'Correction' in Re to aid cut deficit: Rakesh Mohan

Former RBI Deputy Governor Rakesh Mohan tells CNBC-TV18 that the fall in the rupee is to be seen as a correction, He explains that the new level of the rupee vis-à-vis will make the country competitive and aid in reducing the current account deficit. Mohan adds that the RBI has a very tough road ahead and needs to use every option that is available.

Click to read an edited transcript of the interview

Kerala needs more centres to dispense currency'

Thiruvananthapuram, May 29: The Syndicate Bank Staff Association has requested the Reserve Bank of India to open satellite centres in the State to deal with currency and coin distribution. The request comes in the context of a RBI move to close down its counters delivering these services in state capital and metros. It has found a mention in the RBI annual policy statement for 2012-13. Distribution of currency notes and coins would now be channelled only through currency chests and bank branches. There are five coin/currency dispensing counters at the Reserve Bank regional office here and two associated with its Kochi office. Mr K. S. Bhat, all-India Secretary, of the Syndicate Bank Staff Association (SBSA), said that the RBI move would affect interests of business and the general public. He urged trade unions as well as the banking public to come forward in protest against this move and force the Centre to take up the matter...................

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RBI cancels Chatrapur co-op bank licence

The Reserve Bank has cancelled the licence granted to Chatrapur Co-operative Bank Ltd, Chatrapur, Odisha. With the cancellation of its licence and commencement of liquidation proceedings, the process of paying the depositors will be set in motion subject to the terms and conditions of the Deposit Insurance Scheme. The RBI said that the bank had ceased to be solvent and with all efforts to revive it having failed and the depositors being inconvenienced by continued uncertainty, the RBI delivered the order cancelling its licence after the close of business on May 23................

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RBI asks NBFCs to verify documents before opening biz accounts

......"For sake of clarity, in case of proprietorship concerns, it has been decided to lay down criteria for the customer identification procedure for account opening by proprietary concerns. "Accordingly, apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, NBFCs/RNBCs should call for and verify documents before opening of accounts in the name of a proprietary concern," RBI said in a notification..................

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Shake-up in banks’ shareholding?

............The Bill will also give RBI the power to supersede the board of a bank for up to an year and to call for information from banks’ associate companies. These are truly significant changes in that they create the enabling conditions for the banking regulator to take bank ownership and governance to another level, primarily for private sector banks. However, these are necessary but not sufficient conditions. The sufficient conditions can be created through further ......

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DMs asked to submit list of new bank branches, business correspondents

In a bid to complete Financial Inclusion in the State, all the district magistrates had been directed to submit the list of new bank branches and business correspondents (BC) of their respective districts in one week. They had also been asked to take initiatives to increase Credit Deposit Ratio.Chief Secretary Alok Kumar Jain issued these instructions to district magistrates in a video conferencing at Secretariat on Tuesday. Recently RBI Governor D Subbarao had agreed to relax the set standard of 1,000 population for opening of bank branches. There ought to be a bank branch in every 5 km distance and a BC in every 2 km distance. He directed the DMs to identify the location and submit the list to him in one week and to ensure connectivity while choosing the location............

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LIC hikes interest rates on loans against policies

.....Meanwhile, the All-India Bank Depositors Association and former deputy governor S S Tarapore have suggested to the Reserve Bank of India that premature termination of fixed deposits should be allowed for survivors in a joint fixed deposit account. "The logic behind this is that the joint holder has to usually face a lot of expenses and should not be further penalized through imposition of an early withdrawal penalty," said Ashok Ravat, secretary of the association.

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NPAs not a systemic issue:RBI

Deputy Governor of the Reserve Bank Anand Sinha today said that the burgeoning non-performing assets in the banking system was not a systemic issue but only a reflection of the economic stress being faced. "Whenever there is stress on the economy, both global and Indian, that is bound to reflect on the banking system. But I will not call it a systemic issue," Sinha told reporters on the sidelines of a conference here. Sinha's comments come a day after Finance Minister Pranab Mukherjee said that the NPAs have grown at "an uncomfortable and unacceptable rate" in the last two years and asked banks to tread cautiously because of the risks involved................

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KVG Bank aggressive on financial inclusion front

The Karnataka Vikas Grameen Bank (KVGB) under the financial inclusion scheme has covered 418 villages and of this, 53 villages have brick and mortar branches. Meanwhile, the bank plans to open 50 regular branches and 50 ultra small branches and achieve a business-level of Rs 13,000 crore. Declaring 50 more villages as solar villages and establishing nine financial literacy centres are other schemes. KVGB chairman C Sambasiva Reddy told reporters here that the bank’s net profit for the year 2011-2012 stood at Rs 128 crore showing a growth of 35 per cent. The bank’s capital plus reserves have risen to Rs 839 crore from Rs 711 crore.

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Tardy lending performance raises concern at bankers' meet

.....The RBI Regional Director Uma Shankar said that to make financial inclusion meaningful it is necessary for banks to actually lend to people who have been given new accounts. “Only a small portion of the villages with a population of more than 2,000 persons have been provided with credit facilities,” Ms. Uma Shankar noted. She also urged banks to review and monitor the functioning of banking correspondents appointed by banks. “Banks need to ensure that the conduct of their correspondents does not affect their reputation,” she said............

Read -The Hindu

RBI proposes tweaking FII debt limits: source

The RBI has proposed to the finance ministry reducing the minimum lock-in debt investment periods for foreign institutional investors as a way to boost inflows and help protect a weakening rupee, a senior official said on Tuesday. The Reserve Bank of India has also proposed recasting the investment limits within the countrys existing debt categories, an official with direct knowledge of the proposals told Reuters, given more than a third of foreign investment limits across all Indian debt categories are unutilised. He declined to be identified because the proposals have not been publicised. .........

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Timely intervention by CM saves four district cooperative banks from their licences being cancelled by RBI

Ahmedabad, Tuesday: Timely intervention by Gujarat Chief Minister Narendra Modi had saved four district central cooperatives of the four districts from their licences being cancelled by Reserve Bank of India (RBI)................

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New priority lending norms will hit pvt, foreign banks most

.....Banks may be encouraged to ensure that the number of outstanding beneficiary accounts under ‘small and marginal farmers’ and micro enterprises’ each register a minimum annual growth rate of 15 percent, the committee says. These new sub-targets, experts believe, will be a big challenge for private and foreign banks, since the lending levels for these banks are well below these new targets. The RBI’s view seems to be that it is now time foreign and private banks, having done business in India for long, join as equal stakeholders in the objective of greater financial inclusion. The aim is to increase direct lending to those who have a lack of access to credit and those sectors which generate large employment. How the foreign and private banks respond to these targets remains to be seen.

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Moily irked by growing demands for selective exclusion from CCI scrutiny

.....After the banking regulator Reserve Bank of India made a pitch for exempting bank mergers from the ambit of the Competition Commission of India (CCI), there have been demands from other sectors, especially those like telecom which have their own regulators...............

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High govt borrowing may crowd out pvt sector – RBI

The government’s large borrowing could crowd out credit to the private sector, Duvvuri Subbarao, governor of the Reserve Bank of India said on Tuesday. The situation would become more critical if there is fiscal slippage, he said at a conference of state finance secretaries in Mumbai.........................

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Inflation: RBI asks states to address supply side issues

Ahead of mid-quarter monetary policy review, Reserve Bank Governor D Subbarao on Tuesday asked state governments to address the issue of supply side bottlenecks against the backdrop of rise in prices. Addressing state finance secretaries here, he said both the centre and the states have important role in generating and promoting the supply response so that inflation could be managed within the comfortable zone.............

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India GDP: not looking good

“There are only two [factors that could force] RBI to look at cutting rates. One is what happens to Greece and if there is some severe shock waiting for us. And the second is if growth over the next one or two quarters continues to remain close to 6 per cent – if that is the scenario then RBI would feel compelled to cut rates,”.......

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The rupee saga

The partially convertible rupee on Tuesday closed at 55.67/68 per dollar, 0.9% below its previous close of 55.1850/1950

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Time is ripe for an NRI bond issue to support rupee: Indranil Sen Gupta, India Economist, Bank of America Merrill Lynch

.....RBI Governor D Subbarao is really losing the game of expectations rather than facing capital outflows. Of the $20 billion that the RBI sold in October-January, almost $8 billion remain parked in banks' forex nostro-balances and thus have not left the economy. All the forex market is probably looking for is a commitment that the RBI will rebuild reserves abandoning its policy of trying to appreciate the rupee at the cost of buying forex.........

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Rupee fall will not last very long: PM

Dismissing any comparison with the 1991 external debt crisis, Prime Minister Manmohan Singh today said the fall of rupee is a matter of concern but was confident it will not last very long. He said the rupee depreciation was taking place against the backdrop of the global economic problems and the Euro zone debt crisis and expressed optimism that solutions will emerge at the G-20 Summit in Mexico next month............... 

Read - Indian Express

The rupee: a reality check

.............Unlike countries such as China, our official policy is not to target any particular exchange rate. The Indian central bank has stuck with this hands-off policy, allowing the market to determine the value of the rupee. One way of looking at the current slide is to consider it an overdue correction after a long period of overvaluation, when the strong capital flows into India sent the rupee soaring. RBI has done well to not target an exchange rate, because recent economic history shows us how difficult it is to defend the value of a currency in a world where capital flows freely across borders...................

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