VITALINFO requests for leave please............

Due to personal and family commitments, I shall be away travelling. The editions of VITALINFO may not be available on following dates:-

1. 29 - 30 April 2013
2. 7 - 9 May 2013
3. 18 - 24 May 2013

May I request you to please bear with me?  Inconvenience caused to you is sincerely regretted.

Vitally yours,

Mangesh 

The Indian unexceptionalism

..........Why did expectations come unhinged? Because RBI, too, till mid-2011, nearly 15 months after the inflation spike in early 2010, believed that supply constraints were the drivers of inflation and insisted on tightening policy at a glacial pace, showing none of the urgency that the 22 months of double-digit inflation over 2010-11 demanded. Add to that the government’s fiscal profligacy—it refused to withdraw the massive stimulus provided in 2008-09 despite growth flying at 8.6% and 9.3% in FY10 and FY11. With that kind of excess demand persisting for more than two years, households and firms rationally changed their beliefs, doubling their expectations about where inflation could and did reach..........

Read - Mint

Data on bank credit

The Weekly Statistical Supplement to the Reserve Bank of India Bulletin (WSS) used to carry a very useful table on “Accommodation Provided by Scheduled Commercial Banks to Commercial Sector in the form of Bank Credit and Investments in Shares/Debentures/Bonds/Commercial Paper, etc”.

It also included memo items on investments in instruments issued by mutual funds and public financial institutions and bonds/ debentures issued by others.

The RBI has stopped publishing this table as also a few others in its WSS. However, the disaggregated data on bank accommodation are available in the table on “All Scheduled Commercial Banks — Business in India” in the database on the Indian economy on the Web site. Many readers may not be aware of this since there was no announcement about the changes in the WSS.

Secondly, interested researchers have now to add up the different components to arrive at the total flow of bank funds to the economy unlike in the past when it was readily available at one place. They will be thankful to the RBI if it helps in saving their time and effort by restoring the old table.

- A. Seshan, Mumbai (HBL)

RBI should hit pause button

........What should the Reserve Bank do in the face of moderation in WPI at one end and a sticky CPI on the other? One way out could be to use GDP deflator-based inflation, which captures price pressure in the most comprehensive manner. However, the next GDP-deflator based inflation number will be available only on May 31, when CSO would be announcing the fourth quarter GDP numbers..............

Read - HBL

There is case for RBI to cut interest rate: Rajan

Ahead of the annual monetary policy review of the RBI, Chief Economic Advisor Raghuram Rajan on Friday said there is a scope for interest rate cut as the core inflation has come down and there is a need to push growth...............

Read..........

RBI approves merger of Mehsana Urban co-op bank and Surat Nagrik Sahkari bank

..........Samir Patchigar, managing director of Surat Nagrik Sahkari Bank said, "We are grateful to the RBI for taking prompt decision on our bank's merger with the Mehsana Urban Cooperative Bank. This will end the 40 long years of Surat Nagrik bank's performance in the city. Now, the depositors and account holders will be catered by the Mehsana Urban bank"............

Read - TOI

Gang targets ATMs, siphons off Rs 1.56 cr

KOLKATA: The CID has unearthed a fraud of Rs 1.56 crore because some ATMs of a nationalized bank could not enforce the RBI's directive of discontinuing with the "cash-retraction" facility, thanks to a technical glitch.............

Read - TOI

Maharashtra sees highest number Of card, internet banking frauds

..........."Internet frauds reported in the country are relating to phishing, usage of stolen credit cards/debit cards, unauthorised fraudulent Real Time Gross Settlement (RTGS) transactions, fictitious offers of fund transfer, remittance towards participation in lottery, money circulation schemes and other fictitious offers of cheap funds,".............

Read | Business Standard

As bond yields soften, banks see arbitrage opportunity

Banks are taking an arbitrage advantage by borrowing from the Reserve Bank of India’s (RBI) daily Liquidity Adjustment Facility (LAF) and using the money to buy government securities, as yields on the latter have softened in the hope of a steep rate cut by the central bank during the annual monetary policy review on May 3.................

Read | Business Standard

3k non-eligible farmers gained from Centre's waiver scheme

PUNE: The reaudited report of the National Bank for Rural and Agricultural Development (Nabard) on the Rs 52,000-crore agricultural debt waiver and debt relief scheme (2008), shows that loan amounts of about 3,000 farmers from Kolhapur, who owed Rs 2 lakh each, were waived when the ceiling was set at Rs 1 lakh per farmer.........

Read - TOI

Banks to continue focusing on retail credit in FY14

Banks are once again relying on retail credit in the current financial year to drive credit growth. This is because credit demand from the corporate sector may continue to remain weak. In the previous financial year, banks had focused a lot on retail credit as corporate credit demand had slowed down amid economic growth at its slowest pace in a decade...........

Read | Business Standard

Banks' put contracts cheapest in 6 months before RBI meet

........The Reserve Bank of India may pare its benchmark rate by 25 basis points at a May 3 policy review, according to 14 of 16 economists in a Bloomberg survey. The bank index has jumped 14 per cent in April, poised for the biggest monthly advance since September, amid speculation a cut in borrowing costs would help lenders boost lending and profitability. "Investors are bullish on banks even after the runaway rally," ...........

Read | Business Standard

ICSI to organise national seminar on ' Indian Financial Code'

..........The seminar will cover various sub themes like Regulatory Regime.  Others speakers at the conference include Dr. Kanagasabapathy, Director, EPW Research Foundation,...........

Read - FPJ

Banks stepping up efforts to get ‘Know Your Customer’ details

........Now, if you have not stepped into a bank branch in a long time due to the convenience of Net banking, then not submitting the KYC documents (latest photograph, original and self-attested copies of identity and address proofs) could land you in hot water...............

Read - HBL

Did HSBC Bank resort to toxic churning and illegitimate transactions to earn commissions?

.....The modus operandi for HSBC in both the cases has been a continuous churning by the “portfolio management service” by taking a power of attorney (POA) and used pre-signed blank letter of intents (LOIs) to execute the transactions on behalf of the clients. The London-based NRI mentions that he was asked to sign blank LOIs. On asking the bank to provide copies of the LOIs, he found that certain forms were not signed by him due to a mis-match in signature. He has even provided forensic evidence to prove that he has not signed on certain documents..........

Read - Moneylife

Gold’s eternal lustre

..........Apart from gold, the RBI’s reserve assets include foreign currency assets, Special Drawing Rights (SDRs) and reserves held with IMF. SDRs are artificial currencies used by the IMF and defined as a “basket of national currencies”. The IMF allocates SDRs to its member countries and uses them for internal accounting purposes. Central Banks are the biggest losers in the latest price crash as they own 31,694.8 tonnes or 19 per cent of all gold mined. It is reported that the recent fall in gold prices has already eroded $560 billion from the value of central bank reserves. Some central banks, such as that of Canada, eliminated their gold stock..................

Read - HBL

No evidence of money laundering, says Kochhar

......."The internal inquiry report has been submitted. Deloitte has also submitted its interim report. No actual transactions (violating anti-money laundering rules) have been found to have taken place,"............

Read | Business Standard

In Bengal's grey 'money market', Saradha is just one

..........Cheating of investors falls under one of the following laws : a) ‘vanishing’ after raising money through public offers;  b) illegal collection of deposits in violation of Section 58A of the Companies Act, 1956; c)  floating sham CIS in violation of SEBI Act; d) collecting money from public by posing as ‘Non-Banking Financial Companies (NBFCs) in violation of RBI Act; e) and resorting to ‘Ponzy’ or money circulation schemes under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978...........

Read | Business Standard

Government yet to crackdown on multi-level marketing firms

......The draft was first prepared with consultation of RBI in 2005. It was approved by the state cabinet and was sent to the Centre for approval. The Centre sent it back to the state with some recommendations and ever since the home department is sitting on it. The government showed "interest" after the Gold Sukh case but failed to actually work on the pending matter.........

Read - TOI

Mumbai Police steps up vigil on chit funds, ponzi firms

...........The EOW has updated the list of such units functioning in the city and collected information from the Reserve Bank of India and the Securities and Exchange Board of India. Besides, the state government has asked the police to closely watch the present developments and take punitive action against such companies after they receive complaints, to protect the interest of investors..............

Read | Business Standard

While they were sleeping

..........The plan was to encourage middle-class investors to branch out to other, more attractive financial sector investments ranging from equity to pure play debt products like pension schemes. The remedy, instead, let fraud organisations like Saradha and others prosper. One of the elements of the government plan was to dismantle the National Savings Organisation (NSO), which ran all the state-run small savings schemes. The option was for the states to run them as they saw fit. The states except West Bengal saw no need to advertise and more significantly pay high agency commissions to mobilise money they did not need..........

Read - FE

Saradha scam: 13 co-op banks under RBI scanner

............“Be it negligence on part of the authorities in verifying credentials of account holders or their proximity to group officials, we are determined to take stringent action against staff members who are found guilty,” said a senior RBI official.............

Read - Hindustan Times

RBI posers to govt went unanswered

......With the RBI receiving several such complaints, it wrote letters to the state government in January this year as well as February urging it to take action against shady chit fund companies operating in Bengal. The letters, which were sent to the office of chief secretary as well as Chief Minister's Office state that the RBI was receiving several complaints from people regrading chit fund companies operating in the state. As the responsibility for prosecuting these firms for any violation of law is with the state government, the state government should take action against them, it added. The government did not reply to any of the two letters of the RBI...........

Read - IE

Something to bank on

................ But whatever the constitutional division of powers between state and Centre, the Reserve Bank of India cannot run away from its duty to save the country from the financial equivalent of the law of the jungle. Since the Securities and Exchange Board of India had earlier acted against some companies that run dubious deposit schemes, it can’t shirk the responsibility either. But there are strong suggestions that West Bengal’s political establishment, the police who are its handmaidens (as they are of any party in power) and even the law courts frustrate Sebi moves to protect ordinary citizens...........

Read - The Telegraph

Banking on lies

..............To his agents, Sen had said he has lost a great deal of money in a real-estate project. To some other agents, Sen had said he was forced to give Rs 1,200 crore to Reserve Bank of India and Rs 600 crore to Securities Exchange Board of India to keep his business afloat, which had eroded all his wealth................

Read | Business Standard

Can legal measures root out chit fund frauds? - Yes

............Such schemes will not always come under the express domain of any regulatory authority or statute. Given the popularity of such money-making schemes, our legal framework must keep pace with such hybrid investment arrangements and methods of raising funds from the public.

Read - HBL

Can legal measures root out chit fund frauds? - No

........Isn’t all this enough for Saradha to be booked under the existing laws? This only goes to show that the best laws can fall by the wayside in the absence of political will to implement them. That political personages lend legitimacy to dubious activities only makes implementation of the law that much more difficult.

Read - HBL

Didi wants Centre to pay Rs 500 crore for its ‘sins’

...."The Left government should have made the legislation in the 1980s when Sanchayita (a chit fund company) went bust leaving thousands of people pauper. But the chit fund mess was allowed to grow just because of evil designs of the Marxist government as well as the casual attitude of the central government. The centre cannot shirk its responsibility. The SEBI and RBI are in their hands. I will ask Rs 500 crore from them,"..............

Read - IE

Mamata ‘smoke to help’ remark earns ridicule

......."Smoking is injurious to health. Tobacco tax to mop up revenue this way means you assume that people will smoke more. This may create revenue for the state. But if citizens smoke more to mop up revenue for the state, the state will have to pay for their health. This is a dichotomy. This must by Mamata's mantra for the youth. I do not understand the philosophy behind it,"...........

Read - IE

Chit fund swindle: Is there no monitoring?

........It is extraordinary that it’s still so easy to run such a scam in the era of Sebi and RBI regulations and monitoring, and when financial sector “inclusion” is the mantra of the finance minister and Prime Minister. It is hard to believe these worthy institutions could be oblivious that swindlers and profiteers had built financial empires in flagrant disregard of every imaginable rule or guideline............

Read | The Asian Age

UBI had warned Bengal of ponzi scheme menace

...........Asked if there should be more stringent know your customer (KYC) norms implemented by the Reserve Bank of India (RBI), Sanjay Arya, executive director, UBI said, such companies cannot be prevented from using the banks. He said, “The current RBI norms are strong enough, but none of these measures can check these companies. All these chit funds have their KYC documents in place, it is not an issue with them.

Read - HT

Alarmed Bihar cracks down on chit fund companies

Patna: Alarmed at the big fraud committed to gullible investors by a chit fund company, Saradha group, in the neighbouring West Bengal, the state government in Bihar has issued an alert, advising the masses against falling into the traps of the non-banking companies promising hefty monetary returns. The government even announced to tighten nooses around these companies which have mushroomed up in recent years.............

Read | GulfNews.com

The Mamata Banerjee story is over...

.........In December 2012, Reserve Bank of India (RBI) Governor D Subbarao publicly told the state government that it needed to be vigilant on the operations of chit fund companies. "Money circulation schemes are banned under the Prize Chit and Money Circulation Schemes (Banning) Act, 1978, and the respective state governments have the power to take action against people involved in such schemes," he said, asking the state government to intervene. 

No one in the state did anything...............

Read | Business Standard

Big Peddlers But Small Change…

.............Confronted with this swindlers’ list, naming many of her own, you would expect TMC supremo Mamata di – whose infamous Kolaveri di has earlier fallen on a hapless professor fond of cartoons, on a farmer raising an inconvenient truth, and so on – to hit the Writer’s Building roof. Right?  Wrong. And here’s why – Didi has apparently discovered the joys of peddling too. When the Saradha ruin surfaced, Mamata first tried to sell her usual Left-plus-Centre conspiracy theories to give TMC a clean chit. When no one bought this, she switched wares and promised to refund depositors Rs 500 crores. But before you swoon at her generosity, note – this money will come from tax-payers, not the government seizing Saradha assets, still linked to powerful agents of change. So it’s the Peter principle – robbing Peter to pay Paul once again...........

Read - TOI

Trinamool runs aground on cheat funds

.....Soon, hordes of depositors from all over the state descended on Kolkata to ask for their money back, from an already-bankrupt government. Some despairing depositors killed themselves. Thousands of agents are reluctant to return home, fearing that they could be lynched by the people whose deposits they had taken. Mamata has tried to wriggle out of her association with Saradha. She has promised to implement a law which the Left had tried to do earlier, which penalizes Ponzi schemes.............

Read - ET

Investors throng Saradha offices, NBFCs for return

.....The much publicized chit fund scam of Saradha Group companies in Kolkata and Assam, has evoked widespread outburst among the depositors in urban and rural Jharkhand. The people who have invested their money have been thronging in the offices of the chit fund companies and non-banking financial companies ( NBFCs) to get back their deposits......

Read | Business Standard