Brace For A Blowout

..............The irony is that Thorat feels the RBI has diluted her committee’s views in its draft! BW learned from sources that Thorat wrote to RBI Governor Duvvuri Subbarao last month that the idea behind exemption from a certificate of registration (CoR) was to ensure these NBFCs were not robbed of their legitimacy, but would not have a CoR to misuse. If you are on RBI’s radar, play off the reputation it confers you. The RBI’s draft says NBFCs will have the option to surrender the CoR on a voluntary basis and also be out of its regulatory radar (RBI Act 1934, except Section 45N).  She raised the existential with Subbarao: “Is it legally possible to say that the law dealing with NBFCs is not applicable to such companies? Maybe this needs to be clarified.” ................

Read............

RBI, heal thyself

........it is encouraging to note that other analysts have also picked up on this theme, that the signature of the present RBI is that it not only indulges in obfuscation (which is good for a central bank) but also bundles itself into contradictions, and the changing of policy goalposts, which is a real bad. And bad because it severely erodes the RBI's credibility. We have a new addition to the ever-increasing set of goalposts of the RBI............

Read - IE

Why aren’t banks taking RBI’s cues?

.........Although RBI has flagged the lack of monetary transmission as an area of concern, it has done little to ensure that consumers benefit from the steps taken by it. Even the finance ministry, which has trained its gun on RBI to cut rates, has also failed to convince state-run banks to ease rates and help borrowers access cheaper loans. Obviously, banks have their own reasoning. For instance, they say that the repo rate cut is only a signal as most of them make only limited use of RBI's overnight borrowing window...........

Read - TOI

Subbarao throws water on next cuts

....A day after announcing a 25 basis point cut each in the repo rate and the cash reserve ratio, RBI governor D Subbarao threw water on hopes that with inflation trending down, there would be more policy cuts in the months to come...........

Read - DNA

RBI rate cut is a washout

....... The Reserve Bank of India (RBI’s) policy response has been based on the assumption that inflation has moderated. Or, should we say the banking regulator has finally succumbed to the pressures of New Delhi? The cornered RBI has had to acquiesce during one quarter or another. To be fair to the monetary authority, how long can it hold on to the government’s pressures? ................

Read - BS

Chidambaram welcomes RBI rate cut, promises more government action

..........."They (RBI) have taken the call now, they have given the reasons...and I welcome the decision. But interest rates (are)... one issue that India faces. There are many other issues that have to be addressed and I hope we can address them in the days ahead,"................

Read...........

My View on "Vaz was..............."

I, too, am grieved at the sad demise of Madam I.T.Vaz. As I had heard, she had a meteoric rise in the Bank's hierarchy.  She had appeared for selection before a Board (perhaps, for Probationary Asstt's post) and the Board was so pleased with her performance that she was selected for the next higher grade!  Later, in the early 1990s, she was elevated to the position of ED, the first lady officer to have broken the glass ceiling to reach the top position. After the combined seniority was implemented, many ex-ACD officers had excelled in various positions in different departments.  Since managerial experience was a pre-condition for elevation to ED's post, she was posted to Ahmedabad as Manager. 

When the book project "Mint Road Milestones: RBI At 75" was under way, as part of the Platinum Jubilee celebrations, we had called on her at her residence for getting any photos / material concerning any landmark events in the Bank's history.  She had allowed us free access to her rich and valuable collection of photos etc. and also shared her memoirs and offered us help and guidance.  Some of these photos adorn the pages of the book. We were moved by the kind courtesies and hospitality extended by her to us despite her indisposition. I fondly cherish those delightful moments.  She did compliment to us on release of the book.  Her demise is a tragic loss to us. Her memories will abide with us. May the departed soul rest in peace!

- S.M.Khot 

My View on "Missed u so much............"

Dear Mangesh

While we should appreciate the sentiments of those who have become addict to VITALINFO, I would suggest, when it comes to priorities, this kind of ‘extra work’ should not be allowed to interrupt your normal life and you should put the interests of self and family always first. Whenever VITALINFO disappears for a day or two, you are more than making up by taking trouble to update us even about the happenings on ‘holidays’. Many thanks. Enjoy the day and take care. 

- M G Warrier

Shri warrier is so right. Dear Mangesh should have some respite when he is occupied by some personal work. The anxious enquiries about the Newsletter from his readers show that they consider that the day has not begun all right without the Newsletter! I would take this opportunity to say that Mangesh should not hesitate to publish views critical of the RBI as those who air such views found, while in service, that such views fell on deaf ears! 

- A.Chandramouliswaran

Manmohan to release coins on J&K shrine board silver jubilee

The Prime Minister will release two commemorative coins specially designed by the Reserve Bank of India — and which have great significance for Jammu and Kashmir — to mark the silver jubilee of the Shri Mata Vaishno Devi Shrine Board (SMVDSB) in New Delhi on Thursday. According to highly placed government sources, Dr. Manmohan Singh will release two coins, of Rs. 5 and Rs 10 denominations, which will have the embossing of the form of the revered Mata Vaishno Devi, who is believed to be the eldest deity among the six other Devi shrines between the Yamuna and the Chinab rivers in north India........

Read - The Hindu

Fake notes get into liquor shops

Chennai: With Tasmac liquor outlets being flooded with counterfeit currency,  the RBI has joined the CB-CID in training their staff to  detect fake notes. “Tipplers throng the Tasmac outlets at  all times of the day, keeping the staff  on their toes and leaving them with little time to check on the notes given. This makes it easy for customers to use them here,” say sources in the counterfeit currency wing of the CB-CID. ...............

Read - Deccan Chronicle

Banks detect fake currency in collections

INDORE: Large number of fake currency notes recovered by various branches of ICICI bank in the Malwa region during the past quarter has pointed to the operation of a organised racket circulating fake currency in the region. Police have also confirmed the fact and are investigating the matter........

Read - TOI

' Risk averse banking' must give way to ' responsible banking'

.... Risk averse banking' in credit deployment has to give way to ' responsible banking' complying with the twelfth plan vision. The global risks are transmitted to the financial market mainly by volatile capital flows and crude oil price through the exchange rateinterest rate channel. To minimise this risk, the action of monetary policy has to be complemented by a relevant fiscal and external sector policy. The way forward Assuming that the above mentioned risk factors have been managed by stakeholders, the following three monetary policy objectives, viz., to encourage investment, anchor medium term inflation expectations and improve liquidity conditions to support growth, have to be achieved. In this context, can we envision an 8% growth, 6% inflation, 6.5% policy repo rate and 3% CRR by 2014- 15? To conclude, frontloading of monetary policy through rate reduction should be avoided and the ' baby steps' approach may be considered......

Read - FPJ

Reddy charts five-pronged strategy to revive growth

...............Reddy hinted that the government may hand over the financial sector control to the RBI. In this context, he cited the case of the UK, where financial sector regulation has been handed over to the Bank of England. “In England, there was a separate regulator for banks. Now, they all (financial sector regulators) were brought under Bank of England by law.” In fact, a single financial sector regulator was contemplated by the Indian government some time ago, he said. “If you were to reform the financial sector in India, there were lessons to be learnt from global experiences. Earlier, the concentration was inflation targeting and independent monetary policy. Now, somebody should be in charge of the nation’s financial stability. The central bank should be in charge of that,” he said.............

Read..........

In conversation with Dr Y.V. Reddy

Former RBI Governor Y.V. Reddy talks about the issues raised in his new book "Economic Policies & India's Reform Agenda - A New Thinking."

Watch the video........

Nizams' jewellery need conservation: Australian writer

HYDERABAD: Australian writer John Zubrzycki, who penned the biography of the 'original owner' of the Jacob Diamond expressed concern at thefabulous jewellery of the Nizams being locked up in the vaults of the Reserve Bank of India and said the unique pearls in that collection could get damaged if they are not treated for conservation.............

Read - TOI

State electricity boards' second debt recast to get provisioning benefit

..............According to the newly appointed Deputy Governor of RBI Urjit Patel, monetary policy and fiscal policy both impact aggregate demand and therefore both have implications on the current account deficit.  The CAD has widened primarily due to worsening of trade deficit. “In a slowing economic growth high trade deficit is a matter of concern and shows some imbalance. So partly this could be that lot of domestic production is getting substituted by imports,” said Deepak Mohanty, Executive Director, RBI............

Read - BS

India repo window won't turn surplus even if govt spends all balance: cbank

The Reserve Bank of India's daily liquidity adjustment facility will not turn into surplus even if the government spends all its surplus cash balance, Executive Director Deepak Mohanty said on Wednesday..........

Read - ET

Corporates meeting norms to get banking licence: FM

......."The RBI has drawn up draft guidelines, guidelines say that more licences will be given to the private sector... the governor told me he will give out guidelines in two weeks," Chidambaram told Reuters Television in an interview in London on Tuesday: "Whether any corporate or any kind of corporate will be excluded I cannot say." "But if the guidelines are made out and transparently spelt out and if a corporate satisfies those guidelines, I don't see any reason why a corporate should not be given a licence."......

Read - IE

NABARD launches ‘Credit plan 2012-17’

..............Besides the credit outlay in the priority sector, the State Focus Paper  also discusses the sectoral issues for development, replicable practices, success stories and suggests action plants for state government and bankers. R Amalorpavanathan, chief general manager, NABARD, Kerala, in his presidential address, urged the bankers and government  officials to expedite the completion of electronic benefit transfer by March 2014. K R Rao, general manager, NABARD, welcomed the participants. V S Senthil, Principal Secretary, LSGD; V S Sudheep, DGM, RBI; G Sreeram, GM and convenor, SLBC and other senior executives representing banks and government departments attended. G Janaki, DGM, NABARD, proposed the vote of thanks.

Read............