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, February 17, 2012
Review RBI's timing
The Reserve Bank of India (RBI) has scheduled its next mid-quarter review for March 15, 2012, a day before the presentation of the Budget. When it decided on the date, there was a general impression that the Budget would be announced by end-February, as usual, despite the elections to state Assemblies. Now the situation is different. RBI proposals will cover 45 days of which 30 will fall in the next financial year. While the prediction of the growth rate of GDP in 2012-13 may be in the realm of astrology, certainly the Budget forecasts for revenue, expenditure, fiscal deficit and borrowings will be among the benchmarks for the formulation of policy in relation to money supply, interest rate, open market operations and so on. In the interest of coordination between monetary and fiscal policies, it is desirable that the mid-quarter review is postponed by a week or so by which time the reaction of the markets and to the Budget would be known. It will also facilitate the formulation of the annual policy for 2012-13.
A Seshan Mumbai (BS)
Reducing validity of cheques: delayed step in right direction
Even though the attention of Reserve Bank of India ( RBI) is being drawn towards menace of misuse of ' benami' drafts as carriers of black money for last several decades, it has taken a step at last to ensure some corrective measures in this regard. RBI has now decided to reduce validity of cheques and drafts to just three months with effect from 1st April 2012, and banned cash payment of drafts exceeding rupees 20000. But this is not enough. Instead of taking steps in parts, a comprehensive strategy comprising all the measures together need to be taken in a bid to end regime of parallel flow of black economy.
Madhu Agrawal, Delhi (FPJ)
RBI nod to non-bank entities running ATMs
...."RBI has reviewed the extant policy on ATMs and it has been decided to permit non-banks to set up, own and operate ATMs to accelerate growth and penetration of ATMs in the country. Such ATMs will be in the nature of White Label ATMs and would provide services to customers of all banks," the RBI said......
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CRR cut calls gains momentum as RBI fails to prop up liquidity
.... "To that extent of intervening in the forex market, we have sucked some liquidity," RBI Deputy Governor Subir Gokarn told ET in an interview after the cut. "We tried to offset that, but clearly the pressure is still there.".......
Read.......... Finance ministry asks PSU banks not to overstate profits
......Sometimes there could be a difference of opinion about the classification of NPA (non-performing assets) which gets sorted out at the time of external audit or Annual Financial Inspection (AFI) by the Reserve Bank of India (RBI), the official said.If the bank is unable to convince the RBI for not classifying some loans as NPA and subsequently not making provisions, then the bank has to make provision after AFI, the official said.............
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Budget 2012: Tax rebate on 3-year bank FDs likely
Following concerted pressure from banks, the finance ministry has agreed to consider a proposal to reduce the lock-in period for bank deposit eligible for tax rebate to three years from five years, even though it goes against the spirit of the Direct Tax Code...............
Bonds to tap household gold hoard
....A high-level committee on financing infrastructure (HLCFI), headed by former deputy governor of RBI Rakesh Mohan, has made this recommendation. The proposal to float gold bonds scheme is being vetted by finance minister’s budget ‘A’ team led by finance secretary RS Gujaral and economic affairs secretary R Gopalan.The centre proposes to allow infrastructure finance companies and special purpose vehicles (SPVs) to issue these gold bonds.......
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RCom gets RBI nod for FCCBs redemption
....Telecom services major, Reliance Communications, has received the Reserve Bank of India approval for refinancing for the redemption of its outstanding FCCBs (Foreign Currency Convertible Bonds) worth Rs 5,825 crore.......
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ICICI Bank's chief Kochhar sees lending rates falling in Apr-Sep
India's largest private sector lender ICICI Bank's Managing Director and Chief Executive Officer Chanda Kochhar Thursday said that she expects lending rates to fall in the first half of the next fiscal year, beginning April 1, 2012 amid headline inflation moderating in line with the Reserve Bank of India's (RBI) expectations and economic growth showing further signs of stress……….
Read....... HDFC's Mistry says Reserve Bank of India repo rate cut unlikely at least in FY12
India's largest mortgage lender Housing Development Finance Corp's (HDFC) Vice Chairman and Chief Executive Officer Thursday said that he does not expect the Reserve Bank of India (RBI) to cut key policy rate in the next monetary policy review scheduled on March 15, but expressed hope of another cash reserve ratio (CRR) cut to shore up liquidity in the system...............
Read.........Advantage housing finance firms
....... Industry experts say it is a standard practice to lend on the agreement price plus stamp duty and registration fee. Housing finance companies (HFCs) like LIC Housing Finance and HDFC could be the way out for borrowers, as these do not fall under the purview of the RBI. They fall under the control of the National Housing Board (NHB), which so far does not have any such norm...................
Read...........Courage or laxity? Bad debt mountain does not faze RBI
RBI Deputy Governor Anand Sinha recently said that from 15% (of total loans of the banking system) the NPAs came down till 2008, but they have risen sharply by 91% or Rs46,670 crore between 2005-2006 and 2010-2011. The situation is serious and banks had better do something about it quickly.........
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Swiss National Bank chairman’s resignation—A pointer to all regulators in India
..........The Reserve Bank of India’s (RBI) website is silent in this regard and does not give out any details of the rules and regulations applicable to its directors and the senior management of the bank with regard to insider trading either in shares or in foreign exchange. RBI will definitely have its internal rules applicable to its staff but unfortunately, this is not put in public domain. In many cases, it appears that the rules applicable to banks are not made applicable to the RBI, as it is not a listed bank. For instance, all banks have to have a policy on “protected disclosure scheme”, but whether a similar scheme exists for RBI is not known, as it is not published on its website. ...........
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Thursday, February 16, 2012
RBI among world’s best central banks,says The Economist
TOI
RBI asks bankers to "stir up passion" for financial inclusion
Chandigarh, Feb 15 (PTI) The Reserve Bank of India (RBI) today asked bankers here to "stir up passion" for providing banking facilities to unbanked villages in Punjab and Haryana within stipulated time frame of March 2012. The apex bank made this observation while reviewing the FIP's during the State Level Bankers’ Committee (SLBC) meeting for Punjab and Haryana held here. Over 450 villages in both states are yet to be covered under Centre's most ambitious Financial Inclusion Plan (FIP). "Passion and zeal is missing among bank officials... There has to be passion... Let us change our attitude... We are not officers... We have to work as public servants," Jasbir Singh, RBI Regional Director, said while discussing the review of financial inclusion programme. RBI says merely opening accounts of villagers in unbanked areas under FIP will not serve any purpose where transactions in holders' accounts is minimal. "Mere opening of accounts will not serve purpose... transactions should also take place in the accounts," said Singh, acknowledging that number of transactions in accounts were not encouraging at several places. He added that bank officials need to go to the masses in villages and try to bring them in the banking fold. RBI in its field visits conducted at some places in Punjab and Haryana found that bankers were enrolling the beneficiaries while showing them as covered under FIP, though smart cards were not issued to account holders, he said. In some cases where the smart cards are issued, it remained non-operational, he added. According to RBI, the FIP is treated as complete with the whole operations of identification, enrolment, issuance of smart cards, and its operations by the account holders to be ensured by Business Correspondents. Banks have been given the target of covering 1,576 unbanked villages in Punjab and 1,838 villages in Haryana, with a population of 2,000 and above, by March 2012. Out of these, 1,260 and 1,670 villages have been covered in Punjab and Haryana by December 2011, respectively, SLBC report said. Singh also stressed on creating awareness among villagers about the benefits of banking services so they could start using banking services at large scale. Coverage of unbanked villages under FIP assumes significance as the Centre intends to extend benefits of banking to each citizen of India for speeding up economic development.
http://ibnlive.in.com/generalnewsfeed/news/rbi-asks-bankers-to-stir-up-passion-for-financial-inclusion/963955.html Mint Road rules
You could call it Reserve Bank of India Governor Duvvuri Subbarao’s “revenge” on Chief Economic Advisor Kaushik Basu. The forthcoming monetary policy review by the central bank is slated for Thursday March 15, which also happens to be the day the government is to table the pre-Budget Economic Survey for 2011-12 in the Lok Sabha. For Basu, this will be his third and last Economic Survey, a document he holds dear. If Subbarao comes out with the monetary policy review the same day, the Survey will likely be overshadowed by what the central bank does or does not do. Many will also see that as Mint Road’s triumph over North Block!
BS
What's on RBI's mind
Long before behavioural finance became a popular theme, central bankers took psychology into account. Monetary policy aims at modifying crowd behaviour. By tightening or loosening money supply and tinkering with interest rates, central banks try to nudge economies in the right direction. One primary axiom for a central bank is to keep everyone guessing. If other actors figure out the bank wants a certain exchange rate, or it is targeting a specific inflation rate, they may react in ways that are sub-optimal. Central banks also realised behaviour is linked more to future inflation expectations than to current inflation levels. In the 1980s, the US Federal Reserve developed a very harsh inflation doctrine, consisting of raising rates till all inflation expectations had been squeezed out. In the late 1990s and early 2000s, Fed policy swung in the opposite direction. At the slightest signs of trouble anywhere, it would loosen money supply. The excess liquidity, eventually, caused a massive bubble with all asset valuations rising. Since the dollar is, for better or worse, the global default currency, that bubble affected the global economy. For the past four years, the world has been struggling to deflate that bubble without any catastrophic ramifications. India was a beneficiary of the boom. It attracted large inflows. Now, it is walking a tightrope to ride out the bust. Since the government is paralysed, the only policy option is via the Reserve Bank of India (RBI). What are RBI’s targets and what is its inflation doctrine? Inflation versus growth is the balancing act. Growth or the lack of it, is somewhat sensitive, while inflation is a very politically sensitive subject in India. The central bank doctrine is generally inclined to be on the harsh side. Many states are going to the polls this year. This could keep the RBI from loosening. But the case for rate cuts is becoming stronger with every new data point. The index of industrial production has shown consistent weakness in the three latest months. The wholesale price index has fallen to a 26-month low. Growth has shown weakness in the last two quarters. Corporate results have been anaemic. The gross domestic product estimates have been scaled down. If these aren’t enough to induce cuts, one will have to assume RBI has very specific targets for inflation and perhaps a fear of major currency fluctuations. The market is now factoring a big rate cut in April into valuations. It is also assuming that will be the start of a trend of a falling rate cycle. If those expectations are belied, the results will not be happy for bulls. Are these the expectations RBI wants?
- Devangshu Datta, (technical and equity analyst) BS
Subarao meets Naveen; to attend RBI's BoDs meet tomorrow
Bhubaneswar, Feb 15 (PTI) Reserve Bank of India (RBI) Governor D Subbarao today met Chief Minister Naveen Patnaik and attended the golden jubilee function of the Bank's regional office here. The meeting between the Chief Minister and the RBI governor lasted for about 40 minutes. Subbarao refused to share any information with the media about the meeting. "I will not speak anything in view of the model code of conduct for elections," he said. Patnaik, on his part, described the meeting as a courtesy call. After his arrival here in the afternoon, Subbarao attended the meeting of a special State Level Bankers Committee (SLBC) here. He is scheduled to attend RBI's Central Board of Directors meeting here tomorrow. Besides Subbarao, RBI's Deputy Governors K C Chakrabarty, Subir Gokarn, Anand Sinha and H R Khan and other top level officials would participate in the Board of Directors' meeting.
IBN Live
Naveen urges RBI to help poor and destitute
Odisha Chief Minister Naveen Patnaik today asked the Reserve Bank of India (RBI) to take more vigorous and proactive intervention in financial literacy and credit counselling to help the poor and destitute at their hard times. Addressing a meeting organised here to celebrate the 50 years of RBI in Bhubaneswar, the chief minister said the poor were exposed and often attracted to a lot of risky choices when they acquire some surplus out of their meagre incomes. They should be aware where to deposit their savings for what period and at what interest rate so that they do not lose their hard earned money by fake promises and false propaganda by the fly-by night operators and greedy financial vultures. Mr Patnaik said, similarly, the credit needs of the poor are qualitatively different from their wealthy counterparts. The poor need in small doses but more frequently. They had hardly any assets to offer as collateral. Empowerment of the poor would happen only when they acquire the capacity and confidence to shape their destiny, he said. Among others RBI Governor D Subbarao also spoke on the occasion. Earlier, the RBI governor also called on the chief minister at his office and discussed some important issues. He however, refused to divulge any thing to the press in view of the code of conduct in force in the state for the ongoing Panchayat elections.
Inflation trending down, rate cycle at its peak: Gokarn
............ Gokarn, who is in-charge of monetary policy, added that in RBI’s view inflation is “trending down from the highs of nine percent plus to something closer to seven per cent”.The non-food manufacturing inflation, which stood at 6.49 percent year-on-year, is also broadly in line with RBI projection, Gokarn said......................
Read............RBI may not cut rates in March 15 policy meet: ICICIdirect
.......We therefore hold our view that RBI may not cut rates in March 15 policy meet and first repo rate cut seems to be coming in annual monetary policy during April 2012,`` .......
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BIFR is being ‘manipulated': Y. V. Reddy
..........The Reserve Bank of India had adopted strategic innovation while dealing with foreign exchange rate issues during the period of the Asian crisis more than a decade ago..............
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Global stage for growth
....A special plenary session would be held on the inaugural day on “Strategies for mainstreaming less-developed regions in the inclusive growth process” with a special reference to Bihar. London School of Economics professor Nicholas Stern would be its moderator. RBI governor D. Subba Rao and Planning Commission deputy chairperson Montek Singh Ahluwalia would be among the key speakers.....
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Some relief
.......... However the ground may have been prepared for the RBI to ease its hard line monetary stance and to cut interest rates. The apex bank has been rightly reluctant to do so because it wanted a convincingly steady fall in inflation over a period before acting. It may still wait for a few weeks. But it may have to act sooner rather than later because the tight monetary policy has choked investment and growth, as seen in the falling GDP figures. A reduction in interest rates by the RBI, effective fiscal measures on the part of the government and a growth-oriented budget can help to strengthen the hopes created by falling inflation.
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A right move
Regarding “RBI hikes bank rate to 9.5%” (Business Line, February 14), the Marginal Standing Facility was recently introduced by the RBI for commercial banks to survive liquidity conditions. It is good on the part of the RBI to have realigned the bank rate to the Marginal Standing Facility rate at 9.5 per cent, in a one-time technical adjustment. Instead of having to change several rates, it is good to follow a base/policy rate, so that when this rate undergoes a change to realign with the prevailing market forces, the remaining key rates would move in a similar direction.
- Srinivasan Umashankar, Nagpur (HBL)
‘RBI approach timid, should let rupee appreciate’
... I think an obvious thing to do is to let the currency appreciate. I don’t believe the RBI needs the reserves that they have. They are excessively large, but we will have to see how that works out,”......
Watch those NPAs
RBI Deputy Governor Anand Sinha’s assessment of the NPAs of banks should be heeded. Sinha said that “the situation is under control but there is an underlying reality that is not very comfortable”. He pointed out that gross NPAs are rising, clearly the result of some reckless lending before the slowdown hit the economy. With economic growth looking up only slightly, smaller corporates are understandably unable to service their loans as reflected in the ratio of recoveries to NPAs, which has dropped to less than 29% in 2010 from around 41% in 2008.............
FE Editorial : Watch those NPAs
FE Editorial : Watch those NPAs
Fake currency racket busted in Kurnool
...Meanwhile, the Reserve Bank of India directed banks not to return the fake currency to public or destroy them.....
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Draft norms for ATMs from non-banking firms
..............The guidelines on five transactions per month for using other bank ATMs would not be applicable on WLAs. In such cases, the operator can charge the interchange fee to the issuer bank. “The charges for the transactions should be displayed on the screen before the customer initiates the transaction,” said RBI..............
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More counters for tax payers
KANPUR: At times, it has been observed that there is increase in the number of persons depositing income tax dues in the last days of March at Reserve Bank of India counters. Keeping this in view, additional counters are opened in the bank. Deputy General Manager (Banking) Rajeev Dwivedi said that facility for depositing income tax by cash or cheque is also available at 145 branches of public sector banks, including State Bank of India and at three branches of private banks. The list of such branches has been displayed outside the premises of RBI and also at branches of other commercial banks.
TOI
RBI shocked as fake note passes ultra-violet test
..........The police said the fake notes they seized from the arrested duo on Monday are made such that they can pass even ultra-violet test. A police officer said even the officials of the Reserve Bank of India are shocked as to how it can happen. The fake notes have copied about 35 of the 50 unique features of original notes.............
RBI moves against fake currency deposit
Lucknow, Feb 15 (IANS) The Reserve Bank of India (RBI) Wednesday filed an FIR against nine banks in Lucknow on charges of depositing counterfeit currency to its vault here. Shalini Sachan, the assistant general manager of the RBI, lodged the first information report (FIR) at the Gomtinagar police station. The banks against whom the RBI moved include select branches of State Bank of India, ICICI Bank, Oriental Bank of Commerce, Indian Overseas Bank, Vijaya Bank, Bank of India, Syndicate Bank and Allahabad Bank.RBI officials said fake notes totalling Rs.39,030 were deposited by these banks. The notes were in Rs.10, Rs.50, Rs.100, Rs.500 and Rs.1,000 denomination.
Rise in NPAs, loan recast spoils banks' show
..... "The situation is under control, but there is an underlying reality that it is not very comfortable," RBI Deputy Governor Anand Sinha was quoted as saying. "From 15% in 1995, NPAs came down till 2008, but they have risen sharply by 91%in 2006- 2011."………..
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Madras HC rejects petition to curb micro-lending in state
The Madras high court has not granted relief to a petitioner seeking the introduction of legislation in Tamil Nadu to curb microfinance activities by private players in the state. A similar law passed by the Andhra Pradesh government in October, 2010, which banned weekly collection of dues, severely affected microlenders, eroding their profitability and threatening their existence. The high court, however, said the state government should step in to protect the interest of self-help groups if it found microfinance institutions (MFIs) were resorting to “unfair and unhealthy” practices. It added there was a need to empower self-help groups. “We also hope steps taken by the Reserve Bank of India (RBI) in introducing the Micro Financial Institutions Bill becomes an Act to provide the necessary safeguard to affected parties and provide a successful check on the unhealthy practices of MFIs,” judge Chitra Venkataraman stated in the order, a copy of which is with Business Standard. MFIs said the judgment was positive for the sector, as curbing microfinance activities by private firms would not only hurt the recovery of the sector, but also impact the rural poor who do not have access to formal banking channels.
BS
An Overview into FRSGlobal’s Solution to RBI’s Automated Data Flow (ADF) Implementation
Date : | Thursday, 23rd February 2012 |
Time : | 10:30 am - 11:30 am IST (GMT + 5:30) |
Venue : | Online - Webex |
Wolters Kluwer Financial Services’ FRSGlobal is pleased to announce that they will be conducting a webinar about its Solution to RBI’s Automated Data Flow (ADF) Implementation on 23rd February 2012.
The webinar will be about Automated Data Flow (ADF) and what it means for banks in India. Find out how Wolters Kluwer Financial Services’ FRSGlobal’s regulatory reporting solution is exactly aligned with Reserve Bank of India requirements.
You will have a chance to see our content rich solution, visualized by industry domain experts, which will ensure compliance to all the regulatory reports required by the RBI.
You will also learn about the intricacies and complexities of regulatory reporting for banks in India with a live demo of the functional and technical features of our solution. Participants can also put forth questions to our subject matter experts, during the webinar or on a follow-up conversation.
Places for this event are limited; please register your interest for this event by completing the form below.
http://www.frsglobal.com/news_and_events/solution-to-rbis-automated-data-flow.htmlNDMA mulls Rs 923 cr for fail-safe communication network
.......... NDMA is also preparing guidelines for Reserve Bank of India (RBI) for bank financing in infrastructure sector which would also include the communication sector. "This will ensure disaster resistant design criteria in all the infrastructure projects and will go long way in maintaining better communication connectivity,"………….
SC restrains Kerala court from passing orders on temple assets
.............The petition filed by Jacob J Mappilacherry, through advocate Nishe Rajen Shonker, arrays the Union of India and the RBI as parties and highlighted the “importance of treasures like the Travancore temple treasure to the national economy”.
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After Pai’s exit, Sebi board has no industry member
...The current Sebi board composition include representation from Finance Ministry (Thomas Mathew, joint secretary, capital markets, department of economic affairs), ministry of corporate Affairs (Naved Masood, secretary, ministry of corporate affairs), RBI (Anand Sinha, deputy governor, RBI) and a former civil servant VK Jairath, in addition to three Sebi top officials comprising chairman UK Sinha, whole-time members Prashant Saran and Rajeev Kumar Agarwal.........
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Microfinance industry confident for recovery
After more than fifteen months of battling the microfinance crisis, industry players now appear to be optimistic for a revival in 2012. With positive developments like the creation of a new category of NBFC-MFIs by the Reserve Bank of India, easing of liquidity crunch and a Microfinance Bill in the offing, the sector is expecting to get back on the growth track once again.........
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Wednesday, February 15, 2012
RBI’s Subbarao: Overruling Advisers Difficult But Necessary
Sometimes leadership is listening to those around you. Sometimes it’s ignoring what you consider to be bad advice from those same people. In the case of Reserve Bank of India Governor Duvurri Subbarao, he decisively picked the latter last year, consistently bucking the recommendations of his Technical Advisory Committee on monetary policy. The committee is made up of economists, academics and former central bankers............
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Lakshmi Vilas Bank branch in Madhapur
Hyderabad, Feb. 14: Lakshmi Vilas Bank has opened its new branch in Madhapur here on Tuesday. Lakshmi Vilas Bank now has a network of 38 branches and 76 ATMs spread across 18 districts of the State with a total business of Rs 2,056 crore. The branch was inaugurated by Ms Rosemary Sebastian, Chief General Manager, Reserve Bank of India, Hyderabad in the presence of Mr P R Somasundaram, Managing Director and Chief Executive Officer of Lakshmi Vilas Bank and others, according to a release.
HBL
RBI to bring more NE people in banking service
Shillong, Feb 14 (PTI) Concerned at the slow progress of financial inclusion in North East, Reserve Bank of India will open offices in all major cities to push banking institutions to cover more people. "We have launched a financial outreach program in North-East in a very big way," RBI General Manager (Meghalaya) P Shyam Sunder told reporters. He said top RBI officials are going to villages personally to supervise developmental activities of banks in the region. Sunder said RBI would open offices in state capitals of Meghalaya, Nagaland, Mizoram, Manipur and Tripura. "There are many villages in which people do not have accounts with commercial banks. We want banks to promote them to open no-frill accounts just to have them included in banking," Sunder said. Further, RBI officials said the central bank moots at electronic payments of the popular government-sponsored MGNREGS and other payments to people to avoid harassment in the process.
IBN Live
New security features embedded: RBI
SHILLONG: The Reserve Bank of India (RBI) on Tuesday said new security features have been embedded in currency notes to check the flow of fake Indian currency notes in the country. ”It was practically impossible for a layman to differentiate between genuine and fake currency notes and the RBI has adopted new security features on bank notes to deal with the menace of fake Indian currency notes,” RBI General Manager (Department of Expenditure & Budgetary Control) P Shyam Sundar told reporters. Sundar said “The quality of fake notes are so good, that the similarity between counterfeit and genuine currency is in the range of 90 to 95 per cent.” He, however, refused to name the places from where the fake notes have been pumped into the country, saying that the RBI has been integrating new security features in currency notes in a bid to check the “menace”. “Apart from regularly changing the design of the notes, we have also incorporated new security features in the notes. These measures would certainly help in curbing the menace,” Sundar said. He also said the RBI was working on augmenting the functioning of the security press apart from developing security paper for printing currency notes. The official informed that an office of the RBI would be soon established in Shillong. “We are likely to open the branch office by this April,” he said. “Once the office is established, the RBI would be in a better position to directly work with other banks and also to take active part in developing the state,” Sundar said while stressing on the need to bring in more people under the banking network. Currently, there are only two offices of the RBI in the region, Guwahati and Agartala. When asked about the shortage of coins in the State, Sunder said he was aware about this problem. “In fact, there is no shortage of coins. We would soon take corrective measures to see that the coins are being circulated in an even manner in various parts of the country,” he said.
The Shillong Times
http://theshillongtimes.com/2012/02/15/new-security-features-embedded-rbi/RBI guv offers roadmap to cut fiscal deficit. Will FM listen?
.......... Subbarao offered a simple plan for bringing the government’s finances back into shape. He suggested that in addition to offering a fiscal deficit estimate for the next year, Finance Minister Pranab Mukherjee should also prepare a medium-term roadmap to cut the fiscal deficit............
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Subbarao: Oil Is an Economic Problem Largely Out of India’s Control
............... There’s been a lot of talk about the Reserve Bank of India’s recent stance that it can’t cut interest rates until the government presents a solid plan for reducing the fiscal deficit. But there’s something else that could dash India Inc.’s hopes for easier credit: the price of oil.........
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Who's the boss?
Apropos “Regulating the regulators” (Raisina Hill, February 14), the finance ministry has many subtle ways of undermining the independence of the Reserve Bank of India (RBI) and nominating one more representative to the RBI board is one such move. There have been many instances in which the ministry has wielded its power. And when the RBI governor himself reports to the finance minister, where is the question of independence? Also, the ministry does not merely function as the prime shareholder of public sector banks. It has the final say in the appointment of CEOs of these banks. In fact, it is not even necessary to regulate the regulator (RBI). The banking regulator is already aware of its subservient role. Its independence will only be restored if the Centre honestly believes in doing so. Till then this will remain wishful thinking.
- K V Rao, Bangalore (BS)
Same difference
Guess what Indian Prime Minister Manmohan Singh, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos have in common? For one, all three are economists and, for another, all three head coalition governments. Papademos and Singh have another point of similarity: both were governors of their respective central banks — Singh headed the Reserve Bank of India between 1982 and 1985 and Papademos was Governor of the Bank of Greece from 1994 to 2002. The major point of difference, of course, is that Monti and Papademos, both of whom took charge in November last year, head countries that are neck-deep in financial and economic crises. Singh doesn't have to face that problem as prime minister — he addressed that particular crisis as finance minister almost 21 years ago.
BS
Banks oppose Irda norms on retailing policies
........ The draft guidelines give Irda the power to inspect the premises, books of accounts, records and documents of the bancassurance agent to check if the activities are carried in line with regulations. Banks are concerned that this will ensure that they are effectively under the supervision of two regulators, the Reserve Bank of India (RBI) and Irda.........
Read.............Subir Gokarn sees signs of accelerating growth in FY13
...... Speaking at the IIFL 2012 India Conference, Gokarn is witnessing signs that growth is getting back on track in this fiscal. "The baseline scenario is starting to show that the signs of growth are now bottoming out."………….
Read........... Get fiscal house in order on priority basis, says Reserve Bank
…..On the fall in headline inflation, Gokarn said it was in line with the government’s trajectory. “It is expected to be about seven per cent by the end of this March. It will help us change of our stance on the monetary policy. The bank has already indicated that interest rates have peaked,” he added.The official, however, did not elaborate if this would prompt the RBI to begin policy rate in the near future..............
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RBI issues draft norms on White Label ATMs owned by non-banks
In a bid to accelerate the growth and wider spread of ATMs, the Reserve Bank today issued draft guidelines for permitting non-banking entities to set up, own and operate such money dispensing machines...............
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'RBI: The bank of the bankers'
.... In early 40’s, senior officials posts in RBI were filled up by the promotions from the existing staff and/or taking staff in deputation from the Imperial Bank of India. The final interview used to be held at central board of Directors at Calcutta. After partition officers from Karachi were asked to report to Mumbai office in 1947. When it came to women staff, there were hardly any on the Bank’s rolls on that time. The few who joined being mainly telephone operators. The first lady to be taken up for a clerical work joined in early forties and the first to be recruited directly as an officer was Miss Dharma Venkatraman who joined in March 1949. Gradually the numbers increased. According to a data women formed less than 8 per cent of the total staff in January 1968; which is around 18 per cent.......
Read.........Weighing the better inflation measure
There’s a new consumer price index on the way, but monetary policy requires various other inputs, too
When the Reserve Bank of India (RBI) unveils its monetary policy review and the finance minister tables the Union Budget 2012-13 in Parliament next month, they would have one more set of inflation numbers to base their policies on. For the first time, India would come out with consumer price index (CPI)-based inflation data from February 21.............
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The inevitability of rate cuts
…..RBI has quite correctly said that its ability to cut rates is dependent on the ability of the government to cut its deficit. In other words, monetary policy can be more loose if fiscal policy is tighter. That suggests that the first cut will come only after the budget is presented in mid-March. .........
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A price balm for the economy
......One cannot rule out inflation returning, which then explains the RBI's obvious reluctance to ease its hard money stance. But the issue right now is about identifying the main problem confronting the Indian economy. And that perhaps is not inflation as much as the virtual drying up of investments...........
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Rate cuts a double-edged sword
.... SBI chairman is whistling in the dark just as are policymakers in New Delhi who believe that December's depressed output numbers can be handled by the simple expedient of interest rate reductions. The buck may have already been passed to Mint Road and the call for more action than cuts in CRR may reverberate increasingly in the coming days.But the RBI has probably pre-empted that sentiment. In its third quarter review it still moans the stickiness of inflation to justify its current rate policy. But its analysis of macroeconomic trends does more than just implicitly defend the status quo on interest rates.....
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RBI warns on bad loans, but says situation not alarming
.....“As we see it, the NPA problem has arisen because in the pre-crisis boom period there was an aggressive lending stance by the banks that was coupled with laxity in monitoring and proper due diligence. The NPAs have also risen because of the system-generated NPAs,”........
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Loans to commodity traders not farm credit
The Reserve Bank of India has objected to private banks classifying loans to commodity traders as part of the mandated farm credit, in a move aimed at ensuring that banks reach out to genuine farmers........
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We have not made any mistakes knowingly: V P Nandakumar
.......... The RBI has not sought a clarification from us, but it has given us a set of directions to comply with so as to rectify the matter. We have already complied with all those directions, and replied to RBI on this Monday. We will strictly comply with all the directions of RBI…………
Read..............‘Flaws in recovery policy of banks’
Mumbai:The Reserve Bank of India (RBI) has found shortcomings in the recovery policy of a few banks. In an affidavit filed in the apex court on February 10, the finance ministry stated “in certain cases the value of security indicated in the settlement proposals is much less than the value arrived at the time of advance, indicating unrealistic valuation of security either at the time of sanction of the credit limit or at the time of compromise settlements.” The SC was hearing a PIL filed by Richie Shoaib Sequeira stating that there was no strict vigil by the finance ministry and RBI while writing off loans and onetime settlements. According to the plea, the finance ministry has not framed rules while writing off loans, which smack of corruption. The affidavit mentioned that there were instances where a few banks did not have a separate recovery policy. “Sometimes, the net worth of the borrowers and guarantors had either declined drastically or become nil at the time of compromise indicating inadequate evaluation of the borrowers’ net worth at the time of sanction.” Although the security was available in many cases of compromise settlements, the bank had not made adequate efforts to realize the security and it did not examine the staff accountability in many cases, the affidavit said. The RBI does not have any control over the discretionary powers of the bank, the sworn statement said.
TOI
Short-term deposits offer better returns than savings bank accounts
.....Offering high interest rates on savings bank is a good ploy to acquire new customers for a bank with a low customer base, but those looking to switch banks must take into consideration the cost and hassles of leaving their existing bank for a new one........
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Tuesday, February 14, 2012
Financial awareness programme at DPS
Dimapur, February 13 (MExN): A financial awareness programme was conducted at Delhi Public School Dimapur organised by Ombudsman RBI on Monday. In his speech, the chief guest Nungtok Jamir, pro-vice chairman advised the students to see through the possibility of what they could do or be best at, before choosing a career. “To make right choices, you will need to discover what you like in your life,” he said while also urging the students to develop a curious mindset and inculcate the habit of asking questions. He encouraged the students to not give up on their dreams but “work hard or hard works.” Ombudsman RBI, Sangma enlightened the gathering on the working of the Ombudsman and also demonstrated through power-point presentation how various bank frauds were committed. He said the banking Ombudsmen in the country were appointed by the Reserve Bank of India to receive and consider complaints relating to various services rendered by the banks. He said the Ombudsmen were also empowered to levy penalty against defaulting banks. Sangma said that the Ombudsmen have a record of not keeping a complaint unresolved for more than two months. According to Sangma, 77, 000 cases were resolved in 2010 while 72,000 cases were solved in 2011. “The Ombudsmen is a prompt and inexpensive way of getting your grievances addressed,” he said. He cautioned the public against getting fooled by SMSes informing them that they have won huge amount of money. Sangma also advised bank customers to always press clear/cancel buttons on ATM keypads after using the service. Students, teachers and RBI officials attended the financial awareness programme.
The Morung Express
RBI raises bank rate to 9.5%
The Reserve Bank of India (RBI) on Monday realigned the bank rate to marginal standing facility (MSF) rate in one-time technical adjustment. The bank rate now stands at 9.5 per cent as against six per cent earlier………
Read.............. WSJ Transcript of RBI Interview
Reserve Bank of India Gov. Duvvuri Subbarao sat down with The Wall Street Journal to talk about his efforts to restart India's growth engine and to fight persistent inflation. Speaking from the 18th floor of the Reserve Bank headquarters overlooking Mumbai, Mr. Subbaro touched on a range of issues, including the RBI's efforts to stabilize the plunging rupee in late 2011, his calls for cuts to government spending, and how it was difficult to increase interest rates several times over the objection of a panel of advisors.
Follows is an edited transcript of the conversation
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RBI board meet
The Reserve Bank of India would have its board of directors meeting in Bhubaneswar on February 16, official sources said. RBI governor D Subbarao and deputy governors K C Chakrabarty, Subir Gokarn, Anand Sinha and H R Khan, among other dignitaries, are expected to participate. Subbarao is scheduled to call on chief minister Naveen Patnaik on Wednesday evening, sources added. The last RBI BoD was held in the state capital in 2005.
TOI
E-cheques: The hi-tech way to pay
London: Traditional cheques may soon be a thing of the past. In perhaps a world’s first, a team of British researchers claims to have developed an electronic cheque which offers the advantages of the traditional system but cuts down much of the processing and transport costs to the bank. The hi-tech cheque book looks and works much the same as the one used for generations. But to write on it, one needs a digital pen which has got a tiny camera attached to it to record any strokes made against millions of tiny dots printed on the surface, say the researchers. The pen sends the details to the bank of the client via a wireless link. And as the cheques and digital pen work only with the customer’s own secure computer hub, they are said to be of no use to a thief, say the researchers. Lead researcher John Vines said the tech-cheque was developed in partnership with a group of people aged over 80. “The beauty is that it’s safe and cheap electronic transaction for banks, but it’s a physical paper-based transaction for the customer,” he was quoted by the ‘Daily Mail’ as saying. The researchers have said that they would hold talks with banks. Currently, a digital pen costs 80 pounds but this is expected to fall sharply.
TOI
RBI to meet banks soon on issue of rising bad loans
NEW DELHI: Worried over rising bad loans in certain sectors, RBI today said it will discuss the issue with banks soon. "Stress sectors are well known, the issues which are there. But we don't think there is a great concern as of now," Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty said on the sidelines of an event here……
Read..............Banks grapple with illegal ATM withdrawals
There appears to be a sudden rise in instances of ATM skimming. Over the past few days, a number of bank account holders in Bangalore have complained that money was illegally withdrawn from their accounts through ATMs and several have lodged police complaints……….
Read............Regulating the regulators: A K Bhattacharya
Nominating two ministry bureaucrats on the RBI board could give credence to the government’s penchant for playing Big Brother
…..The ostensible reason for nominating two senior finance ministry bureaucrats on the RBI board is to strengthen the coordination between the central bank and the government. However, that reason does not sound very convincing. Instead, the move seems to be yet more proof of how the government functions at its own pace, making virtually no distinction between what is necessary and what is not…….
Read............... City of London official to meet top Indian bankers
......Key issues on the agenda will include the RBI's banking roadmap, infrastructure investment and the insurance and pensions sector. Mr Fraser said: “This visit comes at a critical time, not only for the City but for the global economy as a whole. India is a growing part of the global economy and benefits from the investment made by companies from London — and across the globe.......
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Subbarao Satisfied With Impact of Rupee Action
India's central bank is satisfied with the impact of the measures it took to stem the rupee's slide against the U.S. dollar towards the end of 2011, Governor Duvvuri Subbarao said Monday.
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INDIA: MFIS STEP UP SECURITISATION DEALS
….The reason why banks are chasing a few MFIs for securitisation deal is the recent Reserve Bank of India (RBI) directive narrowing the scope of priority sector lending norms governing banks. RBI recently disallowed banks from classifying loans given to non banking finance companies (NBFCs), other then MFIs, as priority sector lending. As per the RBI norms, banks are required to lend 40 per cent of their adjusted net credit to the priority sector. Direct agriculture loans should constitute 18 per cent of priority sector loans for Indian banks……
Read............Indian MFIs have deviated from idea of micro credit: Muhammad Yunus
…."They (MFIs) moved away from the idea of micro credit. That has created all the problems," said Yunus, in a media brefing in Mumbai. "MFIs based in Andhra Pradesh have drifted from their mission…..
Read............Nimbus guarantee puts 3 banks under RBI lens
The Reserve Bank of India (RBI) is probing the role of three public sector banks (PSBs) — United Bank of India (UBI), Punjab National Bank (PNB) and Indian Bank — for allegedly flouting norms in providing bank guarantees of R2,000 crore to Nimbus Communications against an intangible collateral, adding a fresh twist to the ongoing legal wrangle between the Indian cricket board and its estranged telecast partner...........
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Consumer confidence in financial situation up in Dec: RBI survey
...... RBI started conducting the quarterly survey on consumer confidence in 2010. According to it, the change in consumer confidence has the potential to affect real economic activities through the changes in business sentiments and the findings of the survey on confidence level of consumers can be of use for policy making purposes.
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Are RBI's remittance numbers telling the whole picture?
....... The RBI's data is, however, treated as sacrosanct with little outside scrutiny. If transparency is the best disinfectant, it is amazing just how little India is willing to carefully look at the sources of the $50 billion inflows that the RBI calls "remittances".
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Is RBI's victory in reversing rupee decline temporary?
The Reserve Bank of India's victory in reversing a sharp decline in the rupee may be short-lived and the currency will remain vulnerable unless the problems of a hefty fiscal and current account deficit are addressed………….
Read......... Will RBI regulation prevent a gold loan bubble?
Given the scale at which the business of lending money at usurious rates against the collateral of gold is growing, RBI now seems to be worried about the possibility of a gold loan bubble building up in the system and is contemplating tighter regulation for the sector...........
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Manappuram Fin ‘will ensure' compliance with RBI norms
....To enhance governance and better manage growth to the next level, the Board also decided to constitute an independent committee under the chairmanship of Mr Jagdish Capoor (former Deputy Governor of RBI and former Chairman of HDFC Bank). This committee will review relevant aspects of operations, systems, controls and organisational structure, including Board composition and effectiveness...............
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