.....“No project can work with bank finance only. What is the equity that has been raised (recently)? We do not see any new issue,” he said during an interactive session organised here by the MCC Chamber of Commerce and Industry. According to Chakrabarty, over-dependence on debt would lead to high cost of borrowings. Projects with high debt component are “not viable”. “Equity market is almost dead...last four to five years new projects have gone for 100 per cent debt-led finance,” he 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.
Saturday, November 16, 2013
A road map for foreign banks
......The government and the RBI envisage a productive role for foreign banks in India subject to their following certain prescribed norms. It is no coincidence that the RBI has stipulated similar requirements, such as in capital adequacy, for the new private banks that are to be licensed shortly. However, while the imminent entry of new banks, especially those promoted by large corporate houses, has been highly controversial, the expansion of foreign banks’ footprint in the country is likely to be more subdued. After the road map was unveiled,.......
Postal banks to be set up soon in India
......The Post Bank of India (PBI), as it is likely to be called, is all set to receive a banking licence from the Reserve Bank of India (RBI) within a month or so when it would issue licences to the short-listed applicants. A senior official of the General Post Office here told Khaleej Times that the PBI would provide banking services, including accepting of deposits from the public for lending or investment. In addition to deposit schemes, the PBI will also provide loans to general public and corporates like any regular bank. The first such bank with an ATM will be opened at the computerised Navrangpura post-office in the city.............
While banking is a big challenge, it will be easier for us: Sanjiv Bajaj
.....In the last few years, especially after the financial crisis, there has been so much tightening in regulation and lending practices that we are not seeing significant amount of innovation in the banking space. If you don’t keep pushing, we will get into a situation in which you will perform according to averages. We do have a significant business that can be transferred into a bank. But for those that start from scratch, my thinking is they will need a differentiated strategy; otherwise, they will only act to drive down prices. The Reserve Bank of India has talked about niche licences; there are opportunities. ......
RBI should rein in inflation, says BNP Paribas
.........Commenting on RBI (Reserve Bank of India) policy, the research note argues that RBI governor Dr Rajan is showing welcome signs of a hard-line approach to inflation control by prioritising CPI, rather than WPI. With CPI inflation in low teen territory, today’s WPI data, if anything, just cements the case that Dr Rajan will deliver his third repo rate hike in as many as meetings as governor at the December meeting. The research note concludes by saying, “the tacit agenda of the Rajan-led RBI remains to normalise real deposit rates and boost financial saving.” It is important that RBI ensures its monetary policy is sufficiently tight to re-anchor inflation expectations.
Centre relaxes visa norms for MICE travellers
The Indian government has liberalised visas required for conferences and meetings. ffectively, visas for conferences organised by public institutions, public sector undertakings, central educational institutions, Reserve Bank of India, UN and affiliated organisations can be approved by Indian missions and posts, and do not have to be referred to the Ministry of Home Affairs, Government of India for security clearance, Himanshi Dhawan reported in The Times of India. The move is expected to give a much required boost to MICE Tourism.........
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Will rental bonds work out?
.........It is also reported that, private real estate developers are readying themselves to put up rental income backed bonds for sale. At the same time, another report states that, the Infrastructure Development Finance Corporation ( IDFC) will be selling similar bonds backed by lease rentals from Special Economic Zones and infotech parks developed by them. What are these bonds? Has this idea come up from the Reserve Bank of India’s restrictions on bank finance to the sector like the 80: 20 order? Again, are these bonds mooted on the Singapore pattern?.........
FM, Rajan on Same Growth Station, but Sing Different Tunes
Finance
minister P Chidambaram and Reserve Bank of India governor Raghuram
Rajan spoke in one voice on the need to revive economic growth but
differed on the efficacy of higher interest rates in tackling inflation.
While the minister suggested that monetary policy doesn’t really
work as a method of taming prices in the current context, where costlier
food is the main cause, the governor said there were few other options
available. “You have to focus the laser light on inflation,’’ Rajan
told the annual bankers’ conference, Bancon 2013, on Friday. “That’s the
only tool we have. That’s the blunt tool. (That’s why) across the world
central bankers use it carefully.’’ The central bank’s relentless focus
on using interest rates to quell prices had been a sore point between
the minister and Rajan’s predecessor Duvvuri Subbarao.......
Read - ET
Read - ET
New banking licences should not go to ‘clones’: Chidambaram
..........“Most banks are clones to each other. I am inclined to think that there is more cloning than differentiation… It will be sad if licences will go to entities which clone the present banks,” said Mr. Chidambaram, while inaugurating the IBA’s (Indian Banks’ Association) annual banking conference, BANCON, hosted by Bank of India, here. “We need banks which cater to communities, we need banks which cater to people living in tribal areas, we need a different bank to cater to North East, we need banks to cater to the urban poor, we need banks that cater to farmer families and we need banks that cater to women,” he added. RBI Governor Raghuram Rajan had earlier said that the central bank would issue licences to new banks in January next...............
Nail wilful defaulters, not victims of slowdown, FM tells bankers
............ “This is the period for bankers and customers to work together to keep faith in each other because when we come out of the trough... when upturn begins and when we see growth quarter after quarter that (would be the) time when most banks would be healthy, balance sheets would become healthy,” he said. The finance minister suggested the Reserve Bank of India (RBI) give preference to those applicants for new bank licences who want to set up specialised banks, rather those keen to establish clones of existing lenders........
Slow decision making hurting economy, says RBI Governor
......“The Reserve Bank of India intends to play its part in making this happen,” he assured. Addressing a gathering of bankers at the annual banking conference Bancon 2013 here, Rajan warned against the rising noise of protection and subsidies for domestic manufacturers in policy corridors. “Our industrial sector is no longer an infant that needs to be molly-coddled,” he added. He said India should not enter into free-trade agreements that give foreign manufacturers undue advantage and that is no reason for the Government to give domestic manufacturers protection. “Our measure of success should be the jobs that are created...,” he said.......
‘Interest rate is a blunt tool to tackle inflation’
Interest rate is only a blunt tool to tackle inflation and must be used occasionally, though carefully, RBI Governor Raghuram Rajan said “That is the only tool we have — and across the world central bankers recognise it… so they are careful about using it. But it has to be occasionally used,” Rajan said answering a question on why interest rate was being used to address inflation. CPI inflation, measured by the movement in the retail prices of food items, soared to a seven-month high of 10.09 per cent in October. The wholesale price-based inflation too, shot up to an 8-month high of 7 per cent in the same month...............
Steps soon to deepen G-Secs market: Rajan
....“In the coming weeks, we will roll out more recommendations of the Gandhi Committee report to improve the liquidity and depth of the G-Sec market. We will then turn to the money and corporate debt markets. We will introduce new variants of interest rate futures and products like inflation indexed certificates, and work to improve liquidity in derivative markets,”......
Rajan gives away little
.....According to Rajan, the RBI will discuss with public sector banks about what needs to be done to improve their stability, efficiency and productivity. The RBI is also planning to release more recommendations of the R. Gandhi committee to improve the liquidity and depth of the government securities market. Subsequently, the central bank will turn to money markets and corporate debt markets, he added.
Rajan warns against return of licence-permit raj
........According to Rajan, instead of targeting specific industries for governmental attention, which risks bringing back all the baggage of the 'licence-permit raj' the country has left behind, the focus should be on improving the conditions for growth for all.
Raghuram Rajan warns bankers on 'ever-greening' of bad loans
..."You can put lipstick on a pig but it doesn't become a princess. So dressing up a loan and showing it as restructured and not provisioning for it when it stops paying, is an issue. Anything which postpones a problem than recognising it is to be avoided,"..............
Volatile living: Bold monetary experiments of Raghuram Rajan's RBI
The bold monetary experiment that the Indian and Chinese central banks engaged in this year might one day be hailed as a success. So far, the result has been unprecedented market volatility and little else. Both central banks targeted interbank rates to control the supply of money, aiming for a more surgical monetary tool than orthodox bank reserves or policy interest rates..........
No single data point to determine next RBI move: Rajan
.......This is a balancing act, which requires the Reserve Bank to act firmly so that the economy is disinflating, even while allowing the weak economy more time than one would normally allow for it to reach a comfortable level of inflation," he said in a speech..............
LIC reviews Basel III investments
Life Insurance Corp of India (LIC), the country’s largest insurer, is reviewing its investment in Basel III-compliant bank capital after a series of downgrades in the sector. LIC is by far the biggest investor in the new-style capital securities, buying Rs25bn (US$395m) of the Rs40bn of Tier 2 bonds issued since India began to phase in Basel III rules on April 1..............
Friday, November 15, 2013
The kings of finance - Dr.S.S.Tarapore
..........Some of the obnoxious features in the RBI Act, which continue to date, were specifically incorporated to control, indeed, humiliate Osborne Smith (the governor and deputy governors can be dismissed without ascribing any reason). The relationship between Governor Osborne Smith and Finance Member James Grigg was tempestuous and between Osborne Smith and his deputy, James Taylor (who succeeded Osborne Smith as governor), was even worse. The first volume of the RBI History is remarkably silent on this episode. Rajul Mathur and A. G. Chandavarkar have undertaken some work on this episode. In 2009, a treasure trove was discovered in terms of the James Taylor Papers which are now in the RBI archives...........
The next salvo in digital payments
.........RBI proposes to address these problems through an Indian Bill Payments System (IBPS) network—essentially, India's General Interbank Recurring Order (GIRO) network, involving billers, aggregators, customer service points, banks, mobile networks, ATMs, outlets and customers—to facilitate payment instruction from one bank account to another bank account, initiated by the payer.
How does it work?.............
Bank official’s house robbed
Burglars struck at the house of a bank employee, Sujatha, at the Reserve Bank of India (RBI) quarters near Shyamlal building at Begumpet in the city on Wednesday and made away with 20 tolas of gold ornaments and Rs. 1 lakh............
Obituary
Our colleague SHRI ARJAN JHAMNANI passed away on 7th November 2013. He joined the RBI as a Clerk Gr. II in 1971 and rose to the position of Manager (PP) and retired from DICGC in December 2006. During the major part of his career, he worked in different sections / departments of Byculla office. He was known for his hard work and was always prepared to help both his colleagues and senior officers. A very versatile and dynamic person, an all-rounder in every field, be it music, jokes, sher-shayri etc., he was full of zest for life. He devoted time to work for the Gurudwara in Sindhi Colony, Mulund (West), where he lived. He was also the Committee of Member of the Managing Body of the Gurudwara. Although he was down with illness, he had a strong desire to recover and work for the Gurudwara. We have lost a sincere friend and colleague in his passing away. May his soul rest in peace.
- Uma Ramachandran / Naduvilmadam Ganesan
Old pensioners' plight examined
Reproduced below is a write up on 'Old Pensioners Plight examined' appeared in the "LIC PENSIONERS CHRONICLE"......
RBI and banks have different pay scales, percentage of dearness relief etc. Nevertheless, it is worth reading, perusing the write-up as its earnest intent and central focus is not different and in many aspects applies pari passu to RBI and banks pensioners, past, present and future.
Reserve Bank of India : NCFE to conduct National Financial Literacy Assessment Test for School Children
.........The objective of NCFE is to further the cause of financial literacy and inclusion in India in a collaborative manner. The National Financial Literacy Assessment Test (NCFE-NFLAT) is one such step in this direction. By conducting a national level test, NCFE plans to motivate school students (of classes VIII to X) to learn the concepts of finance and also measure their financial awareness so that they acquire the important life skill of managing finances at an early age leading to sound financial decisions later...........
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Need to overhaul business correspondent model of financial inclusion: Canara Bank CMD
......According to Dubey, facilitators of such model are actually not bankers, so they are not devoted to actual implementation of financial inclusion. Dubey pressed for more accountability in the BC model than was permitted by the Reserve Bank of India in 2006 to utilise services of intermediaries in providing banking services. In the BC model of operation, the facilitators involved in ‘cash in-cash out’ transactions at rural places, connecting the last mile to the banking system. “There is need for more accountability of the BC model,” said the CMD of Bangalore-headquartered bank..........
When everything is same, specialists make the difference
....In the decades gone by, a general officer managed all the verticals in his/her branch. Today, banking has become quite sophisticated with banks taking the eRoute (electronic route). Top executives of public sector banks told Business Line that there is a need for increasing the number of marketing officers and law officers in public sector banks. Given that all banks have the same sort of products and technology, it is marketing which is weak in public sector banks..........
PM to inaugurate Mahila Bank on Indira's birthday
Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi will inaugurate country's first all-women Bharatiya Mahila Bank in Mumbai on November 19, the birth anniversary of former Prime Minister Indira Gandhi. With the inauguration of the bank, seven branches would become operational across the country, including Kolkata, Chennai, Ahemdabad and Guwahati..........
Time for Indian banks to get truly inclusive
The theme of the 34th Bankers Conference (BANCON) in Mumbai on November 14 and 15 is ‘Bank of the Future – Gearing up to Meet the Emerging Environment.’ Bancon, formerly Bank Economists’ Conference (BECON), has over the last several years been an occasion for top bankers to get together and review the main challenges and opportunities for the banking sector. It has been an occasion to share notes and experiences and rethink strategies for many of them. The banking sector is critical for a well-functioning economy, especially for a country like India that faces challenges.........
First level screening of bank licence applications on Dec 16
.......It is expected to complete the entire process in three months, following which licences would be awarded. RBI Governor Raghuram Rajan had earlier set January deadline for awarding of licences, but it may take a little longer as the central bank is still collating information on all the applicants. “Due diligence work is being done by the RBI. By mid-December we will get proper status of all applications. It will give us some idea about who are fit and proper. At that stage we would know where we are and first level screening would be conducted,” said a person close to the development. ........
RBI may term 7 banks systemically important
........According to sources, the RBI is expected to consider business size as the primary criteria for identifying systemically important banks. Besides size, a bank’s interconnectedness, substitutability and complexity in operations are the other factors that will be considered for identifying a systemically important bank. While no Indian bank may qualify as a globally-systemically important bank under the Basel framework, the growing size of Indian banks requires RBI to term some of them as significant domestic players, sources said..............
Living with volatility: India, China's bold monetary experiment
SINGAPORE (Reuters) - The bold monetary experiment that the Indian and Chinese central banks engaged in this year might one day be hailed as a success. So far, the result has been unprecedented market volatility and little else. Both central banks targeted interbank rates to control the supply of money, aiming for a more surgical monetary tool than orthodox bank reserves or policy interest rates..........
Stirred and shaken
.......Given the advanced hour, however, no one was in the office to sustain injuries but it is worth wondering whether the incident is a reflection of the state of the economy, since no damage was reported elsewhere.
Why Rajan is Right on the Economy
Reserve
Bank of India Governor Raghuram Rajan has correctly predicted a current
account deficit (CAD) that will be sharply lower than the
near-$88-billion figure for last year. Rajan figures that the deficit
could be as low as $56 billion, well under 3% of the GDP and certainly
much lower than the 4.8% of GDP figure last year, the highest in
history. For five months in a row,.............
If only Raghuram Rajan could control onion prices too
..........If India has to get back to high economic growth, inflation needs to be reined in. As Rajan wrote in the 2008 Report of the Committee on Financial Sector Reforms “The RBI can best serve the cause of growth by focusing on controlling inflation.” The trouble is that there is not much that the RBI can do about it right now.
RBI’s Rajan Tries Damage Control
......Less than three months into his job, Reserve Bank of India Governor Raghuram Rajan is getting tested on a key part of his job: managing communication and the fallout from loose talk in Delhi...........
.......Later that day, RBI deputy governor Urjit Patel, who rarely gives interviews to media, gave an exclusive interview to a local TV channel in Mumbai. In an answer to a question about India’s trade data, Mr. Patel set about giving a detailed answer about how there were several pieces of economic data that bode well for the rupee...............
Rupee fundamentals
The Reserve Bank of India (RBI) Governor Raghuram Rajan has done well to pour cold water on renewed attempts by currency speculators to ‘short’ the rupee. Since falling to an all-time low of 68.36 to the dollar on August 28, the rupee had recovered to 61.41 by October-end before the fresh bout of weakening this month. On Wednesday, it threatened to breach the 64 mark, only to retreat after Rajan’s statement, effectively rubbishing the two main reasons that were bandied about for the rupee’s latest slide...........
Rajan's breathing exercise fails to pacify the rupee
..........But then there was a wake-up call in the form of WPI inflation numbers which touched a 8 month high of 7 per cent. Rhythmic breathing session got over, rupee jumped to touch a high of 63.28 and is presently trading at 63.21 against the dollar. Irrespective of the rupee movement, Rajan needs to be complemented for making a statement in order to pacify the markets and explain the facts of the case............
RBI may remain hawkish to tame inflationary expectations
.............For a change, the market isn’t clamouring for a rate cut. On the contrary, a 25-basis point rate hike is not only being factored in by the market but also welcomed, as such a move would help anchor inflationary expectations and nudge the government to address supply-side issues affecting prices. For a change, the market will welcome any action taken by either the government or the Reserve Bank of India (RBI) to counter runaway prices.............
Will inflation spike force Raghuram Rajan to hike rates in Dec?
.....Many analysts expect the Reserve Bank of India to raise its policy rate at least by a quarter of a percentage point to 8% by March next year. Can that happen in December? In his address to the media on Wednesday, RBI governor Rajan somehow gave the impression that he is not in a hurry to hike the policy rate. Since he took over in September, he has raised the rate twice—by a quarter percentage point each to 7.75%. In his address to the media on Wednesday, Rajan pointed out that even though consumer price inflation has risen, core consumer inflation has actually dropped.....
Sharp Inflation Revision Poses Challenge for Indian Policymakers
......For instance, India first reported 8.5% growth in gross domestic product in the year ended March 31, 2011. More than a year later it was revised to 9.3%, indicating that the economic recovery from the global financial crisis was much stronger than authorities had realized. Former Reserve Bank of India Governor D. Subbarao highlighted the challenges a few days before his tenure at the central bank ended in August. Speaking at an event at Prime Minister Manmohan Singh’s residence, Mr. Subbarao said that in hindsight he believes the central bank’s monetary tightening in 2010 and 2011 should have started sooner and been faster and stronger..........
Current account deficit to be less than $56 billion: Chidambaram
...........“Let me tell you a secret … the current account deficit will be lower than $56 billion that RBI governor said yesterday (Wednesday) … we will fully, securely finance it and will add to our reserves,” Chidambaram said at an event organized by Axis Bank Ltd on Thursday. However, inflation, particularly food-price inflation, remains a problem area. There’s no easy answer to cool retail inflation, said the finance minister, ......
NSEL crisis: Spot exchange acting as NBFC without RBI nod, warned auditor in 2011
........“NSEL was taking higher risk of credit default as it does not hold any security or line. The activity entails funding of the transactions and the provisions of NBFC and the company has not secured any such licence as an NBFC for carrying out such activity and in order to avoid the application pertaining to NBFC, the transaction needs to be restructured in the books of accounts of the company,”..........
Newsmaker: Yogesh Agarwal
.....But what set tongues wagging was that Agarwal had resigned full 20 months before his term ended. This was the first time a regulator was stepping down before the end of his term. Agarwal was appointed PFRDA chairman for five years in June 2010, after he had served as the chairman of IDBI Bank. The regulator had been without a chairman for over six months after Agarwal's predecessor, Dhirendra Swarup, retired in December 2009. Agarwal's views were diametrically opposite to those of Swarup. ......
The Fund to Fall Back On
This
refers to ‘Back to the Beginning’ (ET, Nov 14). The article gives an
agenda for an overhaul of the National Pension System, which can develop
into a social security instrument for India’s workforce. But what is
forgotten is the background in which the original NPS (New Pension
Scheme) came into being in 2004. Its immediate “mandate” was to
eliminate the existing defined-benefit-based pension scheme in
government and the public sector. Central government employees in
service as on December 31, 2003, have a defined-benefit pension scheme. The pension liabilities of central government that were being
met on a “pay as you go” basis were becoming unmanageable. Budget
2003-04 contained a proposal to introduce the new restructured
definedcontribution pension system for new entrants to central service.
The New Pension Scheme for new entrants to central government service
from January 1, 2004, except the armed forces, in the first stage,
replacing the system of defined-benefit pension system was thus
introduced through a notification dated December 22, 2003.
- M G WARRIER, Mumbai (ET)
- M G WARRIER, Mumbai (ET)
No kitchen sinking; SME sector still under duress: SBI boss
.........Bhattacharya said she would not resort to ‘kitchen sinking’, term being described by analysts to purge the book of bad loans at loan. “A few people had even recommended that I go ahead and do this, but I have no intention of doing anything of this sort. We will be doing our best (to improve asset quality) and what is right for the bank, but we will not do anything that takes away all the bad loans in a shot,” she said. It may be recalled that Bhattacharya’s predecessor Pratip Chadhuri had chosen to clean up the books immediately on taking charge in April 2011, leading to a 99 percent drop in quarterly net profit...................
Not getting a bank locker? Secure gold with insurance
When Sudha Sharma was told that she would have to wait for at least a year to get a bank locker, she decided to get an insurance cover for her gold jewellery. As gold prices continue to rise, the demand for insuring the yellow metal is also on a roll. Insurers and jewellers feel that one of the reasons behind this surge is lack of options available to protect the yellow metal. Typically, consumers keep gold safe through bank lockers. However, with increasing waitlists and limited availability of lockers, demand for insuring jewellery is increasing.............
There are two sides of the coin to credit cards
...Credit card debt is the most expensive type of debt. Though tremendously convenient, it is very easy to over-use the credit cards, leading to disastrous consequences. Not only is extremely expensive financially, it also brings down your credit score..............
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We already have a platform ready for banking: George Muthoot
.....We do not need a consultant. We feel we are well suited for transforming Muthoot Finance into a bank. We are the largest in the gold finance business. The next level should be a bank. If it is a bank then the liability options will be much more. My cost of funds can come down.........
New retail gold pricing mechanism
.....At a press conference here on Thursday, M.P. Ahmed, its general secretary, said an unfriendly tax regime and stringent norms of the Reserve Bank of India had created the crisis. “Sales have fallen by 30-40 per cent recently. When other States charge only one per cent sales tax, the Kerala government charges five per cent. Import duty has shot up from one per cent to 10 per cent in a short period. When an average of 60 tonnes of gold used to be imported a month, only 3.38 tonnes was imported in 2013,” he said..........
Short-term fixed deposits shine again
.....So how does the short-term hike in FD rates compare to other avenues like fixed maturity plans (FMPs) or tax-free bonds? For now, the short-term deposit rates are turning more attractive than an FMP of a similar tenure. Rates on FMPs are around 8 per cent, more or less the rates of bank fixed deposits.......
Thursday, November 14, 2013
Keep it up, Grace !! - Dr.D.Subbarao
Dear Grace:
Just a short mail to congratulate you for your contribution to the Central Banking Journal on RBI's independence. I learnt about it from Tarambale's VITALINFO. Even the central banking website carries only the synopsis. I take it the journal issue is not yet out.
I want to commend you for many things. First for keeping intellectually active. Second, for the extensive research you'd done. Third, for publication in a prestigious journal like the central Banking Journal where, I know, the quality standards are high. And most importantly for taking the debate to an intellectual level.
Look forward to reading the full article when it's out. Meanwhile keep well and keep writing.
My regards to Thomas and you.
Subba
Training for commercial bankers - G Gopalakrishna
Speech by Mr G Gopalakrishna, Executive Director of the Reserve Bank of India, at the inauguration of the Academic Block of the NITTE Institute of Banking and Finance, Mumbai, 9 November 2013
........My thoughts today are focused on the increasing need to integrate the present with the future. The past is pass̩ though it has taught us many lessons. Gone are the days of conventional banking where things could be predicted with reasonable precision. The changing scenario around us and across the world leads to the conclusion that there is an imminent need to keep abreast of everything under the sun when it comes to banking... This then forms the crux of our interaction today Рhow can such far reaching changes be brought in the mind-sets of millions of bankers who.............
RBI Deputy Gov stresses on institutional control
Given the fact that public institutions are not performing with optimal efficiency leading to leakage of revenue, there is an urgent need to strengthen institutional control mechanisms, particularly in banks, financial institutions and PSUs, K C Chakrabarty, Deputy Governor of RBI, said............
RBI releases financial literacy material in regional languages
The Reserve Bank of India (RBI) on Tuesday released financial literacy material consisting of financial literacy guide, financial diary and a set of 16 posters for use by banks and all other stakeholders in four regional languages, namely, Bengali, Kannada, Telugu and Urdu........
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Introduction of polymer rupee currency by RBI notes to combat fake currency racket
.....First step from RBI, one would expect, is to announce that they intend to switch over to polymer plastic currency within a particular time frame. If this is considered as letting the cat out of the bag, then, without much publicity, we ought to introduce these polymer based currency notes in high value of Rs500 and Rs1,000. Within a scheduled time frame, we need to mop up the paper currency of these denominations and replace them totally. Only then the FICN can be prevented from entering the country.......
Bad news on the economy
.............. As if this were not enough, there was further bad news. The rupee was once again in reverse gear, having lost 47 paise on Tuesday to return an exchange rate of 63.71 to a dollar. Since early September, the rupee had begun to stabilise around 61- 62 to a dollar. This was due to certain steps taken by the new RBI Governor, including the opening of a special window for the oil companies to source their dollars for imports of crude and a special interest rate for NRI bank deposits. Additionally, the pressure on the rupee had eased somewhat when the US Fed assured that it was not about to switch off the easy liquidity tap. The RBI has now closed the special window for oil companies and, therefore, necessarily they must now buy dollars from the open market...............
Passport for progress
........But it should not have been the end of the road even if Rajan's passport had been found to be American. We have engaged foreigners for crucial jobs in the past also. And today, in the age of globalisation it is still less objectionable...........
Banking on popularity
It's not Raghuram Rajan alone who is seen as a rock star by his admirers. At a recent banking event, a host of leading private and foreign bankers (the public sector bankers have to wait, it seems) were surrounded by many admirers. .......
Banking on foreigners
.......RBI’s main purpose for incentivising the conversion of foreign bank branches into subsidiaries seems to be ring fencing the Indian operations of the parent in case of crises, and protecting the interest of the local depositers by ensuring adequate capitalisation and liquidity.
As foreign banks expand their presence in India, there would be increased competition for local banks. However, RBI has made sure that the foreign banks do not dominate the Indian banking sector by restricting entry of new foreign bank subsidiaries beyond 20% of the total capital and reserves of the banking system. For those foreign banks opting for the branch mode, RBI would deny new licenses when .........
Gold questions
.....There are, of course, solutions to India’s gold problem. For example, one reason for the huge demand is the search for value in an inflation-prone economy. Gold-backed funds can obviate the need to hoard the metal. These funds have not been..........
Proactive RBI
.......The other interesting point Governor Rajan made, possibly in response to fears that, with the CPI rising, another rate hike was on the cards, was that RBI would look at all data before taking its next rate call and that, so far, the data on growth was not encouraging. The fact that RBI announced it would do OMOs next week also suggests it is worried about yields shooting up beyond 9%. That’s reassuring.
Take a deep breath to examine the fundamentals, urges Raghuram Rajan
..........For Rajan to address a press meet with no specific announcement to make is a bit out of the ordinary, definitely a step towards better communication, to clear negative sentiments and offer clarifications in case of any ambiguity - we haven't seen very many Governors do that so far.
Finmin promises FIIs policy support
.........The FIIs are also said to have discussed marco-economic matters such as India's current account deficit and fiscal deficit targets, which, they were assured promptly, will be met. “Everyone was bullish, there were no concerns,” Chidambaram told reporters when asked about the meetings. Later in the evening, Mayaram and senior ministry officials met RBI Deputy Governor HR Khan and officials from the central bank as well as Securities and Exchange Board of India to discuss clarifications on the definitions of FII and Foreign Direct Investment (FDI)............
Rajan conference highlights: CAD for FY'14 estimated at $56 billion, no fundamental reason for the Rupee's volatility
......RBI Governor Raghuram Rajan soothed Dalal Street on foreign investing institutions (FIIs) pulling out more Dollars from the Indian debt market for the exposure of FIIs in the market has nearly halved to $19 billion from $37 billion in May this year. Rajan said that the repayment of Dollars oil companies had directly borrowed from RBI through the special swap window shall be done by February–April 2014.........
India Central Bank Chief Tries to Calm Markets
MUMBAI—India's central bank governor Wednesday focused on the brighter side of the economy—narrowing current-account deficit and slowing core inflation—as he tried to calm investors worried over the impact of a likely rollback of easy money policies in the U.S. India is much better prepared now than a few months ago to handle a rollback of U.S. policies, Raghuram Rajan told reporters. His comments came on a day the Indian rupee dropped to a two-month low against the dollar in early trade and stocks extended their losing streak to the seventh session. ..........
Rajan Returns to Bond, Hits Golden Eye
.......“There
are issues we have to worry about and there are issues we should not be
so concerned about,” Rajan said. “It is important that RBI clarifies
its interpretation of economic events and the likely direction of
policies at times of uncertainty so that the market worries about the
right things and does not get into a tizzy about the wrong ones.” ...........
Rajan's effect on rupee 'a little bit of hype': Arvind Virmani
....... "I had said that what people were talking about the Raghuram Rajan effect really applied to the rupee above 65 because that was a overshooting and it had to be corrected and he [Rajan] did it very effectively. I think beyond that it was a little bit of hype."...........
Read...........
Read...........
Bankers briefed on joint liability groups
......NABARD assistant general manager A. Parthiban said under the JLG form of lending to which the Reserve Bank of India listed as priority, the credit needs of poor people for taking up micro economic activities could be supported without much of hassle for security. At the same time, lending for JLGs would qualify as ‘weaker section lending’ under the priority sector advances for the bankers..........
Take tough stance against defaulting Corporates, FinMin advises PSBs
.........In order to contain bad debts, the Finance Ministry has advised public sector banks to take a tough stand while sanctioning fresh loan to the corporate houses in case any of their special purpose vehicle (SPV) has defaulted. The move, Finance Ministry is of the view, will help check rising bad loans which has touched a high of Rs 1.83 lakh crore at the end of June quarter...........
Dr C Rangarajan bats for Financial Inclusion at CII F&I Summit
“There is a dire need for a robust and efficient banking system to efficiently fulfill the needs of all the sections and sectors of the economy to fill the existing gap especially in rural India", emphasised Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, Government of India, while addressing the 3rd Finance and Investment Summit organised by Confederation of Indian Industry (CII), here today. Addressing the 'myths' associated with financial inclusion, Dr Rangarajan further highlighted that, with appropriate financial products, innovation, change in mindsets, technology and partnerships, financial inclusion is a viable business model and should not be treated as a CSR obligation.......
State Bank of India: Corporate lending zooms, but stressed sectors are a worry
.....While SBI has witnessed lower slippages during the September quarter, consistency in performance will be critical given its high exposure to stressed sectors. The non-performing assets now account for a fourth of the total restructured book, which is indicative of higher risk on the restructured assets. Hence, stressed assets still elevated at nine per cent of loans, remain an overhang on the SBI stock..........
SBI not to merge any associate bank this fiscal
........Arundhati Bhattacharya, the incumbent SBI chief, said, “We need to do a little more consolidation on our side before we take that (another bank) on. It is not off the table, but at this point we need to pay attention to what we are doing in a better manner.” A top executive at the SBI said that there is a new chief at the helm and priorities change when a new person assumes charge. Another reason why the associate bank merger has been delayed could be because the country’s largest lender is grappling with higher staff expenses.............
Liquidation of Anyonya bank's movable assets begins
........A merger proposal with Maharashtra-based Saraswat Cooperative Bank fell flat with a section of Anyonya Bank's staff members stating that they were not taken into confidence for the merger and even relayed this to the Saraswat Bank. Following this, the Saraswat Bank pulled out of the merger and intimated this to the RBI as well. The bank that was once the city's pride and touted to be Asia's first cooperative bank went into liquidation in 2010........
PFRDA chief Yogesh Agarwal quits, govt appoints Anup Wadhawan
......"Yes, I have put in papers. I will not comment on reasons," Agarwal said outside the Finance Ministry here. Agarwal, who had one and half years more to go as the PFRDA chairman, resigned within days of his name not being included in the selection panel for shortlisting of whole-time members of the pension fund regulator by the Finance Ministry..............
Do Not Let Fraudsters Spoil Your Cover Story
.........Hi,
Irda has found out that your current insurance policy is giving you
poor returns. As one-time relief to you, we are allowing you to
surrender your existing policy and shift to a better product. You just
have to pay a nominal fee for this. You also will have to submit some
documents... Many
insurance policyholders have been getting similar calls from
representatives of the Insurance Regulatory and Development Authority
for a while now. In fact, the insurance regulator was forced to issue a
public alert recently, cautioning policyholders against falling for such
sales pitch by the so-called ‘Irda representatives’..............
NPS : Back to the Beginning
We
have been through a long detour on the National Pension System (NPS).
In the decade that elapsed until the law was passed in Parliament, many
things have been done that were expedient. Now that this phase is behind
us, it is time to go back to the spirit of the NPS. This involves a
single simple system, harnessing economies of scale, using auction-based
procurement and waging war against fees and expenses...........
Read - ET
Read - ET
Wednesday, November 13, 2013
A shaky base - Renu Kohli
.........By far, the greatest concern is of forecasting a price series that has yet to stabilise. This is a point noted by both current and former RBI Governors, Raghuram Rajan and D Subbarao in recent months, suggesting the CPI series is possibly still under observation by the central bank. It has also to prove robust and dependable. For example, even when prices of volatile components fluctuate sharply, they tend to return to the previous level within a relatively short span. We do not see such mean-reversion in the CPI series so far. Alternately, could there be a secular upward trend, i.e., a shifting mean? Other than that complex processes such as these need pinning down if they exist, the danger is of forecasting inflation when the price level may be deviating from its long-run behaviour............
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