..........“As soon as the meeting began, Modi said looking at Mayaram that inflation is the first and foremost thing that the ministry needed to handle. Modi has asked Mayaram to include inflation in the first hundred days’ agenda and work out a plan to handle,” an official told dna. Finance ministry sources said a workable plan to address the supply-side issues to handle inflation will be submitted to the Prime Minister’s Office (PMO) soon............
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Friday, June 6, 2014
RBI to take another shot at IIBs in FY15, with tweaks
........For the current fiscal, the RBI will offer two variants from the very beginning: inflation-indexed bonds and inflation-indexed savings certificates. The former will be primarily for institutional investors through the auction process, with a 20% limit for retail investors. The latter will be primarily available.......
Banks may soon be able to issue infrastructure bonds
In a bid to boost infrastructure lending, the Reserve Bank of India (RBI) is likely to allow banks to issue infrastructure bonds. These bonds will not attract the mandatory cash reserve ratio (CRR) and statutory liquidity ratio (SLR) provisions.............
RBI allows FPIs, NRIs to invest upto 26% in insurance
The Reserve Bank said overseas investors, including FPIs and NRIs, can invest up to 26 % in insurance and allied activities through the automatic route. Earlier in February, the government had allowed 26 % foreign investment in activities related to insurance like broking, third party administrators and surveyors and allowed FIIs and NRIs to invest in insurers within the stipulated cap..........
NBFC sources say RBI norms aimed at ending licence trade
........" There have been recent instances where we have seen entities that the RBI may not consider as fit and proper to hold large stake or promote an NBFC, bypassing the regulatory process of seeking a NBFC licence by acquiring or attempting to buy an existing NBFC," a senior industry official said. Sources said that the RBI was likely to be extremely strict with any such instances and may even cancel licences of NBFCs that are acquired in such a manner by those seeking to avoid tougher norms that are in the works. The attempts to acquire NBFCs so as to benefit from their licences have started after the RBI announced a moratorium on issuance of fresh NBFC licences from Apr 1........
New merger proposal to Indus Ind and Federal Bank
........"The Rupee Bank administrator met me on Wednesday. He is holding a meeting with Cooperative Minister Harshavardhan Patil in Mumbai today and we expect some decision on the merger soon. Rupee Cooperative Bank is a loss making bank and any acquiring bank will have to do a due diligence of its assets," Oulkar said. He said a merger proposal will be sent to the RBI once either Indus Ind or Federal Bank agrees for the merger. He said the RBI will have to submit a merger report and so would have either of the acquiring banks.........
RBI permits ANZ to open two new branches in India
...."The approval to open branches in these commercial hubs will strengthen our superior regional strategy, expand our ability to support clients and build on our position as a leading bank in Asia. India is the world's third largest economy on purchasing parity terms and it remains one of the fastest growing economies in the world...Continuing to connect our customers between India and the other32 countries in our network creates a further driver of growth for ANZ," ............
Federak Bank gets RBI nod to open representative office in Dubai
..........“Federal Bank has been granted approval by the Reserve Bank to open a representative office in Dubai, UAE,” the old generation private sector lender said in a statement. The representative office will function as a source of information to NRIs interested in foreign investments in the country, apart from serving the diaspora...........
CKP co- op bank account holders stage protest
Around 100 account holders of CKP Co- operative Bank protested against the bank at Wagle Estate here on Thursday following the RBI directives to allow bank customers to withdraw only Rs 1000 in six months. It was the second day of the bank customers’ protest.............
Housing fin schemes get new thrust
......“The change that RBI’s cautionary note brought was that now banks do not disburse the entire money upfront and instead disburse it in a construction-linked manner, which is a good thing,” ........
YES Bank calls Madhu Kapur's allegations baseless, untenable
.........YES Bank, however, has strongly denied these allegations, saying her statements were incorrect and defamatory. "The bank has always acted in a manner, which is in accordance with law and has upheld the principles of corporate and management governance. The subject matter in consideration at the AGM has been finalised in a transparent and legally compliant manner,".........
Thursday, June 5, 2014
Monetary Policy: Readying for Growth? - Renu Kohli
................The RBI’s guidance states that a faster-than-currently-anticipated pace of disinflation, adjusted for base effects, will provide the headroom for an easing of the policy stance in future. Hard to say at this point as to what role a stronger currency might play in stabilizing prices ahead. A related question in this regard: What of the growth-inflation tradeoffs vis-à-vis exchange rate movements? How much growth could be impacted via reduced exports? That’s why the balance of outcomes on inflation and growth is worth watching out for.
The New Triad of Policy Concerns
Monetary Policy, Sovereign Debt and Financial
Stability: The New Trilemma edited by Deepak
Mohanty (New Delhi: Reserve Bank of India, Foundation
Books, Cambridge University Press India), 2014, pp xiv +
370, Rs 995.
........It is not clear from the paper whether the new framework implies the jettisoning of flexible inflation targeting or better fine tuning; or whether, as suggested in the Urjit Patel Committee report commissioned by Rajan in his new capacity as Governor of the Reserve Bank of India (RBI), inflation targeting is more relevant now for developing country central banks where inflation remains an issue even as “there is a consensus gathering internationally that monetary policy should move away from its narrow focus on inflation towards a multiple...............
When a fellow met a distinguished fellow...
The right way forward
.....This can be attributed to not only the banks' concern for growing non-performing assets but also on the muted demand for quality credit. The government now needs to support the Reserve Bank of India (RBI)'s move by presenting a proactive Budget, supporting the inflow of long-term tangible investment into the country.......
Can Rajan, Modi team up to create Greenspan-Clinton moment?
.......Rajan has plenty of firepower to help Modi boost economic growth if, and only if, the government does its part. This unofficial pact between Rajan and Modi is a delicate one, and it could be scrapped at any moment. But if anyone in India has the gravitas to prod Modi to make good on his ambitious election pledges -- to trim debt, rein in the current-account deficit and cut poverty – it’s Rajan, who served as the International Monetary Fund’s chief economist from 2003 to 2006...........
Read - DNA
Rajan 'cognisant' of state financing needs as RBI loosens credit restraints
The Reserve Bank of India (RBI) held interest rates and unveiled a suite of liquidity measures today, in its first policy announcement since new prime minister Narendra Modi swept to power last month.
Raghuram Rajan, the RBI governor, said it was "appropriate" to leave policy on hold and let the "disinflationary effects" of earlier rate cuts work their way through the economy.
Annual CPI inflation increased from 8% in February to 8.6% in April, on account of a "sharp" increase in food prices. The central bank had forecast a gradual decline in inflation over the period but seems unperturbed by the recent spike, which Rajan described as "largely seasonal".
Reserve Bank of India holds key rate at 8% despite spike in food prices; takes steps towards creating a ‘more generalised provision of system liquidity’ The RBI aims to bring inflation down to 8% by January 2015 and Rajan stressed that if the economy stays on its present course "further policy tightening will not be warranted".
He even raised the prospect of "faster than expected" disinflation that, should it occur, would "provide headroom for an easing of the policy stance" – the first time he has alluded to the prospect of reversing some of last year's rate hikes.
The RBI also announced new liquidity measures for the second policy statement in a row, most notably a reduction in the statutory liquidity ratio (SLR), which determines the amount of money banks must invest in government securities before offering credit to the wider economy.
The SLR will drop by 50 basis points to 22.5% of banks' net demand and time liabilities on June 14, which Rajan believes "will give banks more freedom to expand credit to the non-government sector".
"However, the Reserve Bank is also cognisant of the significant ongoing financing needs of the government," Rajan said. "Therefore, the SLR is reduced by [50bp] with any further change dependent on the likely path of fiscal consolidation."
The RBI also decided to limit the amount banks can draw down from its export credit refinance (ECR) facility, by cutting the amount of outstanding export credit that will be eligible from 50% to 32%. To prevent a drain on liquidity, the central bank introduced a new special term repo facility.
These changes follow the advice of the Urjit Patel Committee, which recommended the economy "move away from sector-specific refinance towards a more generalised provision of system liquidity without preferential access to any particular sector or entity".
"This should improve access to liquidity from the Reserve Bank for the system as a whole without the procedural formalities relating to documentary evidence, authorisation and verification associated with the ECR," Rajan said.
Is India nearing its Greenspan-Clinton moment?
.............The Reserve Bank of India (RBI) is independent and Rajan, a respected University of Chicago professor, is no pawn. Nor can he afford to be a monetary pushover, given how India’ 8 percent-plus inflation rate exacerbates the nation’s crushing poverty. But Rajan seems willing to believe Modi’s pledges to bring down inflation — and is willing to reciprocate the generosity. He did so this week by holding the benchmark repurchase rate at 8% and hinting that he’s willing to ease policy if inflation pressures wane..........
Policy rates may remain on a prolonged pause until 2015
.............."We see no scope for rate cuts any time soon and expect policy interest rates to remain on a prolonged pause until 2015. No doubt, inflation will at times undershoot the RBI projections owing to base effects, but they would have to be sustainably below 8% by January 2015 and 6% by January 2016 for the RBI to start easing policy rates, given that the RBIs credibility hinges on meeting these targets," ............
Markets salute SLR cut with new high
.............“RBI, as expected, kept the rates unchanged, providing stability to the market. Significantly, the commentary is dovish. The two measures taken to reduce the SLR and export re-finance are long term in nature and unlikely to have any immediate relevance. The fact that this comes in the backdrop of a recent firm-up in inflation and RBI has conceded to give more weight to non-food-non-fuel inflation, can be viewed favourably,.......
Returning goodwill
.........Rajan’s decision to not aggressively deploy the wide latitude the apex bank enjoys in setting monetary policy, will be welcomed by a new government all set to work the nuts and bolts of a tenuous economy. The decision to hold interest rates will also push the onus onto the Modi government to further contain the fiscal and current account deficits through conservative fiscal spending. Rajan has made it clear that further policy tightening will not be warranted if the economy stays its course. However, this will require..........
Just financial literacy doesn’t work, need accountability
............Today, the world is abuzz with the need for financial literacy. But can financial literacy deliver on its own? Not if it’s used as a filter to let faulty products and wrong advice pass through. There is so much information arbitrage in the financial market that to hang financial well-being on financial literacy is wide off the mark. It would also not be fair to expect investors to know the innards of a complex financial product, be adept at crunching numbers, and remember all the fine print, all in the name of financial literacy...........
Greedy or practical? Why banks don’t want you to use other ATMs more than twice
.............Nation Payment Council of India’s spokesperson, Managing Director and CEO, AP Hota, refused to comment to Firstbiz about the banks proposal to RBI. The truth is, it’s all about interchange money and cost of keeping ATMs operational. As per RBI report, banks with larger ATM network treat interchange fee as an
important stream of revenue since many customers of banks which fewer
ATMs land up using their's. Industry sources say that it’s the PSU banks who want to decrease the
interchange money presently levied, while private sector banks want it
to be raised. This is primarily because private banks have more ATMs and
have public banks' customers using their machines................
Soiled notes make way to ATMs
.............."Ideally, soiled notes should not reach ATMs. However, we do receive frequent complaints from customers and exchange soiled notes that were supposedly dispersed by ATMs. We suspect that the people entrusted with refilling cash in ATMs are running a racket of their own," an officer in a public sector bank said. In extreme cases, those involved in ATM maintenance have been known to replace valid notes with fake ones. Recently, fake currency notes were dispersed by an ATM in a district in Bengal. ............
Private bank puts out fake notes
CHENNAI: Police have found that a private bank in Karapakkam was involved in circulation of fake currency notes after they questioned a woman who tried to deposit counterfeit notes at a bank branch in K K Nagar on Tuesday. Police said when the woman came to deposit 50,000 in a private bank in K K Nagar, branch officials found that 500-rupee notes totalling 27,500 were fake............
Debit card annual fees: Why most customers shouldn't be charged
..........Its a different story that phone banking, which was supposed to help customers on a toll free number, is now offered on a paid line. So, all these services that came up to help customers have helped the banks more than the customers. Of course, no one can deny the many conveniences we enjoy today. The point I want to make is that all that was free, now comes at a cost. Even an SMS sent to customers are subject to charges now. The SMS initiative came as a measure to ensure safe banking and now it costs the customers to ensure that he banks safely. Somehow, it doesn't convince me that my bank account is not safe with the banks with this paid SMS facility...........
Can A Digitized Post Realize India’s Financial Inclusion Dreams?
...............India’s Post has forged partnerships with the country’s leading technology companies to help build a technology platform that would allow post offices to offer online services, and postal workers to use mobile phones to handle many of their operations in the field. This year, it plans to launch a national ATM network, as well as connect all branches of the post office through the common technology platform. .............
India’s own Temasek
.............The banks get outside the purview of the CBI/CAG/CVC and will then be able to take commercial decisions without fear of being hauled up 10 years later for what was just a bad commercial decision. The flip side, of course, is that RBI needs to strengthen its supervision, which has been found wanting on various occasions. Indeed, if the government is keen to professionalise PSUs, the same PJ Nayak format should be extended to all of them. Transfer government shareholdings in them to a Temasek-type fund where the government stake is at 50% and have the fund run by a professional board. Immediately............
Bank Mergers: Finmin Looking at Various Options
...........One proposal suggests Punjab National Bank, Indian Bank and Dena Bank be merged to create a bank with an asset base of more than Rs. 9 lakh crore. Another possible combination is Bank of India, Allahabad Bank, Corporation Bank, Bank of Maharashtra and Punjab & Sind Bank. The finance ministry is examining proposals that include consolidation based on geography, business mix and information technology systems. Both private and public sector investment banking firms have made proposals, a senior finance ministry official told ET.............
Stake sale in bank duo on agenda
..........The finance ministry may consider selling part of its stakes in the State Bank of India and Punjab National Bank in the current financial year. The ministry also wants state-run banks to aggressively sell bad loans to asset reconstruction companies to fall in line with the Basel norms as the North Block has decided to limit its infusion into state-run banks at about Rs 11,000 crore. The government’s current holding in the SBI, the country’s largest lender, is 58.6 per cent. A divestment of 5 per cent will take it down ..........
Indian Banking System third most at risk with online malware: Report
.........Improvements in the banking industry and the trend towards making online payments have caused such fluctuations in the growth of banking malware. Also, the introduction of new techniques by cybercriminals causes these changes. Online banking malware creators updated their portfolios yet again in Q1, 2014 with the addition of new routines to their usual weapons of choice, and hence there was a spike in this quarter. "...........
Finance Ministry mulls nodal agency to take over bad loans
.........There is a proposal to form such an entity, for which public sector banks can jointly put in capital, sources said. “We have asked banks to prepare some modalities for setting up of this company, which could look at the stressed asset issue holistically, including taking over non-performing assets (NPAs) and revival of sick units,” the sources said, adding that the proposal was part of a presentation made to the Finance Minister by the Financial Services Department.
As per the proposal, it could act as an aggregator of NPAs and clear such assets quickly.........
NPA norms stressed, RBI may revamp soon
........ “If you are rushing to do a TEV report, the quality will be poor,” another senior banker at a large public sector bank pointed out. He also highlighted the fact that not all banks have board meetings often enough to be able to discuss the cases. Sources told FE the Indian Banks' Association had already sounded out the RBI requesting the regulator to review the timelines. Typically, borrowers tend to pay up on the 89th day to avoid the NPA tag. With JLFs in action, customers have started paying up on the 59th day, a banker said......
CBI Registers 46 Cases in Saradha Chit Fund Scam
.........The Supreme court had last month handed over the Saradha chit fund scam to CBI and asked the state governments to provide all logistical help to the CBI team probing the matter. CBI has formed a Special Investigating Team (SIT) headed by Joint Director Rajeev Singh to also probe the role of Securities Exchange Board of India (SEBI) and RBI. "Investigation conducted so far puts a question mark on the role of regulatory authorities like SEBI, Registrar of Companies and officials of RBI within whose respective jurisdictions and areas of operation the scam not only took birth but flourished unhindered," an apex court bench headed by Justice T S Thakur had said in its order.........
United AP bills deducted from residuary AP account in goof-up
...............From the midnight of June 1, individual bank accounts from both the States came into effect. However, the bank officials presented the bills on June 2. The officials who noticed the goof-up then wrote to the RBI to correct the mistake............
Plan to cover unbanked GPs in the Odisha by June
............“SLBC jointly with Reserve Bank of India and state finance department will finalise the plan for allotment of GPs to the banks for opening of branches in the GPs”, said an official. Individual banks will be asked to submit an action plan for opening of branches in a time bound period so that all the unbanked GPs will have brick and mortar branches in next three years, added the official........
Women CAs still run into glass ceiling
Way back in 1933, Shirin K Engineer broke the glass ceiling by qualifying as the first woman chartered accountant in India. Yet, decades later this profession continues to be viewed as a male bastion. Of the 2.30 lakh chartered accountants (CAs) in India today , only 21%, or around 49,000, are women. The silver lining there are nearly 3 lakh female CA students constituting nearly 36% of the CA student population. `While women CAs are leaving their mark of excellence professionally , the immense potential that lies embedded is still vastly untapped and needs to be harnessed and strengthened,“............
Dhanlaxmi to take a fresh shot at stake sale
.........The move by the bank follows its failed fund-raising attempt a month ago, after a group of investors from Mumbai snubbed the lender at the last hour. While the initial plan was to raise around Rs 233 crore, the bank could raise only Rs 30 crore from a couple of investors in the process. While Kapil Wadhawan, chairman and MD of Mumbai-based Dewan Housing Finance Corp Ltd, picked up around 3.34%, NRI businessman Ravi Pillai raised his stake to 4.9%.All other investors from Mumbai decided against investing in the bank. The fund-raising was meant to build a buffer with a higher capital adequacy ratio. ............
Canara Bank to turn some 600 branches to 5-star category
.........“We have unveiled a prototype of Shikhar branches. Over the next six months, we will convert and upgrade another 600 branches across the country. We will totally transform our branch network by providing a good customer-friendly ambience, products and services. Now, our branches are rated under one star and we will upgrade them to five stars as per the standards provided by BCG,”..........
ICICI Bank gears up for cash chase
...........The bank added in the filing that the cost of raising funds through private placement might be up to 300 basis points above the benchmark interest rate for issuances in the rupee market and up to 500 basis points above the benchmark rate for the foreign currency market. While the proposal to raise the borrowing limit may only be an enabling resolution, analysts said it could be an indication of how banks were gearing up for a possible recovery of the domestic economy...........
Madhu Kapur takes Yes Bank fight to shareholders
.....................Kapur said the bank notice for the AGM does not refer to the circumstances surrounding the Reserve Bank of India’s (RBI) approval of Kapoor’s appointment as MD and CEO till August 2015. “Rana Kapoor could not have applied to be MD and CEO without my recommendation...secondly, the shareholders have not been informed that though the approval sought in August 2012 was for five years, RBI granted it only for three years. This speaks volumes and the shareholders must know about it. The entire proposal is not transparent and contrary to the Articles and Companies Act 2013.”.............
Wednesday, June 4, 2014
FM lauds Rajan for 'balanced' policy
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| File photo |
The FinMin-RBI equation
......A good understanding and relationship between the government and the Reserve Bank of India (RBI) governor is a prerequisite for the success of our economy. There should be clarity about their respective objectives. The finance minister is a generalist who is assisted by a team of specialists and, therefore, should treat advice from RBI with an open mind. Secondly...........
RBI policy: Delhi-Mumbai ‘accord’
With the new government at helm in Delhi, rhetoric from the finance minister has been rudiment and clear. That is, going forward, efforts will be towards reviving growth and containing inflation, while progressing on fiscal consolidation. Although requisite steps in this direction are yet to be taken, the yearning appears to be unprecedented. Complementary for setting up of monetary policy, the kind of realisation that the new government has shown towards tackling inflation has given RBI confidence that Delhi and Mumbai will work coherently towards the common goal...........
Reserve Bank’s policy: Leap of faith?
...........This is how the move towards targeting retail inflation with an unambiguously stated glide path came into existence from January. While the market is still trying to debate and weigh the pros and cons of such a move, it was a paradigm shift in India’s monetary policy history. This background is important to highlight that RBI has indeed managed to anchor expectations by infusing disinflationary impulses through its tight monetary policy in an economy that has seen a substantial loss of growth momentum over the past three years..........
RBI’s zone of comfort
....... Some analysts have seen an incipient dovishness in the monetary policy statement. They are mistaken. RBI has merely stated the obvious—that it will have headroom to ease policy in case disinflation is faster than expected. It has mentioned enough risks on the other side as well. Yet, there are signs of greater confidence. ........
Nayak committee reforms a must now
..........So, will the recommendations get accepted? The Committee has been fortuitous with timing, with the report being made public as a new government came in. Fiscal pressures mean that the government has little choice but to act. One can argue about the specifics or quibble about the sequencing or the eventual timing of such moves, but the government will have to grasp the nettle.
FinMin may not allocate more funds
.............The ministry reiterated banks should act tough on wilful defaulters. Options, including change of management of defaulting companies, financing of acquisition of bad assets by strong companies, were discussed. The ministry is toying with the idea of a separate statute for high-value wilful defaulters with special courts and time-bound disposal.
Govt mulls common law for all financial-sector regulators
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Lessons for UFBU and Aam Banker from 2014 Elections
.......I too thought of analyzing the results from the perspective of Aam Banker based on their plight since 10th BPS has already overdue for a long time now. The results seem to have thrown all the constituents of UFBU into disarray and they are so shell shocked that hardly any one of them have spoken a word about the whole event. The Hindi proverb “saap soongh lena” appears to be true for the current situation.........
Read.........
15 months on, Rupee bank merger hangs in balance
Fifteen months after the Reserve Bank of India (RBI) suspended the Board of Directors of the Rupee Cooperative Bank and imposed strict regulations on it, plans to merge it with another bank have not made much progress. A proposal to merge the bank with Saraswat Bank is with the RBI, the move to merge it with Allahabad Bank is stuck pending a due diligence report and merger talks with Bank of India has not made any progress.......
RBI में ग्रेजुएट्स के लिए निकली नौकरियां
जर्व बैंक ऑफ इंडिया (आरबीआई) में ग्रेड बी ऑफिसर पद पर 117 रिक्तियां जारी की गई हैं. आवेदन करने की अंतिम तिथि 23 जून, 2014 है.
Seminar on Imperatives of Basel III Capital Requirements
.......The objective of the seminar is overall in-depth understanding of the Basel III guidelines and its challenges and to equip CMDs/CEOs of banks to implement the transitional requirements, plan their capital requirements and manage the impact on their businesses........
Read.........
Economic Survey may bear Virmani's mark
.............This time, advisors may take cues from Virmani, Kaushik Basu’s predecessor at the finance ministry. In the 2008-09 survey, Virmani had suggested various big-bang reforms to the government of the day — United Progressive Alliance-II. These included suggestions on fiscal sustainability and tax simplification, financial market, energy, improving the investment environment, public goods, institutions, education and employment-generation. On fiscal sustainability and tax simplification, the survey had suggested phasing out surcharges, cesses and transaction taxes. An official, however, said this time, the nature of reforms suggested might be quite different as the economy had changed a lot since then.........
RBI moves away from sector-specific refinance
.............The RBI said that this was “in pursuance of the Dr. Urjit R. Patel Committee’s recommendation to move away from sector-specific refinance towards a more generalised provision of system liquidity without preferential access to any particular sector or entity.” “This should improve access to liquidity from the Reserve Bank for the system as a whole without the procedural formalities relating to documentary evidence, authorisation and verification associated with the ECR. This should also improve the transmission of policy ..........
RBI policy review: An ambiguous turn
..........One of the maxims of central bank communication is that each word should be chosen with care. Thus, changes in policy statements, particularly on guidance, are always well thought out and tightly scripted. By playing fast and loose with its guidance, RBI risks introducing ambiguity in the minds of stakeholders and undoing some of its good work on clarity and transparency.......
RBI holds repo rate as inflation woes persist, cuts SLR by 50 bps
.....“The move indicates that RBI is working in independent fashion, regardless of what pressure are supposedly been put by the government,” Madan Sabnavis, chief economist at Credit Analysis and Research Ltd, a rating agency. “The RBI is firm on its stance of inflation control.”..........
Signs of normalisation
.............the RBI has stuck to its guns, asserting that it will not back down from its fight against inflation. This may, of course, get the government's back-up, but, as the RBI governor has made very clear, he alone decides monetary policy. The government would be well-advised not to go down the route of confrontation. It is far more important to begin to quickly address the supply constraints that are combining to keep inflation high. Only if the responses are visible and credible can the RBI justify a reversal in its position. Of course,..........
The RBI Can Do Only So Much
.......The central bank tightened rates constantly through 2013, as prices soared; it can now afford to take a break. Governor Raghuram Rajan has hinted that if inflation slows dramatically , he would consider cutting rates, which could boost investment and growth, which await firm, decisive action by all parts of the government. However, there are two problems.........
RBI’s SLR cut is symbolic of better days ahead
.....The cut in SLR also illustrates the RBI’s confidence in the new government’s commitment to fiscal consolidation. In the current fiscal year, the government is set to borrow a record Rs.5.97 trillion (so far Rs.1.52 trillion has been raised from the market) after borrowing Rs.5.64 trillion last year andRs.5.58 trillion the year before. These are all ........
Rajan holds rate, waits for govt to push growth
........Finance Minister Arun Jaitley complimented RBI for striking a balance between growth and inflation, a stance in sync with that of North Block. He promised to address the inflationary concerns, particularly on food prices, through supply-side measures and fiscal consolidation. He also assured the government would strive to revive the investment cycle for higher growth and employment generation. “RBI has chosen to maintain a balance between growth and inflation while keeping the policy rates unchanged,” Jaitley said on his Facebook page. He reiterated this was also an aim of the government. “It is (also) a priority for the government to maintain a balance between growth and inflation.”............
RBI makes the first move
......... But since RBI talks of the possibility of stronger government action on food supply, this means it is confident the government will dump wheat and rice stocks from FCI to kill foodgrains inflation; RBI seems to be more sure about better fiscal consolidation this time around, something finance minister Arun Jaitley has talked about..........
RBI should wait until budget before cutting rates: C Rangarajan
...."The policy has been very much on expected lines. It is prudent and wise to wait a little longer before taking any decision on lowering the interest rate. "We do not know very much about what the monsoon is going to be. The new Budget is yet to be unveiled and therefore, the decision to lower the interest rate will have to come after some of these events are over with," ......
RBI seeks better transmission of policy rates
........By reducing the statutory liquidity requirement and funds provided under the export credit refinance (ECR) facility, the RBI has gone a step further to align interest rates across different segments to market-determined rates. The objective — as stated in the Urjit Patel Committee report — is to facilitate the transmission of policy rates across segments. For borrowers this means quicker pass through of policy action on banks’ lending rates over the long term.................
Bankers see consistency in Rajan’s rate moves
While the status quo on interest rates was on expected lines, RBI Governor Raghuram Rajan’s surprise cut in Statutory Liquidity Ratio has been welcomed by bankers, who see consistency in policy rates in the medium and long terms...........
Will SLR cut lead to lower lending rates?
......This move, according to analysts, could infuse about ₹30,000-40,000 crore into the banking system. But whether this will have any impact by way of lower lending rates or more credit to the so-called “productive sectors of the economy” remains to be seen. Anis Chakaravarty, Senior Director and Lead Economist at Deloitte India, said: “This is a calculated move by the RBI and should give a boost to growth.” However, bankers seem to disagree that such a move will have any significant impact on lending as most banks have already deployed funds in excess of the statutory requirements in government securities. .......
Things getting better for the economy? Here's what RBI's Raghuram Rajan thinks
Are green shoots of economic recovery round the corner? Are there any indications that the major factors that have worried both the Finance Ministry and Reserve Bank of India (RBI) have moderated? RBI Governor Raghuram Rajan certainly feels that the prospects of economic recovery look better.
Inflation not easing soon; rate hike likely by Dec: Analysts
...Governor Raghuram Rajan, while leaving all key rates unchanged, reduced the statutory liquidity ratio (SLR) by 0.5% to 22.5%, thereby injecting about Rs 40,000 crore into the financial system. Analysts described the RBI actions as "dovish". "If the economy stays on this course, further policy tightening will not be warranted," Rajan said......
Bandhan to go for listing after three years of banking
........."As per RBI norms, Bandhan Bank will get listed after three years of operation as a banking entity," Ghosh said. "The RBI has given us 18 months to start banking operations. .........
RBI approves re-appointment of KVB MD
The Reserve Bank of India has accorded its approval for re-appointment of K. Venkataraman as Managing Director and CEO of Karur Vysya Bank (KVB) for a further period of three years from June 1, 2014 to May 31, 2017, the bank informed the Bombay Stock Exchange on Tuesday.
The Hindu
Tuesday, June 3, 2014
RBI governor Raghuram Rajan meets Narendra Modi
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