........"Banks are advised to front-load the opening of branches in unbanked rural centres over a three-year cycle co-terminus with the financial inclusion plan."Credit will be given for branches opened in unbanked rural centres in excess of the mandated 25 % in a year which will be carried forward to the subsequent year of the inclusion plan," RBI Governor D Subbarao said..........
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, May 6, 2013
Ping-pong economics - TCA SRINIVASA-RAGHAVAN
................It could only happen in India. The Reserve Bank of India (RBI), whose job it is to tend to the monetary system, says the price of money (interest rate) is not the only thing that matters for reviving the economy. The government, whose job is to tend to everything else, says that’s what holds the key............
RBI slaps fine of Rs 100,000 on Financial Cooperative Bank for violating norms
...The regulator had previously issued a show cause notice to the bank, in response to which the bank had submitted its reply. After considering the findings of the case and the bank's response to the show cause notice, RBI decided the violations were substantiated and warranted imposition of the penalty........
The price of regulators' ignorance
........They are paying the price of the system of dual regulation, under which both the Registrar of Co-operative Societies (RoCS) and the RBI are supposed to be regulating co-operative banks. RoCS officials say the RBI does not regulate these banks, while the RBI says it waits for government recommendations to act. Most co-operative banks are set up and controlled by powerful politicians. What is common between these two areas I have highlighted? Regulations cover products and entities instead of the broader definition of service offered to the savers. Regulators have stuck to the narrowest possible definition of their role, instead of focusing on what really helps savers. Savers pay the price for both............
Government moots consumer awareness
................."We are looking into the Saradha scam from a consumer's perspective and have directed our officials to prepare a report and suggest what more can be done to make consumers aware of such practices,"...........
Cobra’s new sting on banks in 2 days
 |
| .........“This second part of our expose is 20 times bigger than part one and covers the who’s who of the Indian Banking and Financial Industry," .......................... |
Don’t blame RBI for government inaction
...........By underlining the limited role of monetary growth, the RBI has sent a clear signal to the government. Finance minister P Chidambaram must deliver on the promises he made during his recent roadshow in America. Without initiating long-pending structural reforms the government cannot expect the RBI alone to ensure growth. That’s the message Subbarao has passed on.........
Banks stem rot in loans, gross NPAs down
........The Reserve Bank of India governor D Subbarao confirmed that gross non-performing assets have declined and the growth in restructured assets over the previous year have been flat, but he refused to commit a figure to the consolidated bad debt, suggesting that the estimates were provisional and would be revised once the final results of all the banks were announced......
Sunny future
..........Another hurdle faced by solar power developers is the lack of financing for companies, and difficulties in priority sector lending for household solar appliances, despite approval from the Reserve Bank of India. “Compulsory solar installation must be mandated in new buildings without which water and electricity connections should not be given; The States should offer additional subsidy as in Kerala, Tamil Nadu and Chhattisgarh for widespread adoption by all income groups,”..............
My View on "A plot to destroy RBI"
Not much research is needed to conclude that finance ministry and FSLRC, in a hurry to resolve certain minor issues, ignored the evolution of the role of RBI and the care with which RBI has nurtured the financial sector. Fed Reserve and RBI function in two different worlds. To say that time is not right for dismantling or truncating the RBI which is doing creditably well as is being admitted in several international forums, would be telling the obvious. The dissenting notes recorded by 4 out of 7 members who signed the final report are well-argued documents, which inter alia plead the case for maintaining the basic features of RBI and assert the need for allowing the central bank to carry on with its present mandates. One wonders what motivated the FSLRC Chairman to finalize the report ignoring the difference of views expressed especially by K J Udeshi, P J Nayak and Y H Malegam. It would appear that the Commission did not get opportunity to understand the present relationship between the RBI and GOI. The regulatory apparatus plus legislations in financial sector in India are in working condition. The FSLRC’s effort to re-invent them has pushed the present regulators and supervisors to a confused state, making the possibility of an intelligent debate on the issue remote. The idea of creating a Unified Financial Agency for all financial regulators except RBI, truncating RBI by separating Public debt Management and keeping the agency doing that work (presumably with the same work force) in RBI premises, later UFA subsuming even RBI, all give a feeling that the FSLRC was not allowed to ‘apply its intelligent mind’ and in the eagerness to satisfy all, and so fast, it has forgotten its own brief. Perhaps, the purpose would be served better, if RBI is allowed to function with its present mandate, a coordination committee sorts out issues among the remaining regulators. If GOI aim is to reduce the number of regulators, after necessary groundwork, merger of the regulatory agencies outside RBI one by one, as work stabilizes could be thought of. The twin goals of one Unified Financial Agency and managing the man-power-related issues that may arise with merger here could be better handled this way.
- M G Warrier, Thiruvananthapuram
Confidence and Governance
This
refers to ‘Why be so Glum, Guv Subbarao?’ (ET, May 4). The RBI’s stance
on a growth forecast of 5.7% is quite pragmatic against the estimate of
6.5% put forth by PM’s Economic Advisory Council. Foreign investors’
confidence, as observed from deals in the airline sector and Unilever’s
and Ikea’s investment, can best be described as localised. To enable
this confidence to sustain and permeate to all sectors, the government
needs to implement reforms in diesel, coal and gas pricing and getting
Bills on land acquisition, etc, passed. But given the continued logjam in Parliament, this appears to be a distant dream. The
government should, therefore, come clean on charges levelled against it
and initiate steps against its erring members, as a mark of good
governance. The Opposition, on the other hand, should prefer meaningful
debate on the floor of the House instead of resorting to disruptive
tactics.
- V SRIDHAR, Kolkata (ET)
- V SRIDHAR, Kolkata (ET)
Only Reform is Salvation
After
the repo rate cut by 25 basis points — from 7.50% to 7.25% — under the
Liquidity Adjustment Facility (LAF), the question remains as to what
will be the driver of growth. It is stated in the policy itself that
“recent monetary policy action, by itself, cannot revive growth. It
needs to be supplemented by efforts towards easing the supply
bottlenecks, improving governance and stepping up public investment,
alongside continuing commitment to fiscal consolidation.” Pressure on
the current account deficit (CAD) will not allow the Reserve Bank to
move forward in the direction of further liberalisation of policy.
Again, according to recent reports, there is a continuous decline in the
number of farmers, having gone down by nine million in a decade. So, it
is now an established fact that for further growth, reforms in labour
laws are quite essential to absorb more workers in formal occupations.
- SHISHIR SINDEKAR, Nasik (ET)
- SHISHIR SINDEKAR, Nasik (ET)
Down to the politics now
....Subbarao, perhaps presenting his last full-year monetary policy before he demits office in September, have spared no punches in making it clear that the real reasons for the crippling slowdown are brewing somewhere else. The RBI reckons that India's GDP - or the aggregate value of all goods and services produced in the country - will likely grow by 5.7% in 2013-14, by no means a V-shaped boom that would help the economy regain its status.........
PSU banks stop hiring from B-Schools after court order
........Public sector banks are now planning to appeal in the Supreme Court against the restriction imposed on hiring from business schools. A recent ruling by the Bombay High Court had said restrained campus recruitment for appointment of officers by Central Bank of India............
Human Resources, the Greatest Risk the Banking system faces
......As it is, the absence of the Bankers Training College of the Reserve Bank of India is very much visible in the working of banks these days and general ignorance of banking at operational and customer service delivery level has been very much felt. Monetary policy transmission mechanism through banking has been not as effective as the Reserve Bank desires and this has been perhaps due to the disconnect observed in understanding of the Reserve Bank's policy expectations at all levels of banking as was the case earlier when the Banker's training College was functioning. ............
Read.......
Economic Policies and India’s Reform Agenda
.....This is Dr. Reddy’s latest book and comprises lectures he delivered at different fora. It tackles the Reforms agenda India has adopted which could possibly ignore the current debates on the latest crisis, the broader policy lessons and the burgeoning uncertainties that envelope the world economy. Reddy’s lectures herald new thoughts on economic policies with particular reference to the management of money, finance and external sector. The volume attempts to generate a discussion on the strategies that deserve to be adopted for development and the revised programme for reforming the economy......
Lead bank scheme to enter metros soon
Forty-four years after it was conceived by the Gadgil Study Group in October 1969, and its consequent implementation by the Reserve Bank of India (RBI) the same year, the ‘Lead Bank Scheme’ (LBS) will finally be introduced in metropolitan cities, with the intention of addressing a much neglected constituency -- the urban poor. “The scheme emphasises making specific banks in each of the cities key instruments of local development by entrusting them with the responsibility of locating growth centres, assessing deposit potential, identifying credit gaps and evolving a co-ordinated approach to credit deployment, in concert with other banks and credit agencies,” an RBI official said on Saturday........
Issue unique ID code to customers, RBI to NBFCs
To enable non-banking finance companies (NBFCs) build a centralised know-your-customer (KYC) registry and thereby eliminate the scope for multiple identities, the Reserve Bank of India has proposed that such companies should allot unique identity code for each customer. In a release issued on Friday, it said that the advice follows the proposal made by the Working Group constituted by the Central government. .........
Read - DH
Read - DH
What’s Next, Mr Subbarao?
One of these days, the Reserve Bank of India (RBI) will come out with its history through the eventful days of liberalisation and the decade preceding it. With several protagonists of this fascinating period still around and kicking, chances are the hardbound may read more like an RBI annual report than a Ramchandra Guha. The tome, unfortunately, will not capture the Subbarao era that comes to an end in September — unless New Delhi and the governor have a change of heart. But years later, when a generous historian puts her mind to the subject, when Mr Subbarao's mistakes appear less glaring, she could end up describing the governor as an inflation warrior. No one senses it better than the man himself.............
Rewriting the Indian growth story
........The RBI issued a fairly gloomy forecast in its monetary policy statement last Friday. But it did cut the repurchase rate by 25 basis points. In fact, the central bank started cutting rates as long ago as May 2012. Despite the hawkish language it continues to employ, the actions indicate that it could loosen through this entire fiscal. That has useful implications if it is true........
Why Chidu and Subbu still can't see eye-to-eye
......The policy makes it clear that the distance between North Block and Mint Street is greater than the known distance between Delhi and Mumbai.................
RBI unlikely to cut interest rate on June 17: Experts
...... "Going forward, we expect the RBI to ease by a further 50 bps (0.5 per cent) in FY14", but added that from a timing perspective, "we think the rate cuts could be spread out for the rest of the fiscal year and are data dependent"..............
A policy with many dimensions
............In a statement that is bound to catch popular imagination, the RBI says that both borrowers and lenders have become risk averse, the former because of governance concerns, delays in approvals and tight liquidity and the latter due to rising non-performing assets and heightened risk premia. Finally, the RBI once again renews its call for easing supply side constraints, notably in food and infrastructure without which the effectiveness of monetary policy to contain inflation and anchor inflation expectations will be undermined.
Read - The Hindu
RBI & inflation - A.Seshan
The Reserve Bank of India (RBI) has said it would try to contain the annual inflation rate to five per cent by March 2014, using all the instruments at its command. It's not clear how it can accomplish this. It has itself pointed out on several occasions in the past how it is in a bind in matters of inflation when supportive action from government is required.....
Along predictable lines
........There is simply no getting round the fact that drastic actions by the government, particularly with respect to supply constraints, are now critical to any prospect of a growth revival. The RBI's policy statements have been saying this for several quarters and this one is even more emphatic on the issue. Unfortunately, this imperative is only matched by the dwindling ability of the government to do anything significant............
Why repo rate cuts cut little ice
...................The repo rate, at the end of the day, is only the tip in the iceberg of the financial market. This is not to deny the potent symbolism and signals on the RBI’s ‘policy stance’ that it can convey. But to assume that a rate cut on about Rs 1,00,000 crore (the average sums borrowed daily through the RBI’s repo window) to pass through immediately to the banks’ total loans and advances portfolio aggregating to some Rs 53,00,000 crore is a vaulting expectation, which, to quote Shakespeare, “overleaps itself and falls on the other”.
‘Expect Baby Steps Towards Softer Rates’
.......The
markets were more optimistic, given that there were many positives such
as falling gold and commodity prices and the slowing growth rate in
India. However, RBI has been a bit more cautious — too cautious some
feel — in its action as well as guidance. Besides, RBI appears to be
much less optimistic on the inflation and current account fronts. So, it
seems to be holding back its policy reserves rather than using these up
in a hurry............
RBI wants to spread the Aadhaar menace to card transactions when bankers are evading KYC norms
........Reserve Bank of India (RBI), the country’s banking regulator, seems to be keen on pressing the ‘unregulated’ and illegitimate (as it is yet to be sanctioned by Parliament), the Aadhaar or unique identification (UID) to authenticate card present transactions and other related issues. This is when bankers are still not strictly complying with the RBI’s know your customer (KYC) norms. Some lenders, especially co-operative banks are even using ‘gold route’ to facilitate money laundering for builders and developers...........
RBI to ask banks to hold Aadhaar 'melas'
....."With a view to facilitate the DBT it is proposed to advise banks to open accounts for all eligible individuals in camp mode with the support of local government authorities." The banks would be asked to seed the existing accounts or the new accounts with Aadhaar numbers and also put in place an effective mechanism to monitor and review the progress in the implementation of DBT.......
Raising capital made easy
If you are not overly scrupulous and are willing to exploit loopholes in the law, here is a ‘business model’ to raise thousands of crores of rupees from retail investors...........
Read - HBL
Curbing bank funds will spike prices,help grey mrkts:Jewellers
The Reserve Bank's decision to restrict bank finance to gold imports meant only for jewellery exports will jeopardise the supply system and increase prices apart from boosting grey market, an industry body has said."The RBI's restriction on the import of gold on consignment basis by banks only to meet the genuine needs of exporters of gold jewellery, will have repercussions on the industry...........
RBI cracks down on banks selling insurance products
............. "It has been observed that in some cases, banks did not have clear segregation of duties of marketing personnel from other branch functions, and bank employees were directly receiving incentives from third parties such as insurance, mutual fund and other entities for selling their products. Such practices may lead to mis-selling and distortion of the staff incentive structure." Experts feel that RBI's step may not have the desired effect............
eMudhra launches security solution for online financial services
........The launch of Trustfactor is in alignment with the RBI's mandate for banks to implement digital signature certificate based authentication for electronic banking, a statement from the company said. The solution is supported by robust technology, domain-experienced implementation and secured processes including verification and issuance of digital signature certificates (DSC). DSC is legally valid under Information Technology Act and recommended by the Reserve Bank of India specifically for high value transactions, the statement said. .........
Dear KC Chakrabarty, here’s the real reason why people invest in Ponzi shemes
.........A Ponzi scheme is a fraudulent investment scheme in which the illusion of high returns is created by taking money being brought in by new investors and passing it on to old investors whose investments are falling due and need to be redeemed. K C Chakrabarty, the Deputy Governor, is the latest individual who has jumped onto the more banks equals fewer Ponzi schemes, bandwagon.........
'RBI was in loop on Saradha, others'
.........Under section 45-IA of the RBI Act, 1934, it is mandatory for NBFCs to obtain a certificate of registration from the central bank and have a minimum net owned funds to be able to commence or carry on business of an NBFC. According to the official, any company failing to do so can be heavily penalised by the RBI.............
Saturday, May 4, 2013
A plot to destroy RBI - S.S.Tarapore
....The Commission envisages a 12-member RBI Board with not more than one half being executive members; this by itself is reasonable but one has to dwell a little further into the Commission's proposal. There is an insidious proposal, in that the post of 'Governor' should be abolished and the head of RBI should be named as 'Chairperson'. The Commission's ready defence would be that, after all, the head of the US Fed is called 'Chairman'; the Commission would conveniently forget that members of the 'US Fed are called Governors and the head is known as Chairman of the Board of Governors. Furthermore, the Deputy Governors are to be brought down a peg and called members and one of the members would be called an 'administrative law member'. The whole ploy seems to be to downgrade the RBI to the level of any other financial regulators. The Commission needs to appreciate that central banks are unique. .............
New Bank Licences to Come Under New Guv
.........New
bank licences will not be distributed during the governorship of
Duvvuri Subbarao at the Reserve Bank of India as the ground work and due
diligence will not be completed by September when he completes his
term. His successor will have the privilege of granting those long
awaited licences to commence banking operations. “I doubt,’’ said
Subbarao on the possibility of his handing out new bank licences. “It is
not possible. It will take longer than that. It is not practical. I
have only four months to go.’’ Subbarao’s admission that new licences
would move well into a new Governor’s term could disappoint aspirants............
Activist Subba: RBI curbs on bank charges
..........RBI’s
activism is in line with the move by some central banks worldwide to
treat banks as utilities – providing them protection and rationing their number but regulating them intensely. In
another customerfriendly move, RBI said banks must have a policy where
pricing of loans is transparent, realistic and related to the risk
perception of the borrower...........
Do we need a regulator for ‘unclaimed’ deposits? - M.G.Warrier
.....Ironically, the position will only aggravate with compulsory opening of more accounts to promote financial inclusion, insistence on Aadhaar-enabled accounts even before Aadhaar is yet to reach and crediting of government scheme benefits through bank accounts. The GOI and RBI may look at the issue from a social security angle, lest people lose faith in government-sponsored savings schemes and social security measures and even in the financial sector regulator........
Now, stamps with personalised touch
 |
| FIRST CUSTOMER RBI Regional Director (Chennai), J. Sadakkadulla takes a look at the personalised stamps with his image on it at Anna Road HPO on Friday. |
Seminar on Indian banking at Moodbidri
....Deepali Pant Joshi, Executive Director of Reserve Bank of India, will inaugurate the seminar. N.K. Thingalaya, economist and former Chairman of Syndicate Bank, will deliver the presidential address,.........
CBI willing to probe Saradha scam if court asks
......The state was allowed to file a supplementary affidavit if it wished on the points raised in the applications pitching for a CBI probe.Counsel representing the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) - which monitor companies seeking deposits - also furnished documents to the court on their stand on the issue..........
No clean-chit to ICICI,HDFC,Axis;show-cause notices on way: RBI
....."No we have not. And we are saying that we are (going) to issue show-cause notices. So, the inquiry is still in progress," RBI Governor D Subabrao told reporters when asked whether the apex bank had given clean chit to the three banks. ...........
Focus on bank consolidation
....."It's a no-brainer as it makes a lot of sense. But practically, we have miles to go. I don't think it's in the hands of RBI and the government needs to step in. How will you tackle the trade unions? State Bank of India is struggling to merge its associates. Consolidation has its own advantage, but I don't think it will happen any time soon,"......
Duncan Lawrie eyes private banking space in India
Duncan Lawrie, a part of the UK-based Camellia Group, is eyeing the private banking business from Indian high-networth individuals, an official of the company said.........
Murugappa Group to take a call on foray into banking sector
Diversified business conglomerate Murugappa Group would take a call on its foray into banking services sector over the next couple of months, a top company official said today. "After the guidelines came from RBI, there were some issues relating to NOHC (Non-Operative Holding Company) and other regulations. We have actually sought some clarifications (from RBI),"............
Banks not carrying out customer due diligence: RBI
.........The investigation, according to the RBI annual policy statement, has underscored the need for better regulatory compliance by banks as well. The central bank will issue draft guidelines on wealth management services offered by banks by end-June, 2013. Wealth management services (WMS) generally include referral services, investment advisory services (IAS) and portfolio management services (PMS). Detailed guidelines will be issued by end-June 2013........
Does RBI really want rates to fall?
......So, RBI's repo rate cut needs to be seen in the light of tight liquidity conditions and lower transmission. Possibly the central bank is sending out a message to banks that it isn't supportive of a lower interest rates regime just yet.........
Bank draws flak for refusing to open salary accounts
Following a refusal by Vasco-based Axis Bank to open salary accounts for their employees on the basis of a letter issued by the employer/company as identity and address proof, the Vasco-based Swift Wash, a rehabilitation unit, has written to the bank again. It has also sent copies to the Governor of the Reserve Bank of India (RBI) and the Union Finance Minister..........
2 lakh villages get banking outlets
.....The RBI’s monetary policy statement for 2013-14 said that the banks have been advised to draw up the next FIP for 2013-16 to take financial inclusion to the next stage of providing universal coverage and facilitating electronic benefit transfer........
Lead Bank Scheme to cover metros to ensure smooth delivery of cash transfer benefits
........RBI has admitted that financial exclusion is not merely a rural phenomenon and it is in fact widespread in metros. The latest move aims at facilitating doorstep banking to the excluded segment of urban poor and to implement direct benefit transfer under social welfare plans. Lead bank scheme is an integrated mechanism to extend banking facilities to consumers, especially the economically weaker ones.............
KYC norms: Showcause notices to be issued for violation
.....This move comes after three private sector banks — ICICI Bank, HDFC Bank and Axis Bank — employees were allegedly caught in a sting operation by online magazine cobrapost.com offering to convert tax evaded money into legitimate money. “First we will show the audit report to all the banks and ask them to explain. If we feel that their explanation is unsatisfactory, we will issue a show-cause notice and based on that we will take some action,” K.C. Chakrabarty, Deputy Governor, RBI, said.......
Tighter corporate debt recast norms soon, says RBI
........The move comes even as the monetary authority had last October increased the provisioning for standard restructured loans to 2.75 per cent from 2 per cent and had said it would gradually go up to 5 per cent of the recast amount. The latest step comes following the recommendations of a RBI working group, headed by B Mahapatra, to review the existing prudential norms on restructuring of advances by banks/financial institutions. Following this, the RBI had issued the draft norms on January 31......
Reserve Bank of India concerned over dependence on ECBs
......India's strong dependence on external and short-term debts for financing current account deficit remains a key concern for the Reserve Bank, although the deficit may ease in the fourth quarter due to the fall in global commodity prices...........
‘We are close to the end of the easing cycle’
overnorship of the Reserve Bank of India (RBI) has been a roller coaster ride for Duvvuri Subbarao. In a short span of over four years, he has eased, hiked and again eased interest rates. Soon after presenting his last annual monetary and credit policy on Friday – his five-year term ends in September this year – Subbarao revealed his mind on all things macroeconomic to Parnika Sokhi and Megha Mandavia. Excerpt from the interview:.........
No loan against gold coins weighing above 50 grams, proposes RBI
..........."While there may not be any objection to grant of advances against specially minted gold coins sold by banks, there is a risk that some of these coins would be weighing much more, thereby circumventing the Reserve Bank's guidelines regarding restrictions on grant of advance against gold bullion,"...........
RBI got 3 complaints on black marketing of coins: Government
........"The RBI has received three complains regarding trading/ black marketing of coins during the twelve months, one each at Rajkot, Mumbai and New Delhi,".......
RBI's 5.7% growth forecast for 2013-14 pessimistic: Montek
........"Reserve Bank is clearly more pessimistic than the government is. I think that the government forecast as of now is feasible. Critically what matters is, how effective we are in restoring the momentum of investment in the large projects", .......
Read.........
Read.........
Seven take-aways for common-man from RBI's monetary statement
NEW DELHI: The Reserve Bank of India (RBI) in its Monetary Policy Statement for 2013-14 has highlighted several measures that will help in financial inclusion and also help common man with day-to-day banking transactions..........
The Subbarao magic: How the Sensex see-sawed
For those watching the stock price movements before, during and after the RBI Governor’s announcement of the repo rate cut by 25 basis points today leaving the cash reserve ratio (CRR) untouched, it was a revelation to see how much the market dances to his tune, particularly when he is about to make key policy announcements.............
C Rangarajan supports 'hawkish' RBI rate cut
............"It is a measured response to the current economic situation. WPI inflation has shown signs of decline and the retail inflation still remains at a high level, CAD is also high,"........
We said ‘little’, not ‘no space’ for monetary easing
Reserve Bank of India (RBI) Governor D.Subbarao sees very little space for further rate cuts. But if the current account deficit shrinks and inflation moderates faster than RBI expects, then there will be space for rate cuts. In an interview, he spoke on issues ranging from gold import to banks’ refusal to pare rates and deposit-taking firms in Kolkata going bust. Subbarao is set to retire in September after having taken over as governor in September 2008. Edited excerpts:.............
More rate cuts coming, says P. Chidambaram
......Accepting Reserve Bank's stance on policy rate for what it is, Finance Minister P. Chidambaram today expressed hope that declining inflation would increase the scope for rate cut by the central bank. "Let's accept what has been done today and let us see what the future holds", ...........
Raghuram Rajan welcomes RBI’s rate cut decision
........“Going forward, if inflation stays low and we can bring food prices down, hopefully they (RBI) will have more room to bring down rates.”...........
Rate cuts by RBI and ECB reverberate at ADB meet
.....In India, automatic financing of fiscal deficit has been discontinued since 1990s. However, still many analysts believe RBI indirectly does finance the deficit through its expansionary tools. Whether there could be similar or coordinated monetary actions worldwide? In former RBI Deputy Governor Subir Gokarn’s view, the objectives of monetary actions are different in different parts of the world.......
RBI Governor D Subbarao defends holding CRR, says system has Rs 5 tn excess money
......"The view that the Reserve Bank can improve liquidity only by cutting the CRR is mistaken. We can understand banks saying it, but all of us should understand that liquidity is more than reducing CRR," ............
Read - ET
RBI’s mother-in-law syndrome
...........RBI is expected to take steps to ensure that the economy is firmly on a growth path even though it cannot afford to lose sight of the inflation threat. In this context, once again, the RBI policy document has expressed the central bank’s helplessness—it alone cannot do anything unless the government takes care of supply-side constraints, particularly in the food and infrastructure sectors, and addresses critical governance issues, besides reining in the fiscal deficit. Subbarao has been saying this for years now, like a nagging mother-in-law. The government has been pretending to listen, but unless it seriously addresses these issues, inflation will once again raise its hydra head and growth will be stymied.........
Going halfway
Monetary transmission is a problem: D Subbarao
......If communication is seen as an instrument of policy, our communication through the document should be seen as a part of the action. So, we reduced rate today but communicated about what we might or might not do in the future. I don’t think you should see that as a disconnect. Rather, you should see it as our endeavour to use communication to guide the market.......
Balancing act amid challenging times: V R Iyer
....It has also warned about policy reversals in case of worsening current account deficit scenario. RBI has shown concern over inflation, especially retail inflation, and has tried to maintain a fine balance between growth-inflation dynamics by not going overboard on cuts.......
It's back to the government: R Shankar Raman
....Given the complex and myriad challenges faced by India, it is clear that monetary action alone cannot revive growth. It needs to be complemented by rapid and purposeful action by the government in reviving investment and de-bottlenecking growth impediments. On the ground, evidence suggests the recent reform push is not translating into meaningful activity as yet.......
'I'm not a great storyteller but have a good story to tell'
.....“I’m not a great storyteller, but have a good story to tell...I expect India’s growth to be robust and sustainable. I am confident it would gather further momentum in the coming years...The FDI (foreign direct investment) regime in areas such as multi/single-brand retail and aviation have been further liberalised and I am confident there would be forward-movement in areas such as insurance and pension,”............
Sorry Chidu, rate cut doesn’t often mean cheaper mone
...........But here’s an eye-opener. The RBI may cut rates, but banks are not buying the idea. An interesting bit of statistic from Subbarao’s Monetary Policy Statement for 2013-14, announced today, shows that banks are playing Scrooge. They have held on to most of the gains coming to them from monetary easing during the whole of 2012-13............
Why be so glum, Guv Subbarao? Investment is picking, not falling in India
The remarkable thing about the Reserve Bank of India's (RBI) Monetary Policy Statement for 2013-14 is its excessively pessimistic prognosis about India's short-term economic prospects. The RBI is not a neutral observer — its pronouncements can have a self-fulfilling momentum. It has to be more circumspect about forecasts that dampen sentiment...........
India cbank deputy: Difficult to say if rate cut will revive investment
The Reserve Bank of India's (RBI) third straight rate cut so far in 2013 may not be a surefire tool to revive investment unless supply constraints are eased, Deputy Governor Urjit Patel told reporters in a post-policy talk on Friday.............
RBI does its bit
......The RBI took comfort in the reduction in the wholesale inflation to six per cent in March, but the retail inflation still ruled high in double- digits. In small doses, the RBI had cut the prime lending rate by 100 basis points in the last fiscal, while it had reduced the cash reserve ratio by 75 basis points. This failed to boost growth because it was not dependent entirely on monetary policy.........
RBI plays safe
As a central banker, RBI needs to be cautious, but its inflationary fears appear a bit heightened
..........The central bank’s monetary policy stance continues to baffle, and not just because it is not clear how RBI expects to see rate cuts by banks in a liquidity-constrained situation. In earlier policies, the RBI’s talk has been different from its walk. This time around, including in Thursday’s pre-policy macro statement, a hawkish RBI has talked of limited room for cutting rates. Friday’s monetary policy statement talks of upside risks to inflation being significant in the near-term and .............
Ghost of inflation continues to haunt Mint Road
.......Despite average inflation in 2012-13 falling to 7.3 per cent from 8.9 per cent a year ago, and the central bank's own projection for March 2014 inflation at five per cent, RBI Governor D Subbarao seems to be in no mood to lower the guard.........
The interest rate-growth disconnect
.........RBI, on the other hand, has always argued that the link between interest rates and investment is tenuous, and there is evidence to show that low interest rates by themselves cannot bring about growth. This argument sounds right because nobody borrows money merely because it is cheap—like merely because interest rates come down, one does not buy a house as other conditions also matter such as own income and price of property........
Mayaram says sentiment improving, Montek says RBI too pessimistic
In
a strong signal that the government does not agree with RBI’s
assessment of the economy, the finance ministry on Friday said India
would grow at least 6% in the current financial year, citing a pickup in
investment and rising investor confidence. RBI has projected the Indian
economy to grow at 5.7%, which is lower than even some private forecasts............
Read - ET
Read - ET
RBI can Take Only Singles, Govt has to Play Big Shots
We
are in the thick of IPL season and, unsurprisingly, there haven’t been
too many orthodox, straight bat (riskaverse) shots. But we certainly got one from the Reserve Bank yesterday.............
Read - ET
Read - ET
Rate is Cut, Cut Red Tape
.........And you thought that Subbarao could make all these hurdles vanish with one rate cut?............‘Chit funds are a regulated sector
..........Chit funds are a traditional business, strongly regulated by the State Government and Central laws and the Reserve Bank of India, clarified the Tamil Nadu Chit Fund Companies Association. Addressing a press conference organised by it, T. S. Sivaramakrishnan, General Secretary, All India Association of Chit Funds, said the public should not confuse chit funds with the unorganised, unregulated companies that take deposits promising unrealistic rates of return or operate Ponzi schemes............
We can’t yet declare victory in war on inflation: D Subbarao
.....That is because even as inflation has come closer to the threshold level, the risks are present. First, there is this consumer price inflation, which is still in double digits. That's the inflation that people experience in the market. That shapes inflation expectations. Then there is the current account deficit, commodity prices, especially oil price, imported inflation, food prices. Then rural wages, minimum support prices and so on... So, there are several upside risks to inflation. We cannot declare victory as yet.
Read - ET......
Lower inflation can bring down deposit rates: Urjit Patel
......."You may get deeper (monetary) transmission as inflation comes down....banks will get confidence so that they can reduce their deposit rates without deposits leaving the banking system,".........
‘End non-home branch fees, fairly price retail loan’
..........The Reserve Bank has asked banks to stop differentiating between home-branch and non-home branch for customers, and ensure rates of interest for auto and home loans must not vary between customers without a clear reason. RBI told banks that variation in pricing for services makes no sense when all of them are connected by a common network..........
Get a fix on deposits
........For senior citizen deposits, most public sector banks have started cutting the additional interest (or premium) they pay on fixed deposits of these citizens. The move comes after after the finance minister's observation at a meeting with heads of public sector banks in November last year that the additional interest for senior citizens may be reasonable, but not excessive. SBI reduced the premium on senior citizens' fixed deposits from 50 bps to 25 bps last month and a week later PNB followed suit...........
Thursday, May 2, 2013
Can the RBI innovate?
.................Recycling of credit does not happen in the context of accumulation of non-performing assets and restructuring of assets. As rightly pointed out, the RBI is in a dilemma, and how it is going to face it is worth watching. Maybe the RBI has some innovative ways to rescue the economy from the situation with positive results.
Subscribe to:
Posts (Atom)