......With the Government doing its part on reforms, now all eyes are on the Reserve Bank of India's mid-quarter review of the Monetary Policy on Monday. There is an air of optimism among traders that the RBI might actually announce at least 25 basis point cut in interest rates. However, inflation at 7.55 per cent in August – much above the central bank's comfort level – has given little headroom for RBI......
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 17, 2012
All eyes on RBI in the reform run
......Most economists and bankers are sceptical. But the Finance Ministry is optimistic, pinning hopes on the RBI’s statement of July 30 on “Macroeconomic and Monetary Developments First Quarter Review”.......
Policy rate caution
With the “party” that began over the weekend, there have been calls for the Reserve Bank of India (RBI) to take it easy and cut the policy rate..........
RBI’s turn
The government’s barrage of announcements complicates Governor Subbarao’s choice
......The set of policy measures announced last week is unlikely to yield results this fiscal. The headline inflation at 7.55 per cent is high and is climbing again. Two weeks later, the diesel price rise will push it one per cent more. Yet if the RBI governor wants to vote for optimism on the economy, a 50 basis point cut in repo rates will do nicely......
Read - Indian Express
What will RBI do?
Will the RBI cut rates on Monday or maintain the status quo?
Answers to that would depend upon whether the RBI thinks that the diesel price hike is the starting point of an earnest attempt on the part of the government to mend its finances. In the recent past, the RBI has consistently complained of government inaction in the face of a burgeoning fiscal deficit. So it had to fight the inflation battle single-handedly. With a new finance minister and first concrete proof of government’s willingness to take tough measures, the RBI has some leeway to go easy on interest rates.
Read - The Hindu
Will the central bank go for a rate cut?
......In normal circumstances, a rate cut by the Indian central bank is ruled out even though Asia’s third largest economy is slowing. But I would like to believe the Reserve Bank of India (RBI) may go for a rate cut to send a signal to the market, if not for anything else.......
RBI needs to take 'calculated risks' and cut rates
......It is time the Reserve Bank gets rid of its obsession with the inflation numbers, while completely ignoring grave situation thrown in by constantly decelerating industrial growth, Assocham President Rajkumr Dhoot said. "We would urge the RBI to stop taking baby steps, if at all, and go in for calculated risks to revive the industrial output," he said......
Government mulls financial products to dampen gold demand
The government and financial sector regulators-the Reserve Bank of India and the Securities and Exchange Board of India -are in discussions to launch financial products intended to discourage demand for gold in its physical form and excessive speculation in real estate...........
Kangra Co-op Bank adopts RTGS
......Kangra Bank is the largest urban co-operative Bank of the National Capital Territory of Delhi. It is said to be the first Co-operative Bank not only in NCTD Delhi but also in northern region of the country to have joined RTGS network run by the Reserve Bank of India......
RBI approves reappointment of Ananthakrishna as Karnataka Bank chairman
Reserve Bank of India has conveyed its approval for reappointment of Ananthakrishna as part-time chairman of city based private sector bank - The Karnataka Bank Ltd a further period of three years, as proposed by bank's board of directors........
Saturday, September 15, 2012
RBI Governor D Subbarao faces great dilemma as calls for a rate cut gets louder
They are three very different gentlemen in the same boat. One, known for his lung power, strong views and occasionally unfortunate choice of words, is a favourite of the media. You are tempted to believe him, but fear his views may be brushed aside later.
The second has a towering personality and a baritone, complete with wavy hair and Marx-like beard. The man leaves you bewildered.
The third, their boss, armed with a disarming sense of humour, is soft-spoken and transparent - perhaps too transparent that borders on being simplistic. It's entertaining listening to their divergent views on the same subject in the course of a fortnight.........
Will RBI governor D Subbarao now take momentum into high gear and cut rates?
Highlights and rationale of the recommendations of the working group to review the existing prudential guidelines on restructuring of advances
Keynote address of Mr B Mahapatra, Executive Director of the Reserve Bank of India, at the
round table on the highlights and rationale of the working group to review the existing prudential guidelines on restructuring of advances by bank/financial institutions, organised by the Centre for Advanced Financial Research and Learning (CAFRAL), Mumbai, 13 September 2012
.......One group of commentors have expressed reservations on some of the recommendations of the working group; the other commentors, particularly the print media, have generally appreciated the recommendations. I, as the chairperson of the working group accept the brickbats and bouquets with all humility. I am grateful to CAFRAL for organising this round table and giving me an opportunity to explain the highlights and rationale of the recommendations of the working group.......
My View on "Prepaid payment instruments yet to pick up: RBI"
Growth of prepaid payment instruments (PPIs) continues to be sluggish though non-bank entities also can issue them, said G. Padmanabhan, Executive Director, Reserve Bank of India......
The payment system should be improved in such a way that it should gradually lead to elimination of corruption, black money and high denomination notes of Rs 500 and 1000.Prepaid instruments should be made compulsory in high value transaction areas like bullion and other commodity markets, whole sale markets in vegetables and fruits, scrap dealings, etc. Trails of transactions should not be the immediate objective although it may be the end result,as it may discourage many to switch over to PPIs. The efficiency of the Payment System should be one of the yard sticks to assess the inherent strength of the economy. This will also make Financial and banking inclusion a reality over a period. The economy will definitely get a boost if payment system is improved with all safety,speed and accuracy. With improved IT system, the efficiency of the Payment system can easily be targeted and achieved. Many of the present ills of the economy, the Payment system will prove to be a solution.
- Dr.T.V.Gopalakrishnan
RBI ED's optimism along with the comments of Dr T V Gopalakrishnan give some hope about some changes and improvement in the payment system. Perhaps RBI and GOI could consider introducing new and innovative PPIs. Gold-backed Debit Cards could be one option. If a depositor agrees to maintain an average balance of a pre-decided amount, his account should be credited with gold of equivalent value.He should be in a position to withdraw cash, make payments and buy things using the card, but his balances in the account will vary with the price of gold any day. This is just an example. Similar instruments against commodities and services could be thought of.The present position of major portion of PPIs in sort of cash certificates is not very encouraging. As Dr TVG hints, PPIs should also become instruments for bringing transactions which will not otherwise get through formal channels get into banking system.
- M G WARRIER
A cashless India
...... Over the period April 2006 -June 2010, currency has shown a yearly growth rate of 17 per cent. It is estimated that for 2009-10, the RBI incurred an annual cost of Rs 2,800 crore to just print the currency notes. This is 0.4 per cent of the total currency in circulation. The need to move towards a cashless payment economy is perhaps more in India because of the cost of printing, distributing and processing cash. This cost does not include the cost of storage, transportation, security, detection of counterfeits, etc . To the printing cost, if we were to add the cost of storage and maintaining these currencies through ATMs alone, the cost of printing and disbursing currency comes to approximately Rs 70 per person per year......
State ranks 4th in seizure of fake currency
Going by the number of FIRs registered in connection with seizure of counterfeit currency, Gujarat stands fourth among the states, an RTI query has revealed. Between 2009-10, over 480 instances of seizures were reported from the state, which is slightly less than those reported in Andhra Pradesh, Maharashtra and Uttar Pradesh, according to information given by the Reserve Bank of India (RBI) to a New Delhi-based RTI activist, Subhash Chandra Agarwal, recently.......
Read - Indian Express
RBI cautions public against fraudulent mails
.....The mail also informs the bank account holders about the RBI setting up a new 24x7 Centralised Monitoring Centre to monitor financial transaction flow from the internet banking account. "The RBI clarifies it has not sent any such mail and has not set up any 24x7 Centralised Monitoring Centre to monitor financial transaction flow from the internet banking account," it said.......
Supporting policy needed to lower business risks: Gokarn
Kochi: Regulators need to maintain a balance between regulation and innovation as per local requirements, RBI Deputy Governor Subir Gokarn said on Friday as he pitched for a supporting policy framework to lower business risks. Speaking at the three-day 'Emerging Kerala' investors meet, Gokarn said one of the constant watch points of regulators is to make sure that balance is maintained between regulation and innovation.........
Read.......
Assess strengths of State: Gokarn
Kochi : Inherent strengths of Kerala should be evaluated while evolving a long-term development strategy for the State, said Subir Gokarn, Deputy Governor, Reserve Bank of India (RBI). Addressing a session on financial services as part of the Emerging Kerala summit here on Friday, he called for measures to ensure meaningful financial inclusion. Barriers to growth and policy interventions should be studied for a proper perspective. Innovations driven by specific needs and the ability to scale up were important factors in the development scenario, but unbridled innovation would be harmful, he said..........
Malegam Report to be implemented soon: RBI
Participating in a Punjab and Maharashtra cooperative bank event in Bombay H R Khan Deputy Governor of the RBI said the apex bank would soon implement the suggestions made by the Malegam Committee on the cooperative banks. The committee, among other things, has recommended a dual approach of having a board of directors appoint a board of management to run the cooperative banks and a relaxation of entry norms for the cooperative banks in the areas not yet covered by banking services, the RBI deputy added.........
Why monetary policy will not work?
......Come September 17, and Reserve Bank of India (RBI) will have a mid-quarterly review of monetary policy to take stock of the current liquidity scenario and inflation. This meeting has gained relevance after Thursday’s hike in diesel price by Rs 5 a litre and the cap on the use of subsidised cooking gas to six cylinders per year. Will this undermine RBI efforts to control inflation?......
RBI hints at holding rates, says inflation top priority
Ahead of the mid-quarter review of the monetary policy on Monday, senior-most Reserve Bank of India Deputy Governor K.C. Chakrabarty today said the top priority is to keep inflation under control.......
A bitter medicine
......Now that the Government has shown through its latest actions that it is serious about fiscal discipline, and the monsoon’s turnaround since August has also somewhat eased inflationary expectations, the RBI can afford to be more accommodative.
All eyes on Mint Road, will Subbarao oblige?
......The man at the helm, RBI Governor D Subbarao, is surely feeling the heat, to do his bit......
Read - BS
Inflation spike means RBI won’t say ‘Subbarao khush hua..’
......The diesel hike will make RBI Governor a bit less testy, but the inflation spike may not be enough to smile and say: “Subbarao khush hua…”. Given these circumstances, the RBI is likely to stay put. After all, a rate cut is not a quick fix, and even if it is, a quick fix is not a long-term solution.
RBI's inaction on rate likely to continue
......."While Thursday's decision opens up a bit of room for RBI to act on September 17, we expect the RBI to remain on a pause mode given the extreme hawkish rhetoric on inflation in the recent past. RBI is likely to wait and..............
A wave of bold decisions: Has MMS got his mojo back?
......As India heads towards the weekend, there will be lots for analysts and the corporate sector to discuss ahead of Monday’s RBI meeting. One big point of discussion will have to centre around whether one of the architects of the 1991 reforms, the man who is now Prime Minister, has hit a purple patch once again.
Read.....
SBI sees no case for further CRR cut by RBI at present
...."CRR cut is a wish list for every bank. Any time CRR is cut, banks add to their bottomline. But if liquidity is the determining criterion, then I do not see a CRR cut....
Customers paying more for banking services
.....Data for the indices were compiled by the RBI on the basis of responses from 21 banks, of which 13 were in the public sector, four were private, two were foreign banks, one was a cooperative bank and one was a regional rural bank.
RBI ranks Bengal among laggards in drawing FDI
......During the period under review, the Kolkata regional office of RBI, has received a paltry FDI proposal to the tune of R46 crore. The states which one step ahead of West Bengal is Kerala but with a huge difference, with RBI’s Kochi office recording FDI proposal worth R104 crore during the same period. While the apex bank’s Kolkata regional office caters to West Bengal, Sikkim and Andaman and Nicobar Islands, the Kochi regional office caters of Kerala and Lakshadweep. Following RBI’s Kolkata office is the Bhopal office, which caters to Madhya Pradesh and Chattisgarh, whose fresh FDI proposal records during April-June 2012 is slightly lesser at Rs. 35 crore.......
2G scam: RBI Governor Subbarao to appear before JPC
RBI Governor D Subbarao, who was the Finance Secretary when 2G licences were allocated, will appear before the Joint Parliamentary Committee examining the issue as a witness on Sept 18. He was the Finance Secretary between Apr 2007 and Sept 2008.......
Read......
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Friday, September 14, 2012
Cashless society will help weed out corruption: Khan
.....“We want that we should move towards a less cash society. There is a need for the predominant cash in the society to go down,” .......
Large cash market main driver of corruption: RBI
Mumbai: Stating that the circulation of a large amount of cash in the economy leads to many problems, including corruption, Reserve Bank Deputy Governor H R Khan today said the central bank is focused on bringing down the cash component in the economy. "We want that we should move towards a less cash society. There is a need for the predominant cash in the society to go down," Khan told reporters at the sidelines of a Punjab & Maharashtra Cooperative (PMC) Bank event here..........
RBI's 'on-hold' policy coming to an end
......September policy still remains a close call. The August inflation print on Friday and whether there is finally any constructive step towards fuel price adjustments would have a considerable last-minute bearing on Monday’s RBI decision. One cannot rule out a token easing if such factors oblige. RBI’s rhetoric is likely to be more balanced this time.
Oxigen launches mini ATM cum point of sale device
...."...Masses of India will not only have benefits of ATM like banking services such as cash-in, cash-out, but will also have the advantage of paying for utility services...OxiShaan termial is specially designed to offer all these services,".......
Banks may also use SMERA ratings to assess loan risks: RBI
The Reserve Bank today said banks may use ratings of SME Rating Agency of India (SMERA), in addition to grades provided by other agencies, to assign risks to loans for the purpose of computing capital adequacy requirements. ...........
RBI proposes to replace CAMELS with INROADS
....The country’s financial sector would now be evaluated under a dynamic risk-based mechanism, an aspect the present CAMELS rating system lacked, central banking sources said. RBI proposes to replace CAMELS with INROADS (Indian Risk-Oriented and Dynamic Rating System) from the next round of annual financial inspection, in 2013.....
Loan recast: Banking system credibility at stake: RBI
Mahapatra committee observes extraordinary rise in restructured assets
....The gross NPA ratio, hitherto the main financial ratio to gauge the level of impairment in the banking sector’s assets, is now being complemented with the ratio of restructured standard advances to gross advances as a measure of latent impairment of financial assets,” said B Mahapatra, Executive Director of RBI, at a seminar organised by CAFRAL on Thursday.....
Banks must raise provisions for debt rejig: RBI panel chief
The Reserve Bank of India (RBI) committee on restructuring led by its executive director B Mahapatra has justified the steep increase in the provision requirements for restructuring to arrest the spike in large amounts of debt getting converted into equity and preference shares specially in case of large exposures restructured under the corporate debt restructuring (CDR) mechanism ......
टैगोर पर जारी सिक्के की लागत बताए आरबीआइ
.....आयोग ने रिजर्व बैंक की कोलकाता स्थित टकसाल को सिक्के की लागत समेत तमाम जानकारी आवेदनकर्ता को दस दिन के भीतर उपलब्ध कराने का आदेश दिया है। आरटीआइ कार्यकर्ता सुभाष चंद्र अग्रवाल की अपील पर सुनवाई के दौरान मुख्य सूचना आयुक्त [सीईसी] सत्यानंद मिश्रा ने गत सात सितंबर को यह आदेश जारी किया।.......
Read........
Five reasons why RBI must cut interest rates
The Reserve Bank of India will meet on Monday to review the monetary policy, but economists expect the central bank to hold rates for a fifth straight month despite a sharp slowdown in economic growth......
Read...........
Read...........
Running on empty: The long, long wait for reform
.....Even as Chidambaram and his colleagues at North Block battle it out to push the reform agenda through, one man who will be watching the developments carefully will be Reserve Bank of India (RBI) Governor Duvvuri Subbarao. Chidambaram’s pronouncements may have pepped up the markets, but they’re unlikely to have worked on Subbarao who will be waiting for concrete steps to bridge the yawning fiscal deficit. Hence, in the absence of any concrete reform steps so far, Subbarao and his Mint Road team would be unwilling to budge on their no-rate-cut stance............
Financial Inclusion in India
.....So what is financial inclusion? The term first featured in official GOI literature in 2005 when the RBI’s Mid Term Monetary Review paper, defined it as ‘The process of ensuring access to appropriate financial products and services needed by all sections of society in general and vulnerable groups such as weaker sections and low income groups in particular at an affordable cost, in a fair and transparent manner by mainstream institutional players.........
The last-mile challenge
NPAsource.com hoping to sign up private banks soon
NPAsource.com, a dedicated portal for posting information about bad assets of banks, is hopeful of tie-ups with private sector lenders very soon, a top company official said. NPAsource.com, which has around Rs 13,000 crore worth of NPA notices posted on its website, boasts of clients such as SBI, Bank of India, IDBI Bank, Indian Overseas Bank and Nabard.....
Are Indian banks up to these challenges?
.....Technology is also said to be the way forward with India seeing a mobile and internet revolution and more traditional banks need to accept the same. Human resources is also another challenge as 40-50% of PSU banking staff is expected to retire over the next few years. Plus attrition in the banking sector used to be low with staff staying in the same bank for their entire career. Stickiness is however low among new employees, thus the realignment of HR policies along with employee needs is required. But while there are a lot of challenges on the ground we believe that the banking sector can meet them head-on as they have done in the past. We hope to see a fresh face of banking in India.
From November, pay more for credit card repayment in cash
Prepare to fork out a higher service charge while paying your credit card bill in cash. HDFC Bank, the largest issuer of credit cards in the country, has decided to double its service charge for cash payments at its branches or automated teller machines (ATMs).............
Don't harass your children!
WHO WILL GET YOUR MONEY?
- BANK ACCOUNTS: Reserve Bank of India (RBI) guidelines specify that the deceased's nominee would receive the money in the capacity of a trustee, of legal heirs. The same applies for all other financial transactions such as public provident fund, mutual funds and others where the nominee plays the role of a trustee rather than the owner.
- INSURANCE: Section 39 of the Insurance Act says the appointed nominee will be paid, though he/she may not be the legal heir. The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money.
- STOCKS: Under Section 109A of the Companies Act, if the nomination is made under procedure prescribed by law, the nominee will be entitled to become the rightful owner of shares. And, such right shall exclusively favour the nominee and exclude all other persons.
- PROPERTY: Section 30 of the Maharashtra Co-operative Societies Act says in event of the death of a member of a society, the shares of the deceased will be transferred to the nominee. But, this transfer cannot result in vesting of the flat with the nominee. He/she is merely a trustee for the deceased's estate. But that's not the final word.
- SELF-ACQUIRED PROPERTY: A will is the deciding factor. In its absence, the property will be classified as 'inherited property'. "The property, consequently, will have to be shared equally between the successors
- JOINT OWNERSHIP OF SELF-ACQUIRED PROPERTY: The surviving owner becomes the sole owner.
- INHERITED PROPERTY: All members of the immediate family will get an equal share of the pie.
RBI quiz for students to improve financial literacy
Bangalore : Interested students may contact nodal officer Murlee Krishna on 080-22244001 or 9945722776, or e-mail: murleekrishna@rbi.org.in by September 21...........
Survival of business correspondent model at stake, says report
......According to a recent study conducted by Sa-Dhan - the national association of community development finance institutions - the lack of commercial viability in the form of low compensation is threatening the very existence of the BC model, which was encouraged by the Reserve Bank of India to promote financial inclusion. “The shortcomings for the BC model are the cost structure, bank’s lack of commitment, absence of financial literacy, lack of knowledge between customer service point operators (CSPs) and clients and lack of grievance redressal system,” the study said.......
Diesel hike gives RBI room to cut rates: PMEAC
....."I think the opportunity of action for RBI is provided by this action of the government...The government has showed that it can take a very hard decision,"...........
Despite diesel price rise, economists unsure of RBI's Monday response
The rise in diesel prices three days ahead of its scheduled mid-quarter review of monetary policy will put pressure on the the Reserve Bank of India to cut interest rates for boosting demand. However, say economists, the central bank is unlikely to respond in a hurry. “It is too early for RBI to react to the revision. This is not the only measure required to bring the fiscal house in order; there are also issues on the revenue side,”.........
Financial markets seen more resilient after Lehman crisis
........ “RBI’s decision to adopt Basel-III guidelines with more conservative requirements indicates its willingness to impose higher cost in the near term to achieve long-term financial stability of the banking system.”............
Insurance set to get big boost
.....The troika of the Insurance Regulatory and Development Authority (IRDA), the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are often locked in turf skirmishes, even as they serve an overall pool of savings that need to be turned into productive investments for economic growth.......
Investment intentions take a hit in 2011-12: RBI study
New investment intentions plummeted by 41 per cent to Rs 2,50,900 crore in 2011-12 as compared to Rs 4,26,300 crore in the previous year in the wake of the economic slowdown, the Reserve Bank of India has said.........
Tax payers can pay dues in select bank branches in Delhi: RBI
...."It is observed that the rush for remitting income-tax dues into the Reserve Bank of India has been far too heavy towards the end of March/June/September/December and it becomes difficult for the Reserve Bank to cope up with the pressure of receipts although additional counters to the maximum possible extent are provided for the purpose," RBI said in a statement.......
RBI restricts Vishal Finlease from accepting public deposits
....."The company - Vishal Finlease Pvt Ltd - has been stopped from accepting public deposits for violating RBI guidelines. Its certificate of registration has been cancelled," said an RBI official in the department of non-banking supervision. .............
Thursday, September 13, 2012
22% growth in bank complaint-solving
PATNA: The Office of the Banking Ombudsman (OBO), a separate office under the RBI, has cleared 2,718 out of 2,820 complaints lodged between July 2011 and June 2012, according to the annual report presented by Ombudsman of Bihar and Jharkhand Srimohan Yadav on Wednesday. With this, the OBO has registered a growth of 22% in problem-solving measure, he said..........
Around 300 students from Jharkhand to take part in RBI quiz
About 300 students from 50 schools of Ranchi, Bokaro, Jamshedpur and Dhanbad would represent Jharkhand in the RBI quiz by Reserve Bank of India. Reserve Bank of India(RBI) has launched RBI Q, an all India inter school quiz with a view to create awareness and interest about the history and the role of RBI, banking and finance, economics, current affairs, personalities and events that have contributed to the growth of the country over the years....
Short-term banking courses up for grabs
The banking industry has become a major growth-oriented industry after the phenomenal expansion of branch networks. It is an important tool to facilitate the development of the Indian economy.....
New exemption limit on life cover likely
....For long, life insurers have been seeking a separate income tax exemption limit of Rs.50,000 for premiums. So, the latest government move will cheer them as it will help promote insurance plans as tax-saving instruments. Earlier, investments on pensions were treated separately for tax deductions. There was an income tax limit of Rs.10,000 under Section 80CCC. It was withdrawn in 2005 and the tax department started treating it with aggregate deduction of Rs.1 lakh. The finance ministry is considering to reintroduce the exemption for pensions separately. ......
RBI meet on payment, settlement system by Sept end
Mumbai: The Reserve Bank will hold a meeting by month end to discuss the payment and settlement system, Executive Director G Padmanabhan said here on Wednesday. The central bank had issued a vision document on payment system concerning to cards, ATMs, internet and mobile in 2009, which was open for feedback from various stakeholders........
Growth in prepaid payment instruments not encouraging: RBI
......“Significant changes are required in the technology and business model of non-bank PPI issuers to be accepted at the point of sale terminals, they need to adhere to the form factor specification and connectivity to their switch,.......
Read - BS
Make way for the signal !
The Reserve Bank of India Governor was about to address a conference organised by National Bank of Agriculture and Rural Development (Nabard) in Mumbai, which also involved patching through a video-link between him and some of Nabard’s rural centres. The auditorium is located in the basement of Nabard’s office so, naturally, there were problems connecting to the centres. Instead of fixing the problem or arranging for an alternative, the staff forced people standing at the entrance to the auditorium to leave. The logic? It was these people who were apparently “blocking” the signal! Naturally, this “theory” didn’t hold but it doesn’t say much for Nabard’s adoption of high-end technology, which the conference was supposed to showcase.
MFIs want new RBI guidelines implemented in phases
...."The new norm is not practical and will make MFIs unviable," said MFIN chief executive Alok Prasad. "We have taken up the matter with RBI as the operating cost for most MFIs in the country is still high despite being part of the most efficient MFI system in the world. It will be difficult to bring down the cost immediately." Prasad said Indian companies offer micro loans at the cheapest interest rates.......
No policy space?
....The question for many is: what will the policy response be to this full-fledged crisis in manufacturing? Those who argue for a response from the Reserve Bank of India (RBI) are likely to be disappointed. Manufacturing inflation may have fallen, but consumer prices are still increasing at a rate way out of the RBI’s comfort zone. On Friday, inflation numbers will reveal whether the consumer price index is in double digits or not. Meanwhile, RBI Deputy Governor Subir Gokarn has already dismissed concerns about liquidity. Global influences on monetary policy, too, point in the direction of steady domestic interest rates.....
Read - BS
Varied thoughts on the exchange rate
......In the context of the exchange rate, I recently came across a curious paper titled “The Art of Currency Manipulation”, (26 June), by Kaushik Basu, Rajan’s predecessor. From what I could make out, Basu (now the chief economist at the World Bank) blames the “currency manipulator”, whoever he may be, for the volatility of the rupee’s exchange rate, also taking a swipe at RBI (“The central bank and regulator, ….have very little notion of how the currency manipulator works and so have dealt with this problem very inadequately.”)..........
RBI should go for at least 100 bps rate cuts
.... If you want to buck up the sentiments of investment in the country, one indicator the RBI should focus on is the base rate, which has been contained for a while and should be brought back to an investible rate. I believe that if credit is available at around 10%, many projects may become viable and consumption can catch on. Therefore, RBI cannot utilise the monetary policy alone as inflation control as it will not control the consumption. I certainly recommend that RBI should intervene and reduce the interest rates by at least 100 basis points across one or two instances. Doing so will be a positive indicator for the markets and encourage investment.....
Why low deposit rates may be short-lived for banks
.....The overall loans-to-deposits ratio still remains at 75%, reflecting that out of every Rs 100 as deposits, Rs 75 has been lent. With banks mandated to own at least 23% in government bonds and 4.75% in cash with the Reserve Bank of India, banks are relying on other sources of funds to lend. These ratios will never match. Banks, in their eagerness to please investors, have, in the past few years, raised short-term deposits, (which are low cost), and lent long term for building power plants and roads.
Read - ET
Inflation likely nudged up to 6.95% in August
India's rate of inflation probably picked up in August from July's near three-year low as poor summer rains drove up food prices, a Reuters poll showed, giving the RBI even less room to cut policy rates next week to reinvigorate economic growth. While central banks elsewhere are trying to ease monetary conditions to counter a global slowdown, the Reserve Bank of India (RBI) has consistently flagged high inflation as a key risk for Asia's third largest economy.......
IRead......
Centre readies plan to revive exports, says secy
..........The Reserve Bank of India (RBI) has also been urging the government to unveil a clear fiscal consolidation strategy and tackle the problem of subsidies . The central bank says lack of fiscal consolidation measures weighs heavily on any plan to ease tight monetary policy..........
Cut in FD rates will not lead to capital flight: SBBJ boss
Q. There has been an ongoing debate on abolition of cash reserve ratio (CRR). What is your reading about it?
A. CRR has its own philosophy to which it was set up. RBI has its own reason to keep it. From bankers’ perspective, we raise money and expect return on that. CRR money goes away without any interest. For banks, it is definitely a drain on profits. It is definitely a burden on banks. If depositors’ security is a concern, then the regulator should pay some interest on CRR. RBI normally does not pay interest on CRR. Some 20 years back, it used to pay interest but beyond 3% when CRR had gone up as much as 15-16%. With changing pace of time, discussion on this issue should take place. You cannot continue to do banking as you used to do in the past.
RBI sets stage for a bank supervision overhaul
| CHANGING TACK The changing landscape of banking supervision |
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Read - BS
Forensic audit of Deccan Chargers owners accounts begins
.......The move is set to derail the proposal of DCHL to go in for corporate debt
restructuring (CDR) of its outstanding loans with the bankers. DCHL's board has
passed a resolution on asking the CDR cell to rejig its existing debt. "The
board of directors of the company, at its meeting held on September 7, 2012,
has passed a resolution to restructure the existing debt of company by an
application to Corporate Debt Restructuring (CDR) cell under CDR mechanism as
envisaged under the Reserve Bank of India guidelines,".....
DYK | Banks, NBFCs are rated by RBI on CAMELS concept
Through its annual process of financial inspection, the Reserve Bank of India (RBI) inspects and supervises commercial banks and non-banking finance companies (NBFCs) every year. It also gives a rating to banks and NBFCs, but the results remain out of public domain. Known as the CAMELS rating, the process has been on since late 1990s.............
Read - Mint
Time to worry about retail loans
....one key reason for ballooning retail NPLs in 2008-09 was the damage to the recovery environment as the Reserve Bank of India (RBI) clamped down on lenders’ recovery practices after reports of borrower harassment followed by suicides. The important point to note is that the banking system handled this in a oblique fashion by clamping down on further loans, but not through an improvement in the recovery climate that remains broadly the same even now...........
Geithner to visit India next month
....On October 10, Geithner will travel to Mumbai, the country's financial center, to meet with Reserve Bank of India (RBI) Governor Duvvuri Subbarao, as well as Indian business leaders from a variety of industries.......
Wednesday, September 12, 2012
Reserve Bank of India’s Payment System Gambit
......The RBI’s intended mission of a safe, efficient, accessible and inclusive world-class payments system is appropriate and is a very critical cog in the giant wheel of India’s economic growth. The payments industry and the outside world will be watching the strategy to unfold in the coming years. We all hope that all the good intentions get translated to actions and that India’s payments system takes its rightful place among the leading markets for electronic payments.......
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