ANOTHER RATE HIKE IN SEPT?

The past 10 days in which the economic landscape of the US and the euro zone has changed should have an impact on India’s monetary policy, but that may not happen too soon with no signs of inflation coming down in Asia’s third largest economy. The market is vertically divided on what the Indian central bank should do when it reviews its monetary policy on 16 September. 

Many economists believe that Reserve Bank of India (RBI) Governor D. Subbarao will continue to tighten the policy and opt for yet another rate hike, the 12th in the past 19 months, and raise the policy rate to 8.25% before he presses the pause button. There are others who equally strongly feel that RBI should wait and watch before tightening the rate further. After all, it had raised the policy rate by 50 basis points in July, surprising the market, and by doing so, it’s ahead of the curve. One basis point is one-hundredth of a percentage point.

The latest factory output data, released on Friday, will hardly help RBI to make up its mind. The Index of Industrial Production rose sharply by 8.8% in June year-on-year, higher than the revised 5.8% in May, and significantly higher than what most analysts had estimated, but an unusually volatile capital goods index is responsible for this. The capital goods index rose 9.5% month-on-month after showing a decline in the past two months. The consumer goods index, meanwhile, continued to decline for four months in a row with both consumer durables and non-durables showing weak demand. In fact, consumer durables rose just 1% year-on-year, the slowest rise in 23 months. The decline in the Purchasing Managers’ Index—53.6 in July, down from 55.3 in June—also reflects weak investor sentiment. Domestic passenger car sales slumped by almost 16% in July, the first monthly dip since January 2009. It’s pretty evident now that dear money has started dampening demand, something which RBI has been pushing for.  The developments in the US and Europe and the stock market meltdown have shaken business confidence and if senior bankers are to be believed, most corporations are shelving investment plans for the time being. Following this, concerns about growth will definitely be back on RBI’s radar along with managing price stability. But is the time ripe to press the pause button? One major positive for the Indian economy is the fall in crude prices. In Asian markets, the benchmark West Texas Intermediate fell to around $82 per barrel from at least $100 per barrel a week ago and Brent crude is trading at around $105 per barrel, sharply down from $125 in early August. India imports at least 75% of its crude requirements. If crude prices continue to soften, it will have a bearing on domestic inflation, but nobody is sure how long the decline in crude prices will continue. At a bankers’ meet in Kathmandu, on Friday, Subbarao said it was important to bring down inflation to sustain growth and that it was too early to signal a change in monetary stance. The suggestion was clear—the central bank may not be done with monetary tightening as yet. Earlier, meeting bankers in Mumbai, RBI deputy governor Subir Gokarn said unless inflation comes down, monetary policy will continue to remain tight. The crude price decline may not last long because of the US Federal Reserve’s ultra-easy monetary stance. Last week, the Fed decided to keep interest rates at near-zero level till mid-2013 and said it would be ready to take further policy measures if economic conditions deteriorate further. Fed has held rates at near zero for more than two years since December 2008, and the economy is flooded with almost-free money. Its second quantitative easing programme that ended in June, and involved $600 billion of bond purchases, led to massive capital inflows into emerging markets and a surge in commodity prices. The Fed has promised to continue to consider additional measures to support the economy, but chairman Ben Bernanke may not find enough support for yet another quantitive easing programme. If he can push through that, the fresh flood of money will prop up commodity prices and the Indian central bank will find it extremely difficult to fight inflation. Wholesale inflation was 9.44% in June and is not expected to slow before October. In its quarterly review of monetary policy, RBI has, in fact, raised its year-end inflation projection to 7%. Before RBI announces its semi-quarterly review of monetary policy on 16 September, July factory output data as well as wholesale inflation data will be available, as will first-quarter gross domestic product or GDP data. On top of all that, RBI will have a clear idea of the trajectory of the monsoon by that time. All of those factors will influence its monetary stance. There is a subtle difference between continuing with the tight money policy and making it tighter—the difference between taking a pause and going for another round of rate increases. A pause doesn’t mean the reversal of policy. My column last week on customer service in banks evoked strong reactions from banks and their customers. I refrain from reproducing their emails as I have no intention to play the role of a banking ombudsman. A couple of them have pointed out, and rightly so, that the quality of service is equally bad across the financial sector and it’s not fair to blame banks alone. Mis-selling of insurance policies and mutual funds is rampant in India. One retired bureaucrat told me he has not been able to continue with his insurance policies till they mature as his insurance agent always encourages him to prematurely withdraw money from old policies and start new ones to earn higher commission.  

Mint 

1000 notes too big for Kolkata wallet

KOLKATA: The city where the cheapest bus ride is five bucks and the base Metro fare even cheaper doesn't have much of an appetite for the 'big note'. The demand for the one thousand rupee currency note in this city is only about a third of Mumbai and Delhi. It'd rather make do with small change - there is a perennial shortage of coins in Kolkata.

The Reserve Bank of India's Regional Office in Kolkata says that 26 million 'Rs 1000' denomination notes have been supplied in Kolkata over the past year. In Delhi and Mumbai, the figure is around 80 to 100 million. Kolkatans mostly prefer currency notes of Rs 100 or lower, say bankers. The middle-class people of Kolkata "cannot really afford" to keep thousand-rupee notes in their wallets, says Tarakeswar Trivedi, secretary of the Federation of Traders' organization of West Bengal. Alok Saha, a grocery shop owner in Shyambazar, a bustling part of north Kolkata, agrees: "We hardly get 1000 rupee notes from customers. We get a few in the first days of the month, generally for monthly grocery purchases. It's not even 10-15% of our business." Satyajit Das, a food court employee in Salt Lake's City Centre Mall - one of the most happening places in town - says he rarely gets 1000-rupee notes. "We get more 500 rupee notes," he says. You would hardly find an ATM in Kolkata that dispenses 1000-rupee notes. "Customers here don't like getting thousand rupee notes," said an official of United Bank of India. "The yearly demand at any of our branches is no more than 2,000-3000 such notes. Customers are even apprehensive about the 1000 note. They fear the notes could be fake," he added. An HDFC Bank official said they stock currency notes of 500 and 100 denominations in its ATMs. "The Kolkata customer's first preference is the 100 rupee note, followed by 500," he said. Even the demand for 500-rupee notes, though ten times the demand for the 1000-rupee note, is low compared with other metros. "Banks in Kolkata don't want 1000 rupee notes in large numbers," an RBI officer told TOI. Samita chatterjee, an IT employee, said she withdraws money from ATM twice or thrice a week so that she gets more 100-rupee notes. "Generally, for each withdrawal in Kolkata, you get only five 100 rupee notes. It is difficult to get change for 500 rupees for day-to-day transactions like bus fare, metro fare and even food," she added. The cost of living is relatively low in Kolkata. For 10 bucks you can go from one end of the city to the other in a bus. At pavement stalls, the costliest dish would not be more than Rs 50 and you can still get a decent rice-fish meal, streetside, for Rs 15-20. "I wouldn't like if someone hands me a 1000-rupee note," said Remesh Samanta, a food vendor at BBD Bag.  The Reserve Bank of India's Regional Office in Kolkata says that 26 million ‘Rs 1000' denomination notes have been supplied in Kolkata over the past year.  

TOI 

On accountability drive, Nabard chief axes official

The Chairman of the government-owned National Bank for Agriculture & Rural Development, Prakash Bakshi, has started cracking the whip to bring accountability among the 5,000-plus employees.  Bakshi, who took over as chairman in June, has suspended an officer of the rank of Chief General Manager (CGM) from the department of production credit, for lack of presentation in time of certain data he’d sought. This is the first time since the ban’s inception that a CGM has been suspended. Further, an explanation was sought from another CGM from a regional office in southern India on an alleged impropriety. Disciplinary action has also been ordered against a senior lady officer. A Nabard official, who did not want to be identified, told  Business Standard :“The chairman has also asked the officials and employees to remain present well before the timing of a meeting. If they fail to do, they will be barred from attending it. Besides, staff at official meetings have been told to switch off their mobiles or keep it on silent mode; if not, they may be fined Rs. 25,000.” Bakshi was not reachable for comments. A Nabard Officers’ Association member confirmed the chairman’s drive, and was critical, saying: “Accountability should commensurate with the work handled. The CGM suspension was not at all warranted, as the ground on which the action has been initiated is not sustainable. The Associations Central Executive Committee (CEC) at its two-day meeting in the last week of July held a marathon discussion in this regard. The CEC members, by and large, felt the steps under the garb of bringing accountability in the functioning are in the nature of victimisation.” Bakshi’s initiative comes at a time when the bank is reanalysing its product range and work processes. It is also exploring the design of new products, such as supporting and financing producers’ organisations, to capitalise on the advantages of value-chain financing and increasing the incomes of grassroot producers.

BS

Your post office may double up as a bank soon

NEW DELHI: Your friendly neighbourhood post office may soon also function as a bank. The department of posts is working on a plan to get a bank licence, which will be sent to the Cabinet for approval. Once it gets a go-ahead, the postal department will formally seek a licence from the Reserve Bank of India.  If the plan is approved and India Post gets to start its own banking operations, it has the potential to emerge as one of the biggest banks in the country, thanks to its massive network and reach. India Post, the largest postal network in the world, comprises 1.55 lakh post offices, of which nearly 1.4 lakh are in rural areas.

TOI

Better customer service = higher deposit insurance coverage?

One wonders why the Damodaran Committee on customer service has made a broad-brush recommendation on increasing deposit coverage for all banks.

It would seem so if the recommendation of the Damodaran Committee on customer service in banks is any indication. Indeed, a key and interesting recommendation of the Committee is that the deposit insurance cover should be enhanced to Rs 5 lakh from the present Rs 1 lakh (per customer per bank).  The Committee feels that the coverage enhancement can encourage individuals to keep all their deposits in a bank convenient to them. Going further, the Committee has even said that “a way should be found out to insure 100 per cent of deposits by making necessary amendments in the relevant Acts.”

Implicit view

Implicit in this statement is the view that the limited cover of Rs 1 lakh compels individuals to split their deposits amongst a number of banks and even possibly with non-banks.  That implicit view also seems somewhat supported by the data — according to the RBI, in terms of number of term deposit accounts of “individuals”, only some 20 per cent of the total number of accounts are in the greater than Rs 1 lakh category as of March 2010. This could mean either that deposits are getting split or that the fraction of individuals with above Rs 1 lakh deposits is quite small.  Now, one can wonder how a Committee tasked with looking into the operational aspects of how customer service is rendered in banks can make a recommendation on a policy issue.  Indeed, deposit insurance is a core macro policy issue in banking. It impinges on how the banking regulator can reconcile the objective of minimising risks of a bank-run with the need to not create or aggravate the moral hazard inherent in providing a liability-guarantee for lending institutions.  The recommendation is also interesting in that it comes in the backdrop of global regulatory efforts (at least efforts) of the past year or so to ensure that “TBTF” (too big to fail) does not happen again.  To make a recommendation on 100 per cent deposits coverage is certainly interesting in this context. This means all lenders will be ‘too big to fail'.  Be it as it may, one cannot but recognise that the Committee recommendation has the potential to spark off a larger debate on the concept of deposit coverage itself.  More pertinently, in India, given the organisational landscape of banking (and more generally financial intermediation) — marked by the significant presence of public sector banks and the notable presence of new and old private sector banks and an expanding non-bank financial institution sector — some brainstorming on deposit coverage could well be in order.  It can potentially generate ideas and proposals which can contribute to the policymaker's larger objectives — for instance, attaining higher and deeper financial penetration and inclusion. Indeed, if that larger objective is kept in mind, some fresh thinking on employing new tools — such as deposit insurance — to attain that objective could well be considered seriously.  It is well accepted that different types of financial intermediaries — large banks, small banks, public banks, local banks, private banks and, importantly, non-banks, too — are critical in expanding financial reach and penetration, be it on the savings side or on the credit side. This recognition of the importance of different types of intermediation to achieve some broader economic objectives can be acted upon through various policy tools — one such tool seems to be the medium of deposit coverage.

For whom?

One wonders why the Committee made a broad-brush recommendation on increasing deposit coverage for all banks. Now, do we really need it for the public sector banks in India? Does not their public ownership character mean that the government fisc is backstopping all the creditors of such banks for all amounts?  More broadly, going beyond banking, for all public sector financial intermediaries, it is well understood that the government budget ultimately backstops them — like the US Treasury's backstop for Fannie Mae and Freddie Mac. A clear example in recent times was when LIC was diagnosed with an actuarial deficit of some Rs 10,000 crore on some of its guaranteed return schemes. Now, does anyone believe that LIC — or more specifically the policyholders who purchased insurance from LIC — will be left to fend for themselves here? A broad brush recommendation therefore does not appear necessary at all here. Indeed, experience shows that 100 per cent deposit coverage has been provided in India even in the case of (some) failing private sector banks. But, precisely for that reason — that the 100 per cent deposit protection in the case of private sector lenders could be selective — it does seem possible to think of alternative and different deposit coverage structuring for private sector banks or, more broadly, private sector financial intermediaries.

Positive discrimination

Now, it may not need much convincing to note that public sector financial intermediaries — given the 100 per cent deposit backstop they have — are in a “higher playing field”, so to say, vis-à-vis their private sector counterparts here. In banking particularly, the private sector banks, and specifically the old private sector banks which have so far had a largely regional focus, certainly do not have a level-playing field. The new private sector banks with their recent entry and the benefit of starting with a fresh slate across all operational parameters do not seem to be that affected by this “playing field” syndrome. The weak hand dealt to the old private banks is also broadly inferable from the financial data. In the past decade, their average cost of funds has been uniformly higher than that of public sector banks by a margin of some 60-70 basis points. That is not fully offset by higher returns from the asset side of the balance-sheet. That shows both in accounting and market based measures of return. Also, deposits growth for the old private sector banks has consistently lagged behind that of government banks in the past decade — a possible pointer that higher deposits growth could have been attained only with much higher deposit rates than were posted hitherto. Now, why cannot deposit coverage be enhanced only for the (old) private sector banks? More broadly, why cannot deposit coverage be provided even for non-bank financial intermediaries up to a certain limit based on some rigorous operational and prudential parameters?  The Committee has said (euphemistically) that deposit coverage should be enhanced given the “rise in general income levels”. Why cannot we say that there has been a serious decline in the real value of deposit insurance?  It is the decline in the real value of deposit insurance that should call for coverage enhancement, more particularly for small financial institutions for which deposits is the primary source of funding.  Going by the GDP deflator, inflation has averaged 12-13 per cent per annum in the past decade. That means coverage of close to Rs 4 lakh to keep the real value constant.

HBL  

Value of cheque transactions down 13.9% in June: RBI

MUMBAI: The cumulative value of transactions carried out through cheques across the country during June, 2011, amounts to Rs 7.19 lakh crore, a 13.9 per cent decline vis-a-vis the year-ago period, according to new RBI data.  Banks had cleared cheques worth Rs 8.35 lakh crore in June, 2010, according to the latest data from the Reserve Bank of India.  The total number of cheques cleared by banks across the country during June, 2010, was also 3.8 per cent less than in the same month last year.  A total of 10.62 crore cheques were cleared by banks during the month under review, compared to over 11.04 crore in the corresponding month of 2010.  During the April-June quarter, the total value of the transactions carried out using cheques stood at Rs 24.06 lakh crore, as against Rs 25.17 lakh crore in the first quarter last fiscal, a fall of over 4.4 per cent.  In addition, a total of 32.61 crore cheques were cleared by banks during the first quarter of the current fiscal, a decline of almost 3.8 per cent from 33.90 crore in the April-June period a year-ago.  In June, the Mumbai region reported the highest number of cheque clearances, as well as the maximum transaction value for any zone.  Banks in the Mumbai region cleared a total of 1.95 crore cheques, with a cumulative value of over Rs 1.28 lakh crore.  In the Delhi region, banks reported that 1.27 crore cheques with a total value of a little over Rs 1.06 lakh crore were cleared in June.  The Bangalore region stood third in terms of both the parameters. Banks in the region reported a total 55.4 lakh cheque clearances worth over Rs 39,700 crore, it added.  The fall in the value of transactions through cheques in June, 2011, is in line with the trend of the previous fiscal. However, the numbers went up marginally in April this year.  The value of cheque transactions in the country declined by 2.6 per cent year-on-year to Rs 101.33 lakh crore in 2010-11. Delhi and Bangalore were the only major centres to report a rise in the value of clearances last fiscal. However, the total number of cheques cleared by banks across the country grew marginally by 0.4 per cent in 2010-11. Over 1.38 lakh crore cheques were cleared by banks across the country last fiscal, as against 1.30 lakh crore in 2009-10.  

ET

No major impact of US crisis on Indian economy: Y V Reddy

Ruling out any major impact of the ongoing crisis in the West on India’s GDP growth, former RBI governor Yaga Venugopal Reddy has said the impasse is “very fluid” and it is too early to assess its effect on the domestic economy.  Reddy, credited for firmly anchoring the domestic financial system and economy during the pre-crisis boom that helped the country tide over the 2008 disaster earlier than expected, said, “Though there will be some spillover effect on our economy, it won’t be that grave as our growth is primarily driven by domestic consumption.” Ruling out a recession in the short term, he said a slowdown in global economic growth was certain in the mid-to medium-term. “While the 2008 crisis was a revelation for everyone, the present crisis arising from the US downgrade by S&P and the lingering debt crisis in the Eurozone economies, is a realisation of the fact that the fundamental problems are still not rectified,” Reddy told PTI over the phone from Hyderabad. However, he cautioned that it was too early to assess the development as the situation was too fluid. Projecting an economic expansion of around eight per cent for the domestic economy, with a downward bias, he said to achieve that growth rate, our policy focus has to be fine-tuned at the earliest. Whether there would be a flight of capital if the US economy slips into another recession in the wake of the last week's credit downgrade-from AAA to AA+, Reddy said, “If there is excess liquidity in the US system, then we have a fair chance of getting more capital inflows. But if a serious slowdown kicks in, there could be volatility in the fund inflows”. “This is more so because the global situation is more complex and fluid today than it was in 2008. Moreover, the inherent strength of the economy is not as strong as it was three years (back) when the fall of Lehman Brothers yanked down the global economy into one of the worst recessions,” he added. Therefore, Reddy says “the key monetary focus should be domestic economy.” He refused to answer when asked what would be his advice to the Mint Road in this situation, saying, “whatever the governor is doing now is on the basis of well informed choice. I have trust in the current RBI governor.” When sought his view on the second term for the incumbent Governor Duvvuri Subbarao, Reddy said, “I am very happy that the government has given him an extension.” It was granted that he would get an extension and that it is only a formalisation of continuity.”

BS

Regulators frown at put option mode of exit

An RBI spokesperson said that under the Foreign Exchange Management Act (Fema), notification 20 (regulations 3, 4 and 5), only Sebi-registered foreign institutional investors and non-resident Indians are allowed to invest in exchange-traded derivative contracts where the underlying securities are equity shares of an Indian firm. “No other class of foreign investor is allowed to enter into any derivative contract where the underlying security is an equity share of an Indian company.”....

Read.................. 

Problems persist - ''There are weaknesses in economic growth.''

Last week some economic indicators of the country showed good and healthy growth, though there was bad news too in the form of a near double digit food inflation too. The rise in food inflation was not unexpected as the general price rise was still strong and had got a special push from the diesel price hike in June. Even after all the tough and persistent monetary measures from the Reserve Bank of India, there is a realisation that inflation will be a fact of life for some time to come. In that gloomy context, the impressive 8.8 per cent growth in the Index of Industrial Production (IIP) in June, as against below 6 per cent in the previous two months, and the spectacular 81.5 per cent increase in exports in July should have lifted spirits. But the performance reports fade in brightness on closer scrutiny. A break-up of the IIP figures shows that there was actually a deceleration in some important sectors that make up the index. It was the growth in capital goods, especially power machinery and equipment, which grew by 89 per cent, that contributed to a good part of the 8.8 per cent growth. Capital goods has only a 9 per cent weightage in the index and its growth is not very real because it is built on a low base of last year. Areas like consumer goods and mining which have 30 per cent and 15 per cent weightage in the index grew poorly by 1.6 per cent and 0.6 per cent respectively. A high IIP growth rate with uneven performance by constituent sectors does not inspire confidence. The inconsistencies actually expose the weaknesses and problems in industrial and economic growth. The high export growth rate of last month is also outwardly creditable, especially in a very difficult global environment. The greater diversification of exported goods and of trade partners is also good. But the export growth was on account of the orders received before the current crisis in Europe and the US started. In the coming months the momentum is actually likely to be lost. The government has itself admitted that the year’s export target may not be met. Imports are likely to increase and trade deficit may increase, in spite of the likely fall in crude prices. Therefore the value of one month’s extraordinary performance should not be exaggerated.
DH

The Slowdown Scare

On Friday, when correspondents hounded Subir Gokarn, Deputy Governor, Reserve Bank of India, in New Delhi for his reaction to the ‘good’ 8.8 per cent growth in industrial production, he cryptically replied, “Good for whom?” He would just hope that the rebound in output after a slowing trend over the last three months is freak. The RBI has been aggressively tightening its monetary stance since mid-March 2010—it hiked the repo rate (the rate at which the RBI lends to banks) 11 times, or a cumulative 475 points, over the last 15 months—to pull down demand in its sustained, yet unsuccessful, battle against inflation.  Despite all these hikes, inflation continues to remain stubbornly high, in fact flirting with double-digit numbers—headline inflation rose to 9.4 per cent in June and food inflation almost touched 10 per cent for the week-ended July 30 from a year ago. In fact, according to Thursday’s RBI survey of 4,000 households across 10 cities, expectations continue to run high—they think inflation will rise to 12.9 per cent over the next one year.  

IE

‘MFIs can be regulated via four pillars of compliance’

Deputy Governor of Reserve Bank of India K.C.Chakrabarty went on record last week saying the central bank is not capable of regulating microfinance institutions (MFIs) in the country and that “it needs to get equipped to do the job”. However, Y.H.Malegam, the person who headed the RBI committee to look into MFI operations, says MFIs can be regulated through four pillars of compliance.  While Malegam admitted that “it’s impossible for the regulator to ensure compliance when loans run into thousands,” he also said, “the regulator should look at whether MFIs have an internal organisation for compliance. Whether you have an internal audit department, or an inspection department.”  “The second pillar is an association. If one third of MFIs become members of an association, they (RBI) will recognise it. The association will have its own code of conduct. If discipline is not observed, the association, which will be something like an SRO (self-regulatory orgnisation) can remove that member,” he told The Indian Express.  As per the draft Micro Financial Sector (Development & Regulation) Bill, 2011, the RBI will become the sole regulator for the micro-finance sector.  “If the MFI applies for a bank loan, it can say it’s a member of the association and it’s safe. There will be a lot of incentives for MFIs to become a member,” he said. “The third pillar being, banks that gives funds will supervise MFIs as this funding comes under priority sector lending. Fourth: the RBI will inspect the MFIs to see if they have the systems for internal regulation.” Malegam said.  “Once the Central Act comes into practice, it might be argued that it supersedes state laws. In this case, the Ordinance (in AP) becomes ineffective. On the other hand, states can probably argue under the Constitution, money lending is under the states purview,” he said.

IE

The microfinance sector needs urgent and sensible policy attention

Three Andhra Pradesh-based microfinance institutions — Spandana Spoorthy Financial Services, Share Microfin and Asmitha Microfin — want to merge their businesses. A merger is a good idea to trim costs and achieve scale as operations of these MFIs turned unviable after unsound politics and the Andhra Pradesh state law curbed lending and loan recovery practices. However, merger and consolidation cannot revive the micro finance industry whose loan portfolio has shrunk from . 27,000 crore last year. The real threat to microfinance is from politicians who instigate loan defaults, promising an inevitable waiver. How can micro lenders in AP do business if the opposition Telugu Desam Party (TDP) prevents them from entering villages and promises a state-funded loan waiver, and the state government lacks the courage to counter such senseless campaigns? Politics must change. The country needs microfinance as the poor do not have access to formal finance. MFIs are a huge improvement on moneylenders charging 60% and using force to seize assets. Policy should aim at increasing, not thwarting, the supply of microfinance. Unlike banks, MFIs lend without any collateral. Till last year, they charged interest rates of upto 30% to cover high operational costs. Business grew at phenomenal rates, largely because of the absence of a collateral, and the peer pressure among borrower groups kept defaults below 2%. However, politicking in AP, where two-thirds of the MFI business is concentrated, led to voluntary defaults and recovery collapsed to 22%. The RBI’s cap on lending rates will further erode profitability. Price controls are retrograde and will curb MFIs from entering remote areas, undermining the goal of inclusive finance. A review of the cap is, therefore, in order.  The government now wants the RBI to regulate MFIs and have the power to frame policies for the sector. However, the RBI is spot on when it says that it does not have the administrative resources to deal with MFIs. A viable alternative would be for the RBI to lay down prudential norms and state governments to monitor the industry.

ET

'Current inflation an amalgam of both supply constraints, demand pressures'

ALLAHABAD: Prolonged high inflation even if originating from supply side would give rise to increased inflation expectations and cause general prices to rise, said Deepak Mohanty executive director Reserve Bank of India (RBI). He was delivering a lecture on Inflation Dynamics in India organised by School of Management Studies (SMS), Motilal Nehru National Institute of Technology (MNNIT) here on Saturday. An eminent economist Mohanty said that poorly anchored inflation expectations make long-term financial planning more complex with potential adverse effects on investment and growth. The recent surge in inflation has become more generalised. Food inflation, prone to supply shocks, is also assuming a structural character given the change in the dietary habits and high demand, in absence of adequate supply response. Sharp increase in non-food manufactured product inflation suggests that producers are able to pass on the cost increases, given higher demand? He explained while replying to the queries raised by students of MBA and other streams. While the persistence in non-food manufactured products inflation is high, the persistence of food inflation has increased making the overall inflation rate sticky. The current inflation process, therefore, is an amalgam of both supply constraints and demand pressures. Laying stress over the containment of upward trajectory of inflation, he said that since high inflation is the most regressive form of taxation, particularly on the poor, it is, therefore, important to contain inflation and keep inflation expectations anchored so that consumers do not mark up their long-run inflation expectations by reacting to a short period of higher-than-expected inflation. On the issue of supply chain management in India, he said that there is an urgent need to address the issue of structural supply constraints, particularly in agriculture, so that these do not become binding constraints in the long-run hampering the task of inflation management. Director of the Institute, Prof P Chakrabarti presided over the session, while HOD, SMS, Prof Geetika welcomed the guests and Prof Peeyush Ranjan Agrawal, Head HSS summed up the session. The lecture was attended by Faculty of MNNIT and Allahabad University and students of MBA and B Tech programmes.

TOI

Tulu on currency notes?

Regarding Tulu's inclusion the 8th schedule of the Constitution, Karnataka Chief Minister D V Sadananda Gowda. said that RBI has created an obstacle to the process. There are 35 languages in the waiting list and as the RBI cannot print in Tulu on currency notes, the process has suffered a setback. Discussions on this issue are going on with union home minister Chidambaram and a request has been made to use Kannada script for Tulu on currency notes.  

http://www.daijiworld.com/news/news_disp.asp?n_id=111978

Don't blame the RBI for economic ills

.......The RBI's inflation forecast for March 2011 was grossly underestimated, given the prevailing inflationary pressure in the system. But the central bank cannot be solely blamed for misreading inflation and giving preference to growth over inflation as its policy decisions have been based on a set of largely unreliable/provisional data. ..........

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Upgrading workforce skills key to high growth: Gokarn

The Reserve Bank of India on Friday said that “inflation versus growth” is not a debate as long-term high growth is directly co-related with low inflation.  “When it comes to choosing between short term trade-off between inflation and growth, and long-term growth prospects, it is important to control the risk of spiralling inflation,” Subir Gokarn, Deputy Governor, RBI said in Delhi today at a conference organised by the Confederation of Indian Industry (CII).  “It is the mandate of the RBI to take steps to control inflation,” he said. The government can only facilitate the process to help it (inflation) come down by taking some supply side measures.  Gokarn said that the failure of the growth strategy lay in the inability to transition the workforce from low productivity areas to high productivity areas. “If we can’t achieve this transition, then labour force is dependent on a shrinking source of income in the economy,” he said. The major hurdles to this transition lay in infrastructure, skill development and the non-existence of a security net for labour.  

IE

RBI: Inflation likely to moderate later this year

Inflation is likely to moderate towards the later part of the year on the back of possible softening of global prices and tight monetary action, the Reserve Bank of India said on Saturday. At the same time, the central bank emphasised on the urgent need to address supply side bottlenecks which could hamper inflation management over the long run. “While inflation is expected to moderate towards the later part of the year reflecting monetary tightening and likely softening of global commodity prices, fiscal policy needs to be supportive in containing aggregate demand,” Deepak Mohanty, Executive Director of RBI said on Saturday in a speech delivered at the Motilal Nehru National Institute of Technology, Allahabad. He said that RBI expects global commodity prices will peak in 2011 which will provide some relief to domestic inflation scenario. “In addition, there is an urgent need to address the issue of structural supply constraints, particularly in agriculture, so that these do not become binding constraints in the long-run hampering the task of inflation management,” he said. While RBI’s medium term objective is to bring down inflation at 3 per cent, monetary policy aims to contain perceptions of inflation in the range of 4 – 4.5 per cent with a particular focus on non-food manufacturing or core inflation. “Going forward, both global and domestic factors will shape the inflation outlook. With increasing global integration, global commodity prices are having an increasingly significant influence on domestic prices,” he said. The central bank has raised the key policy rate by 11 times in the last 16 months to tackle inflation which has stayed stubbornly high for more than a year now. In July RBI revised March end inflation projection at 7 per cent from 6 per cent projected in April. According to RBI the current level of inflation is an amalgam of both supply constraints and demand pressures. “High inflation is the most regressive form of taxation, particularly on the poor. It is, therefore, important to contain inflation and keep inflation expectations anchored so that consumers do not mark up their long-run inflation expectations,” RBI said.

BS

RBI promises to carry on inflation fight



Dr.K.C.Chakraborty, Deputy Governor, RBI  with Axis Bank MD Shikha Sharma in Calcutta on Saturday



Baruipur, Aug. 13: The priority of the Reserve Bank of India (RBI) is to control inflation for which it might raise interest rates further. “You cannot have low interest rates and low inflation at the same time. The focus of the RBI now is to contain inflation and in the process interest rates have to be regulated,” said K.C. Chakrabarty, deputy governor of RBI, said on the sidelines of the launch of ABHA, a financial inclusion programme of Axis Bank in association with microfinance institution Bandhan. According to Chakrabarty, the RBI is looking to bring down inflation to 6-7 per cent in the short term and to 3-4 per cent for the long term. In June, the wholesale price index stood at 9.44 per cent. “Rather than worrying about interest rates we should focus on bringing down costs of goods and services. That will help to curb inflation,” Chakrabarty added. Meanwhile, Chakrabarty stressed the importance of making more people credit worthy as part of the financial inclusion programme. “The objective of the RBI is to make people credit worthy. Alliances like this (ABHA) is a positive step towards that direction.” “Banks have vested interest in these sort of projects. It is in their interest to make people credit worthy as well because it fits in the long-term business strategy of the banks as their credit offtake increases,” Chakrabarty said. ABHA or the Axis Bank Bandhan Holistic Assistance, will have a Rs 100-crore corpus. While Axis Bank Foundation, the CSR arm of the bank, will provide Rs 75 core, Bandhan will contribute the rest. As a pilot initiative, 500 low-income families are being targeted. Gradually, 50,000 families from the two districts of Murshidabad and South-24 Parganas will be covered under the initiative. “We (Axis bank) shall contribute 1 per cent of our total profits as part of our CSR initiative to the Axis Foundation. The focus is on creation of sustainable livelihood,” said Shikha Sharma, managing director and CEO of Axis bank. 

The Telegraph

Dollar loans are risky, Chakrabarty tells corporates

Kolkata : The RBI Deputy Governor, Dr K.C. Chakrabarty, has discouraged Indian corporates from raising dollar-denominated borrowings due to associated risks. He also expressed concern over the volatility of rupee against the dollar.  “In any efficient market, the currency you borrow does not change your cost of funds. However, in some currencies, if the cost is lower the risk will be more,” Dr Chakrabarty said addressing newspersons on the sidelines of the launch of a financial inclusion programme called ‘Axis Bank Bandhan Holistic Assistance' here on Saturday.  The successive rise in domestic interest rates and the consistent appreciation of rupee against dollar in the recent past seem to be encouraging companies to opt for raising dollar-denominated funds.  “We do not encourage dollar borrowings as cheaper loans only attract higher risks. If the risk manifests then you [the companies] are out of business,” he pointed out.  To a query on the movement of rupee against the dollar, he said the RBI was more concerned about the volatility in the currency. “If you consider only the economic factors then ideally rupee should depreciate. However, it is determined by several other factors such as the demand-supply situation,” he added.  To tame inflation, the central bank has hiked interest rates 11 times since March 2010. Though he admitted that high interest regime might impact the investment climate, Dr Chakrabarty said it was difficult to keep interest rates low in a high inflation regime. It was, therefore, the RBI's prerogative to keep the inflation rate low.  On the deregulation of interest rates on savings bank deposits, he said: “If all other interest rates are deregulated then that on SB accounts should also be done. However, when and how it is done is something which needs to be seen.” 

HBL

Savings rates should be market-determined: Chakrabarty

Kolkata, Aug 13 : RBI Deputy Governor K C Chakrabarty today said interest rates on saving desposits should be determined by the market. "If all the other rates are deregulated, then why savings rates should not be deregulated? The only question is when and how," Chakrabarty told reporters on the sidelines of an event near here.  When it was pointed out that there was a difference of opinion among banks on deregulation of savings rates, he said that a decision would be taken on the basis of a consensus by all stakeholders. Indian Banks'' Association (IBA), a group of public and private sector lender, had recently written to the RBI and expressed the view of lenders against freeing up of saving bank interest rate, which is pegged at 4 per cent. The apex bank had already circulated a discussion paper on deregulation of savings rates. Asked about whether the RBI was worried over the possible appreciation of the rupee vis-a-vis the dollar in view of the downgrading of the sovereign rating of the US, he merely said, variation of the domestic currency would have to be uniform and without much volatility. "When the rupee depreciates, the exporters are benefitted," he said. RBI does not discriminate between exports and imports, he said. He said that the high interest rate regime prevailing now was because of high inflation in the economy.

MSN News

Remittances by Ramdev under ED scanner

NEW DELHI: The stage is being set for action against yoga guru Baba Ramdev, with a multi-agency probe revealing that companies owned by his trusts have clandestinely sent large amounts of money abroad, official sources said. RBI has been asked to look into the case and verify if an approval was sought before these fund transfers were made, sources claimed.

TOI

RBI positive to allow INR 500 and INR 1,000 under the governments’ pact

KATHMANDU - Visiting Governor of Reserve Bank of India (RBI) D. Subbarao said on Friday that the RBI could permit operation of Indian currency denominated INR 500 and INR 1,000 in Nepal if the governments of two countries decide to this regard.  Amid concerns involving the use of the fake and counterfeit note of IC denominated in bigger amount, India has been prohibiting their use outside its territory. IC notes are used in Nepal and Bhutan but upto denomination of INR100. “We are concerned on the growing usages of fake and counterfeit IC notes and also about money laundering,” said Subbarao at an interaction at Nepal Rastra Bank. “The RBI is ready to change the existing policy if the governments of two countries decide to change it.” Subbarao, whose term as RBI governor extended this week for 2013, arrived here at the invitation of the NRB governor Yubaraj Khatiwada. At the interaction organised by Nepal’s central bank at its office premises, Subbarao also showed similar concern regarding allowing Nepali money transfer agency to work in India to cash in on the possibility of bringing remittance from millions of Nepalese working there. “Looking at the possibility of transfer of the fake and counterfeit currency, we have put some restriction on money transfer from such agencies,” said the RBI governor. He was not supportive to the idea of permitting Nepali money transfer agencies to enter into India for job. During the interaction, NRB governor Yubaraj Khatiwada said that Nepal was always adjusting its policy with that of India symmetrically in order to maintain ongoing peg of Nepali currency with that of India. The RBI Governor arrived for a courtesy visit will return back on Saturday. 

 http://arthakoarthanews.com/?p=3407

RBI ready to help NRB track unauthorized transfers, investments

KATHMANDU : Top official of India´s central bank -- Reserve Bank of India (RBI) -- said that RBI was ready to track unauthorized flow of money and investments by Nepalis in India, if Nepal Rastra Bank (NRB) formally requested for it. “Controlling movement of illicit money is part of our job. We will extend all possible support to NRB to check the flow of illegal money and trace investments made by Nepalis in India if the two governments entered an understanding or we received formal request from NRB,” said RBI Governor Dr D Subbarao. Such statement from the visiting Indian governor came at a time when NRB has been trying to establish formal ties with the Indian central bank to control capital flight, which grew rampantly in the current political transition. NRB has been trying to tighten knots against capital flight mainly after its research hinted that corrupt politicians and bureaucrats, and private individuals that amassed huge money through illegal means were parking their earning in India.  Even as a portion of that money is again channelled to third countries, officials say a substantial chunk of such money has been invested in housing and real estate sectors in India. In this context, Republica had caught up with Dr Subbarao and asked what will be RBI´s response if NRB formally requested for its support to trace and control such investments. “We will extend full cooperation to NRB,” he replied. Dr Subbarao was in Kathmandu for a two-day visit and Republica interviewed him before he left for India on Saturday.

http://www.myrepublica.com/portal/index.php?action=news_details&news_id=34695

Expanding economy can offer investors good opportunities

After increasing interest rates by 3.25 percentage points over 18 months, the most by any central bank, the Reserve Bank of India (RBI) had said it will continue with its tightening cycle to control persistently strong price pressures and markets have been discounting a quarter-point rate rise in September. Policymakers in New Delhi, however, are likely to lobby for a halt to the rate increases in the wake of the gloomy outlook for major economies such as the US and Europe which could further slow down domestic growth.....

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Loose change boon for traders in capital - RBI distributes coins to vendors to meet shortage in Bhubaneswar

Bhubaneswar :  Reserve Bank of India (RBI) has started distributing coins to vendors at market places in an attempt to meet a shortage of loose change in the capital. Coins worth Rs 12 lakh were given to businessmen in Unit I market today for the first time this year. For the past several months, there has been a scarcity in coins in the market and this had become a problem for day-to-day business transactions in the city. Traders had been complaining of the lack of coins that had been affecting their business. “Since coins were few and far between, we had to give our customers other items instead of the change. Sometimes we had to get coins from unofficial sources who try to make profits out of this,” said Trilochan Jena, a vendor in Unit I market. He said the coins given by the RBI would help. RBI officials said each individual was provided with coins worth Rs 1,000. “We gave them Rs 500 in denomination of Rs 5, Rs 400 in the denomination of Rs 2 and Rs 100 in Re1 denomination,” said Muralidhar Nayak, Deputy Treasurer, RBI Bhubaneswar, who was in charge of the coin exchange programme. Sources said that 1,200 people were provided with coins today. Nayak said that in the coming days many such drives would be carried out in the city at various market places. “Such a drive will be carried out at Unit IV market tomorrow and at other places such as Damana, Khandagiri, Rasulgarh and so on later,” he said. RBI officials said that the shortage in coins in the city was artificially created. Everyday, coins worth more than Rs 5 lakh are supplied through the RBI counter and 13 currency chests all across the capital. Sources said that all over the state coins worth more than Rs 2 crore are provided to the general public every month through 130 chest offices present across the state. A senior official of the RBI said that there were several reasons for the shortage in coins in the state. Some people stockpile coins at their homes contributing to the artificial shortage. Besides, coins from Orissa are transported to other states where RBI counters and chest offices are fewer in number. The other reason was illegal racketeering of these coins to outside the state as well as to neighbouring Bangladesh.  Sources said that five years ago, it came to the knowledge of the authorities of RBI Bhubaneswar during periodic meetings that coins of Rs 2 were being smuggled to Bangladesh and being converted into eight or 10 blades of high quality. So, from a Rs 2 coin, the racket was making a profit of more than Rs 10.

The Telegraph

Bhandari bank depositors rush to withdraw cash

MUMBAI: Depositors have been making a beeline to the Bhayander (east) branch of the Bhandari Cooperative Bank Limited to withdraw cash ever since the bank chairman and directors were arrested by the Anti Corruption Bureau for misappropriation of funds to the tune of Rs 35 crores. The bank having six branches across Mumbai and Thane is headquartered in Dadar. The bank has over 32,000 customers. As news of the bank turning bankrupt spread, depositors have been queuing up at the bank since morning to withdraw cash. Depositors are allowed to withdraw only Rs 1,000 per day and customers have been returning to the bank every day to withdraw the amount. Tight police security has been put in place at the Bhayander branch fearing a clash by depositors'. Policemen have been deployed both outside and on the bank counters. The frauds were committed between 2005 to 2009. The ACB received a complaint regarding the fraud in 2011. The Reserve Bank of India (RBI) had warned the bank over its irregularities and a monetary penalty of Rs five lakhs was imposed on the bank.

TOI

Microfinance bill: Shouldn't MFIs come under state law

Microfinance practitioners insist their embattled industry should not be regulated by state governments. State governments, they say, do not know how to regulate financial organisations. Keeping microfinance institutions (MFI) under the purview of the state government, they add, will leave microlenders vulnerable to political pressures.  It is a set of arguments that has been accepted by an expert committee that wrote the draft microfinance Bill. The draft Bill, put up by the finance ministry, promises to override state laws.  It also proposes that state advisory councils be set up to, among other things, monitor MFIs' field-level conduct and give a feedback to the central government. Further, it says that if the RBI feels an MFI's actions are hurting clients, it can issue orders to stop the functioning of the organisation.  It is not clear, however, if these measures can protect the MFIs' poor and vulnerable borrowers. For instance, while the draft Bill gives sweeping powers to the RBI, it is far from clear if the apex bank has the capacity to supervise and monitor MFIs. Says microfinance expert Ramesh Arunachalam, "During 2008-10, the five largest MFIs - SKS, Spandana, Share, Basix and Asmitha - added a gross loan portfolio of 78.55 crore per month."  The department of non-bank supervision, he says, should supervise every NBFC that has a loan portfolio of over 100 crore. However, despite each of these five MFIs adding almost 78% of that threshold value every month, their growth went unscrutinised, resulting in the collective default Andhra Pradesh saw last year.  Similarly, while the draft Bill empowers the RBI to derecognise an MFI that violates borrower rights, this provision of punitive action was available to the RBI even as a regulator of NBFCs. But it was never used even when the reports of suicides among MFI borrowers and corporate misgovernance began trickling in.  One reason for this relative inaction is that microfinance is still a small piece of the country's financial system. Last year, just before the Andhra Pradesh Ordinance was promulgated, the industry stood at just 27,000 crore. Today, it stands at about 15,000 crore - a minuscule portfolio when compared to the banks. And the RBI seems to be allotting proportionately limited mindspace to the industry.  Further, the work of microlending and collecting is done - in multiple, small transactions - in bastis and villages. These are not transactions the RBI is geared to track.  What about the state advisory councils that the Bill proposes? Can they safeguard the interests of the borrowers? No. These are problematic as well. Take their composition: two nominees from the state(s) covered by the council, one nominee from the convener bank of the state-level bankers' committee, one representative of the MFIs operating in the state(s) and one member nominated by the RBI. Who is speaking on behalf of the borrowers?  Further, it is not clear how these councils will track events in the field. The borrowers are poor. Some of them will live in isolated hamlets. It is unfair to expect them to travel to the state capital (or the adjoining state's capital) for registering their grievances.  This is also an architecture that fails to spell out how investigations will be carried out, nor is it clear how swiftly corrective steps can be taken under this structure.  The Bill also says that the "Reserve Bank may, with the previous approval of the central government delegate, any of its powers conferred under this Act to the National Bank in respect of any microfinance institution or a class of microfinance institutions". This might be Nabard.  Which is another problematic suggestion. Its self-help group programme competes with MFIs. According to IIM professor M S Sriram, "The current problems of MFIs have not occurred on account of their registration, capital structure or governance structure. They are on account of practices at the client end."  The state government is the only institution with both the investigative and grievance-redressal mechanisms in place at the local level. Yet, it has no role. Remember, even the state advisory councils relay their comments to the Centre, not the state government. What is needed is a system where the RBI lays down prudential norms for the sector. But the state governments should have a role in monitoring the industry's conduct with its borrowers.

ET

Should MFIs be allowed to fail?

....To create sustainable changes we need something more fundamental than financial inclusion. We need ways to enhance human capability and the creation of value and then let the funds follow, not lead.....

Continue reading............

Who should regulate the microfinance sector?

There are far too many serious issues that require attention so that they are not repeated again and the Reserve Bank of India or some central institutions cannot undertake this task as they do not have the resources or the local presence...........

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Union Bank Centre for Banking Excellence Presents 2nd Great Lakes-Union Bank Financial Inclusion Conference at Great Lakes Campus



Prof. Bala V. Balachandran, Founder & Dean, Great Lakes, Dr. Y.V. Reddy, Former Governor, RBI, Prof. S. K. Shanthi, Chair Professor , UBCBE & Professor of Economics, Great Lakes, Mr. S. C. Kalia, Executive Director, Union Bank of India & Prof. S. Sriram, Executive Director, Great Lakes



Chennai : The Union Bank Centre for Banking Excellence at Great Lakes Institute of Management, a leading management institute, founded by Prof. Bala V Balachandran, hosted the second conference on financial inclusion at their sprawling green campus at Manamai, here today. Dr. Y.V. Reddy, inaugurated the conference and delivered the key note address. Mr. S. C. Kalia, Executive Director, Union Bank of India delivered the presidential address.  The second Financial Inclusion Conference’s theme for the panel discussion this year was  ‘Microfinance: Panacea for Financial Inclusion? If so, how to get there?’. The speakers Dr. D.S.K. Rao from Micro Credit Summit; Dr. Mudit Kapoor from ISB, Hyderabad; Mr. Vivek Kulkarni from Brickwork India Pvt. Ltd. and Dr. Bappaditya Mukhopadhyay from IDF discussed the various issues around financial Inclusion, and in particular focused on Microfinance. The discussion was moderated by Dr. Subhashis Gangopadhyay from IDF and University of Gothenburg. Speaking on the occasion Prof. Bala V. Balachandran, Founder & Dean, Great Lakes Institute of Management defined Financial Inclusion as "the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. An index of financial inclusion places India, at the 50th rank with more than 60% of the population not having bank accounts. The committee under the chairmanship of Dr. C. Rangarajan made a number of recommendations and they are under various stages of implementation.

_{The Telegraph}

What's in a road's name?

NAGPUR: Amol Choudhari, a businessman in Pune who hails from Nagpur, was surprised during his recent visit to see a sign board proclaiming that the familiar Shankar Nagar Square had been rechristened as 'Swatantraveer Sawarkar Chowk'. Another well-known landmark, Rahate Colony square on Wardha road, was now named 'Dr Hardikar Chowk'.

What he and most other citizens of Nagpur do not know is that these are the official names of these squares. Nagpur Municipal Corporation (NMC) has now decided to use these official names on sign boards.

Amol said, "Till my last visit in April, NMC was still calling it Shankar Nagar Chowk." He is not the only person surprised and confused by the sign boards put up by NMC recently. Most citizens started noticing these 'new' names at major squares while waiting at traffic signals a few months back. Most were also left confused by the names displayed.

Prakash Najpande, a resident of RBI quarters in Civil Lines, echoed similar views. He said, "The square near my house is known to everyone as 'RBI Quarters chowk'. But a few weeks back, I noticed that NMC has renamed it without giving local residents any information and displayed a board of 'Raja Rani chowk' at the traffic junction." 

Coin jingle back in traders' coffers

BHUBANESWAR: It's been back to the days of the barter with currency coins being in short supply in the state capital. Traders paying back in kind with chocolates, matchboxes and other knick knacks, instead of handing over small change, has been a common sight in daily markets of the city, with businessman alluding the practice to the shortage of coins in circulation.

In a bid to help ease the currency jam, Bhubaneswar branch of the Reserve Bank of India, in association with Rajadhani Dainik Haat, Byabasayee Sangha, organised a day-long coin mela at Unit-I market here on Thursday. Such has been the crunch that by the end of the day, bank officials had distributed coins of different denominations worth a whopping Rs 12 lakh, in exchange of currency notes.

"It was a long standing demand of the traders of Unit-I daily market as they have been facing an acute shortage of coins. The shortage was affecting their business. So we decided to organise an exchange programme in the market," said M Soren, treasurer of the bank.

"There was a severe coin crisis in the market, causing problems for both traders and customers. Whenever we were going to exchange notes from the RBI, they were demanding documents and it was not always possible for a poor businessman to go to the bank to bring coins," said Byabasayee Sangha secretary Gyadhar Swain. "We urged the bank authorities to organise an exchange camp inside the market so that genuine traders can get exchange coins. Only members of our sangha were entitled to exchange notes here," Swain said.

"The programme was of a great help for poor traders like us. We were facing a lot of problems due to shortage of coins," said Santosh Sahu, another trader, appreciating the RBI effort.

TOI

Mirwaiz for Islamic banking in J&K

Srinagar : Hurriyat Conference (M) chairman Mirwaiz Umer Farooq Friday advised J&K Bank authorities to start Islamic banking in the state and take up the issue with Reserve Bank of India. “As J&K is a Muslim majority state and interest is haram in Islam, it is high time that JK Bank should start Islamic banking. When Islamic banking is allowed in places like US, UK and other European countries what is problem if it is started here,” Mirwaiz told a well-attended Friday congregation at the historic Jamia Masjid in Nowhatta. Urging the people to close those accounts where they are being paid interest, the Mirwaiz said, “I appeal to all the Muslims not to take interest as it is prohibited in Islam.”

http://kashmirwatch.com/

REPORT OF THE COMMITTEE TO REVIEW THE FACILITIES FOR INDIVIDUALS UNDER FEMA, 1999 - AUGUST 2011

The Committee commenced its work from May 6, 2011 and the then Executive Director and presently Deputy Governor, RBI, Shri H R Khan, addressed the Committee at its first meeting on May 6, 2011. The Committee also had the privilege of interacting and having comprehensive discussions with the then Deputy Governor, Smt. Shyamala Gopinath, Deputy Governor, Shri Anand Sinha, and Executive Director, Shri G Padmanabhan, The Committee is deeply appreciative of insights provided by the top management of the Reserve Bank.......

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David Ramanath, former State hockey player passes away

David Ramanath, former Karnataka State hockey player who also played for Reserve Bank of India (RBI) Bangalore, passed away in Illinios, Chicago, USA on 7th August after protracted illness for some months.He was with RBI for 15 years and there after migrated to USA. Karnataka State Hockey Association offered their condolences for his passing away and noted in their press release, "He was a jovial person and endeared himself to one and all." David Ramanath, former Karnataka State hockey player who also played for Reserve Bank of India (RBI) Bangalore, passed away in Illinios, Chicago, USA on 7th August after protracted illness for some months. This info was provided by Karnataka State Hockey Association. 

http://bangalore.citizenmatters.in/articles/view/3268-ramnath-died-in-chicago-after-many-months-of-illness