the Faculty of CAB that too at an outstation. In the end of the program, she presented me a photo frame taken at the inaugural session with the RD-RBI, CGM-NABARD, Anitha, R R Kulkarni, CAB-Faculty and myself, which I kept it for display in my house. She also shared her memoirs of outreach programme conducted in a village in Himachal Pradesh in one of the coldest winters. Seeing her talent in teaching, I suggested her to join CAB as Faculty but she joined the heavenly abode. I pray to almighty for her peaceful soul”.
- L.M.Ganesan, AGM/MOF, CAB, Pune
86th meeting of Reserve Bank of India, Co-ordination Committee on Training held in Bhopal
Ms. Meena Hemchandra, CGM, Principal-CAB & President CCTH releasing Hindi Noting Table Calender, Shri P.R.Ravi Mohan, Regional Director, RBI, Bhopal, Shri Vivek Maindargi, AGM, RBI, Shri Umesh Kumar Singh, Field General Manager, Central Bank of India, Bhopal Zone, Shri S.K.Agarwal, Principal, SPBT College, Mumbai (DGM, Central Bank of India)
New banks not recipe for quick financial inclusion, says Kamath
..... “Banks are reaching out to the masses and accounts are being opened every day. I think the immediate thing we need to figure out is how to get money into these accounts and how do you create lending opportunities (in rural areas). These are product-related challenges that banks are facing,” ...........
Read - BS
Banking Ombudsman receives 3k complaints
The Banking Ombudsman, Chandigarh, which covers Punjab, Himachal Pradesh, the Union territory of Chandigarh and three districts of Haryana received 3,521 complaints in the year 2011-12. According to J Tashi, the Banking Obudsman of Chandigarh, 663 levy charges on loans related complaints, 574 complaints related to suspected use of cloned ATM cards, 499 complanits related to pension funds and 17 complaints pertaining to debit cards were received. The complaints made on-line increased by 12.6 per cent while other modes decreased.......
Kamath disagrees with SBI chief, says CRR part of monetary policy
....Asked to comment on the vocal slugfest between Chaudhuri and RBI Deputy Governor K.C. Chakrabarty on the issue, Kamath said in the whole issue of monetary policy, several tools are being used, including Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio. CRR is the portion of deposits kept by banks with the Reserve Bank on which no interest is paid. “I think the monetary authority (RBI) in its wisdom uses all these tools as appropriate and that’s what is being done.......
Bankers can give views
Apropos the debate on phasing out the cash reserve ratio, bankers should be allowed to express their views freely on pertinent areas of the banking sector since that will go a long way in framing effective policy for financial stability. The regulator should welcome views as long as they do not damage anyone’s interest.
- Srinivasan Umashankar Nagpur (BS)
CRR battle
The recent war of words on CRR between RBI Deputy Governor and SBI Chairman goes beyond the subject itself. First, the media should ascertain the views of the chairmen of other banks. The RBI Deputy Governor will find himself in a hopeless minority. No chairman of another bank ever has the courage to say anything against SBI till he gets into RBI. There was a time when SBI officers ran many other banks. When these banks wanted a chance to get into SBI, the experiment failed when such a chairman mishandled the Harshad Mehta snafu in a ham-handed way. Also, RBI can never forget that SBI’s genealogy beats that of the RBI by more than a century and that SBI, in its previous avatars, was virtually the first RBI from 1862 till 1935.
- T R RAMASWAMI (ET)
Can’t just junk the fear
..........When the RBI Governor says, even if just by way of abundant caution, that “we need to prepare for” a ratings downgrade, it’s time to get worried, very worried...........
Read - FE
Read - FE
There’s no money to show, honey
High fuel bills, food bills and a wedding cake tax regime - India's consuming classes have never had to fight on so many fronts. Now, latest RBI data shows household financial savings are also decelerating sharply. So is the wallet pinch so hard that Indians are putting off consumption as well as savings?..........
RBI asks urban co-operative banks to modify FD form
....RBI had earlier asked UCBs to incorporate such a clause in the account opening form, however, it said, "UCBs which have neither incorporated such a clause in the account opening form nor taken adequate measures to make the customers aware of the facility of such mandate, cause unnecessary inconvenience to the 'surviving' deposit account holders(s). "UCBs are, therefore, advised to invariably incorporate the aforesaid clause in the account opening form and also inform their existing as well as future term deposit holders about the availability of such an option." .......
RBI signs MoU with UK on black money
New Delhi, Aug 30 (IBNS) The Reserve Bank of India (RBI) has entered into a Memorandum of Understanding (MoU) with Financial Service Authority (FSA) of UK on black money...........
Parl Panel concerned over lack of sync between RBI, govt
......."There is a visible lack of sync between the fiscal and monetary policy being followed by the government and the RBI ... The Committee strongly feel that monetary policy alone cannot bring down inflation or spur growth in the absence of commensurate fiscal measures," said a Parliamentary panel report on 'Current Economic Situation And Policy Options'............
Firms rush for NCDs ahead of RBI policy
A slew of non-banking financial companies (NBFCs) have lined up their non-convertible debenture (NCD) offerings ahead of the Reserve Bank of India (RBI) policy review on September 17. NCD issues worth more than Rs 2,000 crore are likely to hit the market in two weeks..........
RBI, finmin paint bleak picture
....The central bank, in a forceful submission that highlighted its growing differences with the finance ministry, reiterated its demand for fiscal action by the Union government and has recommended that it restructure spending. It should step up capital expenditure that will, in turn, serve as a stimulus to “crowd-in” investment, RBI said. The central bank was categorical that the Union government will not be able to adhere to its fiscal deficit target for the year, unless it takes some corrective steps......
Corporate loan rejig could soar to Rs 3.25-lakh crore
......At a recent seminar, K. C. Chakrabarty, Deputy Governor, Reserve Bank of India, said the increase in restructuring can be partially attributed to excessive borrowing by some corporates during boom periods. He said there are deficiencies in project appraisal, especially with regard to cash flow analysis and the determination of the date of project completion.
Fake Indian currency racket trail now reaches Luxembourg
...."We are in touch with them and the Ministry for External Affairs (MEA) has been informed. We are also sending them the samples of the fake notes so they can spot them and discontinue their circulation in their country. Reserve Bank of India (RBI) has also released its report on the difference between fake and original currency,"......
RBI asks banks to post bulk deposit rates on website
The Reserve Bank of India (RBI) has asked banks to put up bulk deposit rate on their websites, to stop banks from offering exorbitant rates to corporate depositors. According to RBI norms, no bank can offer varying rates on the same day at different locations..........
Accounting for NPAs when economy is down
The task for the RBI is certainly cut out, as it has to balance a dark economic environment with aggressive accounting standards. Having done so in the past (for Indian accounting standards), this should not be a too Herculean a task for the RBI..............
Banks oppose RBI committee's suggestion of higher NPA provision
.....The Reserve Bank of India had set up a working group under the chairmanship of B Mahapatra, executive director, RBI, to review the guidelines on restructured advances of banks and financial institutions. Bankers felt if regulatory forbearance was taken away, which would mean all restructured loans would have to be classified as NPAs, it would increase NPAs in the system. This would have an implication on banks’ profitability and ratings. “Banks’ ratings would be drastically affected if NPAs increase sharply. An adverse rating would make it difficult to raise funds at viable costs,” ......
Technology as agent of change in Indian banking
The evolving information technology in banking can not only help introduce transparency and reduce costs for the banks, but also improve customer service and reach, while enabling financial inclusion.....
No-frills demat account suited for irregular users
| The no-frills banking experience |
| In 2005, the Reserve Bank of India (RBI) also proposed no-frills banking accounts. Account holders could maintain zero balance. In addition, the first cheque book was free and subsequently Rs 5 was levied on every cheque leaf.However, such accounts have not helped banks to spread reach, neither have too many people entered the banking system through these routes. According to public sector bankers, the incremental number of accounts through the no-frills option is barely one per cent. In fact, even the apex banker was not-too-happy with the banks as these accounts remained mostly on paper and no transactions took place. In fact, RBI has told bankers recently to remove the no-frills tag from these accounts since it seemed like a stigma. Instead, they have asked to call it basic savings bank accounts. |
Read - BS
‘I need to earn salary, and not get salary’
...... the board had fixed a salary of Rs 1 lakh a month for him. This was approved not only by the shareholders at the AGM, but also by the RBI and the Central Government. But surprisingly, he has not drawn his salary. He said: “I have a policy. That is to earn the salary, and not to get the salary. I did not take it. As a non-executive director I get sitting fees, conveyance and halting allowance. I also get my pension. These help me meet my expenses.”......
Read - HBL
Corruption: A challenge for managers - M.G.Warrier
.....In November 2010 writing on “Demand and supply of corruption in India” Dr Bimal Jalan made the following observation on the working of the watchdogs of governance in India: “Investigations are carried out, guilt is established, appeals are filed but nothing much happens after that. Years pass; courts, people and the media soon move on to other cases.” The same feeling, in different situations has been finding expression through word of mouth, media reports and on faces of aam admi captured by electronic media and telecast across the world........
Read - Moneylife
Foreign banks in India
....Now the Reserve Bank of India (RBI), the regulator, wants local rules to apply to foreign banks with over 20 branches in India. In practice that means the big three. One bigwig says the rules will make India a harder place to operate in than China. It is easy to sympathise with the foreigners. They know nothing about the price of ploughs. Foreign banks have just 21 ATMs in rural India, home to 830m people. But the RBI’s stance is understandable, too. Why should big foreign banks be treated differently when 70% of farming households have no access to formal finance?.....
Are banks ready for Basel III?
.....Basel III represents a wholly new era in banking regulation where quick and accurate compliance can be achieved. Unlike Basel II, the implementation of Basel III requires monitoring data every step of the way and with the findings set to become public, the implication is that no further regulation will swiftly follow until the new risk paradigm is reached.
7% interest on savings accounts helps smaller banks gain
....Since the deregulation of savings deposit interest rate in October 2011, five private banks, 10 foreign banks and a co-operative bank have increased their savings deposit rate in the range of 100-500 basis points so far, according to RBI data. These banks have increased their share of savings bank deposits in the banking system from 1.8% to 2.1% in the post-deregulation period up to July 2012......
Choose a cash back credit card that suits your spending pattern
The spectre of inflation is still haunting the common man. The Reserve Bank of India recently underscored the threat when it revised its inflation expectation upwards from 6.5% to 7% for March 2013. Sure, the only way out of this inflationary situation is to cut down on discretionary spending..........
Read - ET
Read - ET
Thursday, August 30, 2012
India’s post-crisis macroeconomic challenges - Deepak Mohanty
Speech by Mr Deepak Mohanty, Executive Director of the Reserve Bank of India,
at the Ruia College, Mumbai, 28 August 2012
at the Ruia College, Mumbai, 28 August 2012
....During the post-crisis phase of 2008–12 while growth generally moderated, inflation rose complicating the task of monetary management. The Reserve Bank began exiting from the crisis-driven accommodative monetary policy stance in October 2009, first by phasing out all the unconventional measures and then raising interest rates. Overall, headline WPI inflation increased to an average of 7.6 per cent during 2008–12 largely reflecting near double digit inflation for most months during January 2010 – November 2011 period. WPI inflation has since moderated to around 7.0 per cent but remains above 5.5 per cent observed during the pre-crisis period. Growth moderation, coupled with signs of thawing of WPI inflation since December 2011, prompted the Reserve Bank to cut the repo rate by 50 basis points to 8.0 per cent in April 2012.....
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