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, September 6, 2013
First term at Monetary Towers - Dr.S.S.Tarapore
Governor’s first day
New man on Mint Street
.......Unlike the RBI Governors of the past, in the age of 24x7 television and instant communications, Rajan will have to make the RBI functioning transparent and people- friendly. Opacity of the central bank operations when it speaks only to the finance ministry spooks markets. Rajan, with his easy communications skills and his first- rate academic credentials, has his task cut out. He will have to guard against being lovey- dovey with the finance ministry mandarins. Bureaucrats and bankers should learn to co- exist but not encroach on one another’s toes..........
Walking the talk?
......At Raghuram Rajan's first press conference, however, Executive Directors and Deputy Governors preceded him into the hall and the new governor walked in unaccompanied a little later. A change of style with a change of guard?
Well begun...
.........There is very little in the extensive plans that Dr Rajan laid out in his speech that can be questioned in terms of merits. Ultimately, by the end of his term, he may accomplish some of the objectives that he articulated and may fail on others. But it is reassuring to know that he starts his term with an equal emphasis on the immediate situation and on the structural changes that the entire financial system needs to make.............
Taking guard
Raghuram Rajan's first move as India's monetary czar has been to solemnise a marriage between a needy country and its greedy diaspora. That's the easy part. Tackling the gruelling Indian stagflation will be the real test for the former International Monetary Fund chief economist...........
More fresh air
........ but it is equally likely that it was a Rajan effect, a consequence of the fact that Dr Rajan is smart, relatively young, and brings new ideas to an institution that some thought had begun to labour under the weight of its own history and precedent. Dr Rajan's comprehensive opening statement and his commitment to communication made a good impression - as did his forthright manner and the way that he expressed his willingness to take unpopular decisions, saying that he was not in the job to earn "Facebook likes".........
Promising start
....Rajan has said that he expects close co-operation and co-ordination with the government and the call should not go unattended. He has also spelt out plans to improve the monetary policy framework, strengthen the security market and move fast towards issue of new banking licences. While stressing the need for banks to clean up their balance sheets he has also warned major defaulters of loans of strong actions.These do not make a comprehensive agenda. But the fact that he has spelt them out, unusually for an RBI governor on the first day of his office, shows that he thinks they are matters that need urgent attention...........
Into the pressure cooker
.........If anything the pressure may flow in the other direction, with Mr Rajan having to defend the RBI’s independence. The government wants the RBI to give bank licences to well-connected tycoons; Mr Rajan, sensibly, opposes this and wants more small banks to be created. Official proposals are circling to put monetary policy in the hands of a new committee dominated by external government appointees, and to give the finance ministry, not the RBI, authority for financial stability. Mr Rajan should fight both suggestions. India is lucky that Mr Rajan is in the RBI job. He will be a bulwark against populism and an advocate of liberalisation. But his hardest task is to avoid being labelled a saviour..........
Accolades for VITALINFO
Dear Mr Tarambale,
It is
indeed a pleasure to read the accolades you are getting for the fantastic work
you are doing. Congrats. Keep it up. I had the good fortune to have worked with
you. I found you always more than equal to the task and very sincere in
tackling whatever was assigned. It was also a pleasure meeting you personally
at Pune last month. Good luck and God speed.
- B K
Katyal, Ex Chief General Manager
Excellent.
Congratulations. You get this appreciation because you deserve it. This is
the appreciation of your dedicated work, from respected Sir Tarapore. It's
great. Keep it up.
– Raghu
Gujar, Ex-PS
Congrats! It is very creditable for you to receive such
remarks, good words from Dr.Tarapore. Carry on your good work!
Wish you all the best.
- G.K.Kirloskar, Chembur, Mumbai -71
Congrats! You deserve
it as rightly said by Dr Tarapore. Kudos to you.
– R.K.Sunder,
Ex-PS
Dear Tarambale,
This is to request you to kindly include in your email address Mr P.R.Gopal Rao our former Executive Director. He is very keen to have your VITALINFO blog and he was excited when I informed him about this and its utility.
- Dr. T.V.Gopalakrishnan
‘Unlearn’ the IMF lessons
Dr Rajan, as is evident from his academic and professional record, is a fast learner and capable of finding solutions to the toughest of economic and monetary problems. His challenges lie in (a) how fast he will be able to ‘unlearn’ the IMF lessons which were modeled with prosperity of the developed world in view and (b) how quickly he will get convinced about the historic dual responsibility of RBI to ensure distributive justice while supporting economic growth and reframe his arguments to convince North Block that after all RBI has been on the right path and what the central bank lacked was the support from GOI. Inside Reserve Bank of India, Dr Rajan will get a more accurate feel of the role played by RBI since its inception in the evolution of the financial system to meet the country-specific needs. The changed perception will also tell him why the cut and paste FSLRC report is not finding favour inside RBI.
- M.G.Warrier
The maiden speech is a set of good intentions, outspoken like his predecessor, with an action agenda.The two goals of making financial inclusion stronger and having the MSME sector and Agricultural Sector having their due share in credit flow had their policy roots strong earlier. It remains to be seen as to how he would trigger lending in these two areas when the primary lenders consider them as high risk, no matter whatever confidence measures you provide. How he can influence the government to stop announcements regarding interest waivers and loan waivers that have eroded the confidence in these sectors, will be the key to the success. Regarding Financial Inclusion, when the grassroots institutions like the PACS that outnumber rural branches of all scheduled banks, around 97000 are sought to be taken out of the mainstream how the agenda of FI can be fulfilled with the required speed? These are tough areas on his radar. There is internal resistance and external ambivalence in the pursuit of this agenda.
- Yerram Raju
Vannila reporting
My View on "Institute of Actuaries of India expels R Kannan..":
The reporting in TOI is a real vannila reporting without any information on why this extreme action of expulsion of such a senior member. Who will tell why this has happened? Why this expulsion? What is the basis of slapping a token fine of Rs.5 lakh only if the financial irregularities (which may include some fradulant act also) were serious, then the authorities should have recovered the full amount of loss withe and also taken criminal action against the member. Why no information on this. TOI may need to investigate it further and come out with the truth which will expose those who had gone beyond their brief and helped him to escape with a slap of a small fine and expulsion. - S.Santhanam
Stop mocking at retirees, House tells govt
.....It also asked the government to immediately link pension with the price rise neutralisation to ensure that the pressure of inflation is not felt too acutely by the pension drawing members. It said the wage ceiling of Rs 6,500 under the scheme is in vogue for more than ten years and hence the need to enhance it to raise the pension amount.....
What has inflation come to? Go back to the movies for an answer
........In the last two decades, the loss in value of money is reflected in Bollywood too. Tens have no value. Hundreds have been replaced with tens of thousands; a lakhpati is a common man, a crorepati is middle-class. It is those with hundreds of crores (if not thousands) who are classified as rich. And, if that doesn’t tell you about inflation, nothing will. Money makes the world go around, go the lyrics to a famous song. But money that made the world go around yesterday is no longer enough today. And, that really is the crux of inflation.
India corrects error in mislabeling local firm as China-based
.....Citing the RBI letter, signed by Vandana Khare, General Manager of the bank's Foreign Exchange Department, Tien said that Continental Engineering can hereafter set up investment project offices in India in accordance with standard procedures.............
Raghuram Rajan: Man on a mission
Meet "The Guv": Rock star welcome for RBI chief Rajan
Less than 24 hours in the job and he has already been dubbed “The Guv” by a gushing Indian media and portrayed as a suave James Bond-like figure coming to the rescue of the country’s crashing currency. With the ink of his signature still drying on the oath that made him the 23rd governor of the Reserve Bank of India (RBI) on Wednesday, Raghuram Rajan, stunned investors by announcing a raft of measures aimed at shoring up the beleaguered rupee. His statement triggered a rally in the rupee and a surge in shares............
Consumer Protection: What Raghuram Rajan missed talking about
.........Mr Rajan may like to know that Banking Code and Standards Board of India was created to enforce ethical and consumer-friendly practices but the code is voluntary. Brilliant, innovative and energetic that he is, we believe that Mr Rajan will have some new thoughts on effective consumer protection in the banking sector too. We wonder when he will start articulating his thoughts in this direction.
The saviour trap
....... a big risk is that he is labelled as a saviour when India’s economic destiny is largely in the hands of its government, not its central bank. Nonetheless Mr Rajan did hype-up his speech by arguing his immediate agenda “involves considerable change, and change is risky”. That, to my mind, is an overstatement. The proposals made last night were sensible, but modest, with two exceptions. Both could transform how India works. Both are unlikely to happen soon............
Why Raghuram Rajan is no Amitabh Bachchan
..........Let’s start with inflation. As Rajan said yesterday “the RBI takes its mandate from the RBI Act of 1934, which says the Reserve Bank for India was constituted “to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.” Hence, the primary role of the RBI is to ensure monetary stability. Or as Rajan put it “That is, to sustain confidence in the value of the country’s money. Ultimately, this means low and stable expectations of inflation, whether that inflation stems from domestic sources or from changes in the value of the currency, from supply constraints or demand pressures.” There isn’t much that the RBI can do to control inflation..................
India, Rajan and the Great Man fallacy: James Saft
...........Almost more to the point, the euphoria around Rajan is evidence of the Great Man fallacy of central banking, an always foolish belief that complex events can be bent to the will of one magical civil servant. Indian markets were jubilant, and media portrayed him as James Bond, after Rajan unveiled a host of measures designed to support the rupee. Bank shares soared by 9 percent, the main Bombay Stock Exchange Sensex rose 2.2 percent and, best of all, the rupee rose by as much as 2.3 percent. Rajan's raft of measures were both clever and far-sighted............
Markets feast on Rajan recipe
......Rajan has already indicated that the central bank may over a period of time bring down their statutory liquidity ratio, which is the ratio of bank deposits that must be invested in government securities. Amid optimism over these announcements and hope that more measures would be unveiled soon, investors were seen making heavy purchases in banking stocks............
Markets dance to Rajan tune
Call it the Rajan effect. A day after he stunned everybody by announcing a raft of reform measures, the markets on Thursday enthusiastically welcomed Raghuram Rajan, the new Reserve Bank of India (RBI) governor. Stock markets jumped, led by banking shares, after the rupee firmed against the dollar on optimism surrounding the slew of measures announced by Rajan. Foreign institutional investors (FIIs) net-bought shares worth Rs 1,101 crore amid hopes RBI might unveil more steps to boost the rupee and clean up the mess in the banking system............
Why You Can Bank on Raghuram
.....The
RBI’s state now is similar to that of those giants: it can choose a
path like Bajaj did, by keeping its ageing patriarch at a distance to
remain meaningful, or be blind to the emerging needs and threats like
the Ambassador maker was and turn irrelevant. In Raghuram Rajan
arrives a new governor without bureaucratic baggage, who intends to make
the institution relevant in the decades ahead with financial
sophistication, rather than by beating the traditional safety drum.
Winds of change have begun to blow on the Mint Street......
The Central Banker in Shining Armour
.....Rajan
has the potential to transform his country’s fortunes. He has the
perfect academic pedigree and, as a financial economist, strong market
credentials. In addition, as his maiden speech as governor reminded us,
he is an excellent communicator. He quoted Kipling to close his remarks,
presumably in the knowledge that “words are, of course, the most
powerful drug used by mankind.” And, judging from his words, Rajan knows
what needs to be done.................
Will the new RBI governor be able to suit action to words?
..........But it just might be better to set realistic goals and deliver (do an Infy!) than set goals that are out of sync with ground realities and then fall short! Remember Rajan’s biggest challenge will be to manage expectations, not only about inflation and the rupee, but also on what he himself can deliver ! ............
Read - ET
As Gods Desert, Will Raghu be Market’s Ram?
..........No governor in Reserve Bank of India’s history had spoken so much,
promised so many things, and raised the bar so high for himself on the
first day of taking charge. When Bimal Jalan had passed on the baton to
Yaga Venugopal Reddy in September 2003, Reddy, the newly appointed
governor then, had smiled teasingly at reporters to quip just three
words: “continuity with change.” But these are unprecedented times and for the past few weeks Rajan had been preparing for the day..............
Here’s Looking at You, Guv
The
vibrant agenda set out by the new RBI governor addresses most of the
issues — inflation, falling rupee, etc — that have been troubling the
Indian economy. The governor agrees inflation can arise due to supply
constraints. But what can he do about it? His predecessor cautioned the
government, but the warning went unheeded. The result: inflation
continues. Mr Rajan is also against “lazy banking” (investing in
government securities), but that can be reduced if government finances improve. Again, his predecessors have advised the government to rein in fiscal deficits but the government
ignored that advice. Rajan has promised commercial banks that they need
not approach the RBI for permission to open a branch. But that
assurance comes with a rider that it should be a “well-run scheduled
bank”. If the RBI carves out all the parameters of a well-run scheduled
bank, no bank in India would qualify, and, so, the liberalisation would
remain on RBI’s books!
K V RAO, Bangalore (ET)
Raghuram Rajan and the quest for a new monetary toolbox
........The so-called approach of pursuing multiple-objectives gave operational flexibility; yet it also raised some questions about the understanding of the monetary transmission mechanism and framework in India. For example, not having inflation control as the primary objective at all times indicated the belief that inflation process is perhaps driven by non-monetary and structural factors not under the control of RBI. Lack of a consistent and clear stand on the issue of objectives of certainly contributed to spiralling inflationary expectations in the past few years. The principle of constructive ambiguity should not be about the thinking and formulation of monetary policy but about the communication..............
Bonding at the right time
Raghuram Rajan, the new Governor of the Reserve Bank of India (RBI), in his maiden speech on Wednesday made several proposals. A key one — introducing inflation-indexation bonds (IIBs) linked to the consumer price index in November 3 comes at a good time. When RBI had re-launched IIBs this June, it was linked to the wholesale price index (WPI). Obviously, retail investors were not too enthused........
Commerce department pushes new RBI Governor for priority sector lending to exports
.....Apparently, Commerce Secretary S R Rao had taken up the matter “personally” with Raghuram Rajan, who took over as the country’s central bank governor on Wednesday, urging him to notify the rules based on recommendations by a committee headed by G Padmanabhan, executive director, RBI. The report by the technical committee on services/facilities for the exporters was submitted in May, but “internal processes within RBI has delayed the implementation”,..........
RBI asks Kerala temples how much gold they have
...........The majority of temples in the state come under the five different Devasom Boards, of which the Travancore Devasom Board is the biggest, with the famous Sabarimala temple falling within its jurisdiction. RBI's Regional Director Salim Gangadharan, speaking to IANS, confirmed that a letter had been sent, but clarified: "The RBI has no plans to buy gold, and this exercise is nothing but part of a statistical exercise." ................
Siddhi Vinayak is ready to deposit gold with RBI
Though most temples seem reluctant to deposit their stock of gold with the RBI, the Siddhi Vinayak Temple at Prabhadevi has set an example by showing readiness to deposit the yellow metal with the apex bank. During the Uttarakhand cloudburst tragedy too, the temple had donated Rs 1 crore for relief operations. Some of India's richest temples such as the Tirupati Balaji, the Sri Padmanabhaswamy , the Sri Krishna Temple of Guruvayur and Vaishnodevi seem to be in no mood to deposit the treasure to ease the supply crunch and control the outflow of dollars.
At a time when nothing seems to be able to stem the Indian rupee’s decline, a novel idea to boost the currency is doing the rounds; using the tonnes of gold stashed away in people’s homes and in temples, the bank could pay them an interest for their gold, and then sell a large portion of the stock in the domestic market – thus ultimately, reducing the need to import..........
Prepaid cards: RBI allows cash withdrawal of up to Rs 1,000 per day
....The Reserve Bank said the open system prepaid payment instruments (PPIs) issued by banks is perceived to be a subset of debit cards. "Hence, on a review of the position, it has been decided that the facility of cash withdrawal at POS with debit cards may be extended to such open system prepaid payment instruments issued by banks in India," an RBI notification said.......
Oh my 'Tubthumping' Rupee
........It's one thing to advise people to not buy gold and spend less on high-end electronic gadgets. It is completely another thing to follow these jingoistic bits of economic advice in every day life where no matter what, you have to gift goodies to your relatives even if it burns your pocket, you have to have a family holiday and you have to give something special to your spouse on your marriage anniversary...........
Rupee weakness is an opportunity for Indian tourism
.....It assumes significance now when the Rupee is consistently weakening, which in effect provides a foreign tourist more bang for his buck, when they travel to India. A smart traveler knows how to get the best deal and already the travel and tour fraternity is abuzz with talks of a good winter season for the Indian tourism industry with enquiries and bookings pouring in..............
Read - ET
CPCL plans to seek RBI's nod for commodity edging
........It is estimated that on an average, the offset of exchange gain /loss on product sale is around 70% of the exchange gain/loss on crude. Basu says the company is now looking at commodity hedging through its parent IOC. “We are planning to go to the Reserve Bank of India and IOC to seek their approvals for commodity hedging, it will protect us to large extent, along with natural hedging, though not completely.”........
Banks name defaulters, but hesitate on publishing photos
What’s in a name? Not much perhaps, but a picture speaks a thousand words. Or, so it seems, when delinquent borrowers don’t take offence at their names being made public but hustle to courts to stop banks from publishing their photographs in newspaper advertisements. Until lately, banks have been publishing photographs of people who did not repay loans. At least two high court verdicts in 2006 were in favour of this practice. But, in the wake of a conflicting verdict issued by the Calcutta high court in May, banks are now confused whether they should continue to publish photographs of delinquent clients............
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