Ben Bernanke, the great innovator

There are several central bankers one could admire, especially those who held steadfast against widespread political opposition because the measures took time to take effect. Notable in this regard is of course Paul Volcker, who slew the dragon of inflation. In India, there was C Rangarajan, who did much the same thing, and Y V Reddy who explicitly targeted asset prices when it was unfashionable, indeed heretical, to do so............

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Banks seek RBI guidelines on shifting procedure

NOIDA: Banks that have been displaced by the Supreme Court order have written to the lead district bank asking %it to forward a request to the RBI to issue standard guidelines on the shifting process. Banks have expressed %their inability to shift out by March 5, considering that some are yet to find alternate commercial locations.  Meanwhile, those banks that have opted for the Noida Authority's new land scheme may have to approach the court too seeking an extension of the March 5 deadline. Noida Authority has said that it will seal all banks operating from residential plots even if they have opted for the scheme.

TOI

Bosses take stock of policy steps

.....“This is a pre-budget FSDC meeting. The finance minister heard all the regulators. Of course the RBI has responsibility both for macro-economic management and for banking regulation. The outcome of today’s meeting will be reflected in the budget,” RBI governor D. Subbarao told reporters here. Apart from the RBI governor, the meeting was attended by Sebi chairman U.K. Sinha and PFRDA chairman Yogesh Agarwal and secretaries in the finance ministry....

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Pranab Mukherjee to skip G-20 Ministerial meeting in Mexico

NEW DELHI: Finance minister Pranab Mukherjee will skip the meeting of G-20 Ministers and governors of central banks in Mexico between February 24-26 as he is pre-occupied with his next Budget, sources said. "Finance Minister will not be attending the G-20 Ministerial," a source said, adding that RBI Governor D Subbarao will be participating in the three-day deliberations. Mexico is holding the Presidency of the G-20 this year and the Ministerial deliberations will culminate in the Summit of leaders to be held at Los Cabos later in the year.

TOI

Provide incentives for investment in financial assets to discourage gold imports: C Rangarajan

.... India's massive gold imports that are fuelling an already bloated current account deficit have drawn concern from the country's top policy advisory body. The C Rangarajan-headed prime minister's economic advisory council (PMEAC), in its review of the economy, has suggested more incentives for investments in financial assets to discourage gold purchases in the country.......

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Govt to cover exempt sectors in second phase of XBRL roll-out

.... The regulators, including the Reserve Bank of India and the Securities and Exchange Board of India, have also started implementing XBRL..........

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RBI may cut interest rate by 100 bps this year: Citi

....“Given that the RBI has said that the quantum and timing of rate cuts would be dependent on fiscal consolidation, we expect the repo rate to be cut post the Budget (due on March 16), that is, RBI’s April 17 annual policy review,”.......

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Cards to make Metro travel easy

......The cards will be issued by the bank to its customers but it is up to the bank to charge its customers for it. However the travel fare for a passenger will be the same whether he uses a Metro Card or a Combo card. In future, if Reserve Bank of India (RBI) rules permit, the card can be extended to retail etc., said sources..........

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P C George to hold 'Satyagraha' on Feb 27

KANNUR: Government Chief Whip P C George Sunday said he would organise a Satyagraha in front of Reserve Bank of India (RBI) on February 27 to protest ..............

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JNNURM, farmers’ loan waiver scheme under CAG lens

.... In the farmers' debt waiver scheme, the CAG has received banking data from RBI and has also examined the books of state-owned banks and regional rural banks. CAG has scanned the disbursement of debt waiver made by public sector banks across the country with sample field visits......

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Workshop on foreign exchange held

Interactive sessions dispel myths surrounding overseas transactions

RBI uses the workshop to familiarise the public on its niche products

Event targeted mainly at students, small-scale industries aiming at opportunities abroad

To dispel the myths and unfounded fears on foreign exchange and for motivating the public to make use of the overseas banking services, Reserve Bank of India is conducting an interactive session for all the stakeholders in Tirupati. The two-day event began at Shilparamam (Urban Haat) on Saturday morning with an exhibition by the RBI along with various lead banks in the State such as Indian Bank, State Bank of Hyderabad, State Bank of India, Andhra Bank and Syndicate Bank. As part of its financial inclusion plan, RBI is holding the event to familiarise the niche products as well as to caution the public on the pitfalls ahead. After Hyderabad, Nizamabad, Visakhapatnam and Guntur, this one at Tirupati is the fifth in the series of meetings.

Exhibition

The exhibition titled ‘Foreign exchange and you' aimed at spreading awareness on FE showcased the options available for residents and non-residents, the rules for foreign direct investment in India, overseas direct investment, external commercial borrowings etc. The event is targeted mainly at students aiming at higher education or employment abroad and small-scale industrialists with an export-oriented venture. While information will be disseminated to students on foreign university remittances, account operation procedures, NRI accounts etc., the industrialists will be explained the features of export finance, formalities for import, Letter of Credit, FEMA regulations among other things. T. Prasad, Commissioner, Municipal Corporation of Tirupati (MCT) inaugurated the event, while A.S. Rao, Regional Director of RBI, Hyderabad, interacted with the visitors and clarified their doubts on various issues. The expo will be open till 6.30 p.m. on Sunday. 

HBL

Failure of governance reason for Eurozone debt crisis: RBI

MUMBAI: The ongoing sovereign debt crisis in countries of eurozone owes its origins to governance failures, according to a senior Reserve Bank official. Speaking at a conference of Kerala Management Association at Kochi yesterday, RBI Executive Director G Padmanabhan said the 2008 global crisis and the current debt problem in eurozone suggests that merely having a strong regulatory and supervisory framework is not enough, without proper enforcement of the rules and regulations. "If we take a careful look at the present sovereign debt crisis roiling the eurozone, it should not take us too long to realise that this crisis also owes its origins to governance failures. "The only point of difference between this and the 2008 crisis is that the entities which are at the root of the present crisis are sovereign governments and not the usual suspects which are 'profit-seeking' corporations," Padmanabhan said. The text of his speech was uploaded in the central bank's website. According to Padmanabhan, there was a clear element of acquiescence on the part of core euro members to enlarge the circle of Euro zone at the cost of non-compliance with the tenets of Maastricht Treaty. "How did the crisis surface? By admission of the Greek Government that the fiscal statistics it had earlier presented may not be true and the true position could be significantly worse," he said. Padmanabhan said the European debt crisis has prompted a discussion on governance and sovereign debt. "There seems to be interplay between governance performance and the debt level. Better governed countries can afford higher levels of debt. Conversely, badly governed countries can tolerate only lower levels of debt," he said. According to him, mere financial and economic measures, in absence of reform in governance, may not be sufficient to address the problems countries like Greece face. "This is also why even after the Greek parliament passed the austerity measures as a precondition for further assistance, the market is reluctant to accept it as a watershed and displays a great deal of skepticism," he said. 

ET

Subbu sab jaanta hai: RBI chief is right to remain a hawk

…..If we take the RBI’s main role as an apolitical risk manager, Subbarao is clearly right to take a more cautious view compared to his political bosses. He has to keep the powder dry against future fiscal relapses. Subbarao did the right thing by holding off on a more chirpy policy statement. As the Kotak Mahindra ad goes: “Subbu sab jaanta hai…”

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Dr.Bimal Jalan - Emerging India - Book Review by P.P.Ramachandran

India is ruled by an ex- RBI Governor and ex- Finance Minister.The PM’s Economic Advisory Board is headed by another ex- RBI Governor. Yet the nation is teetering on the precipice of economic decline with a reduction in annual growth and burgeoning inflation. Why, with such a fund of expertise? The book under review is an attempt to solve this riddle.

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Individuals-promoted banks ‘not successful' – Usha Thorat

Mangalore, Feb. 18: Former Deputy Governor of Reserve Bank of India Ms Usha Thorat has observed that the experience of the RBI over the past 17 years has been that banks promoted by individuals, though banking professionals, either failed or merged with other banks or had muted growth. She said only those banks that had adequate experience in broad financial sector, financial resources, and trustworthy people, and strong and competent managerial support, could withstand the rigorous demands of promoting and managing a bank. Drawing the attention to the RBI's August 2010 discussion paper on licensing of new banks, Ms Thorat, who is also Director of Centre for Advanced Financial Research and Learning, said when financial sector reforms were initiated in India in the early nineties, guidelines for licensing of new banks in the private sector were issued in January 1993 and subsequently revised in January 2001. The objective was to instil greater competition in the banking system to increase productivity and efficiency. She said the revised 2001 guidelines, by and large, were still cautious in nature. Large industrial houses were not permitted to promote new banks. Under the policy, 10 new banks were set up in the private sector after the 1993 guidelines and two new banks after the 2001 revised guidelines. Out of these, seven banks have survived, of which, four have been promoted by financial institutions, she said.

HBL

Old private banks asked to step up coverage in areas of operation

 

Mangalore, Feb.18:  Old generation private sector banks, while focusing on their territories and niche business, should enhance their coverage in their areas of operations to source more customers without increasing cost and risk, according to Ms Usha Thorat, former Deputy Governor of the Reserve Bank of India and Director of the Centre for Advanced Financial Research and Learning. Speaking on the theme ‘Old private sector banks in India: Challenges and opportunities' at the 88th Founders' Day celebration of Karnataka Bank Ltd here on Saturday, she said there has been a fairly steady growth in deposits and advances for old private sector banks but their market share has gone down, especially after 2005. “This is most probably due to the aggressive actions by the new private banks to source more customers and offer a whole slew of services to them thereby increasing their value to the bank,” she said. Their strategy should be to capitalise on their strength of knowledge of the region and business to increase the outreach and coverage in their areas which have witnessed very high economic growth in the recent past. More inclusive banking will be good business while keeping concentration risk low, she said. Ms Thorat suggested that there should be a conscious efforts not to get tempted into sensitive sectors that may give higher returns - exotic products that are not very well understood and those that pose higher risk. Equally there should be conscious efforts to see that the liability base is well diversified and on a large retail deposit base, she said. An attempt should be made to move carefully into regions that show good potential for growth and where banking services are not so well developed. Being present largely in areas which have had very high growth has created an enabling environment for the old private sector banks to grow reasonably, but with falling market share. Focus on small ticket loan accounts and increasing outreach will prove to be a good strategy. “Small business can be good business” should perhaps be the slogan going forward, she added.

HBL

RBI Guv favours more rural banks

Reserve Bank of India (RBI) Governor D Subbarao, who chaired a meeting of the Central Board of Directors of the RBI here on Thursday, emphasised on opening of additional branches by the commercial banks in the rural areas; credit support to agriculture and allied sectors by the commercial banks; financing of micro, small and medium enterprises (MSMEs); licensing of District Cooperative Credit Banks (DCCBs); and SHG-Bank linkage programmes. Subbarao also reviewed the recovery climate, the progress made in the financial inclusion plan and delivery of assistance under the beneficiaries-oriented programmes through electronic benefit transfer (EBT) mechanism; the organisational aspects of Rural Self Employment Training Institutes (RSETIs) and Financial Literacy and Credit Counselling Centres (FLCCs). The meeting was attended by eight Directors Anil Kakodkar, MV Rajeev Gowda, YH Malegam, Dipankar Gupta, GM Rao, Ela Bhatt, Indira Rajaraman and Najeeb Jung. RBI Deputy Governors KC Chakrabarty, Subir Gokarn, Anand Sinha and Harun R Khan were also present. Subbarao, along with Chief Minister Naveen Patnaik, also graced the RBI Bhubaneswar region’s golden jubilee function held at the RBI Colony here. Speaking on the occasion, Subbarao said the industrialisation drive going on in Odisha is quite encouraging. He, however, stressed the need for development of the backward districts of the State. The Chief Minister urged the bankers to keep extending credits to bail out the people during this crisis time The function came under the shadow of the model code of conduct enforced in the State because of the ongoing Panchayat elections. State Election Commissioner Ajit Kumar Tripathy directed the RBI Governor over phone not to announce anything in view of the model code of conduct being in force. The RBI authorities were also asked to remove the cutouts of Prime Minister Manmohan Singh.

The Pioneer

Sacrifice growth to scale down inflation, says Governor Subbarao

Patna : Reserve Bank of India (RBI) Governor D. Subbarao has said that a bit of growth needs to be sacrificed temporarily in order to bring inflation down. "What I want to give is a message and that is that there is no way we can bring inflation down without sacrificing some growth. People talk about it in textbook economics. You have to sacrifice a bit of growth in order to bring inflation down but that scarifies needs to be short term," Subbarao told the media here on Friday. "We scarifice in the short term, so that our medium cum growth becomes more sustainable. If there is high inflation, there will uncertainty for investments, there will uncertainty for consumers and high inflation scenario in not a use of growth," he added. Subbarao further said inflation is anemic for growth. "It is true that in economic literature, there is a concept of trading of between growth onsultations but that happens below a threshold level of inflation. At below a certain level of inflation, you can trade a bit of inflation to get a high level of growth but above a threshold level of inflation, inflation is anemic at growth," said Subbarao.  "For much of 2010, for all of 2011, we had inflation in the range of 9 to 10 percent, which is way above the threshold level and we had to act very aggressively and decisively on the monetary policy side to bring inflation down," he added.  Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. 

http://news.webindia123.com/news/Articles/Business/20120218/1930064.html

Hold DLRC meetings as per convenience of MPs/MLAs: RBI

.... Citing instances of lead banks not arranging District Level Review Committee (DLRC) meetings in consultation with Members of Parliament, the RBI has directed all such lenders to fix programmes taking into convenience of local representatives and to involve them in major activities.......

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J&K Bank organizes ‘Awareness Camps’ in rajouri and Pulwama

n an effort to bring the unbanked into the fold of banking, J&K Bank yesterday organized ‘Awareness Camps’ at Village Badhoon in Rajouri and Kakapora, Pulwama.. The camps, conducted to educate people of far-off places about the importance of Financial Inclusion, were attended by a large number of people belonging to different walks of life. Speaking on the occasion, Lead District Manager (LDM) Rajouri, Arvind Kapoor briefed the gathering about the programme of Financial Inclusion initiated by Reserve Bank of India (RBI) to bring the unbanked villages under the ambit of formal banking services. He urged the people to open bank accounts and avail all the banking services and facilities available at the Bank’s Business Units or Khidmat Centers established in their vicinity to provide benefits of economic growth to everyone. He also asked people to use smart cards and urged upon them to open their accounts through the VLEs. Those present on the occasion lauded the role of Bank in empowerment of the poor. Earlier, Chaman Lal Sharma Head Business Unit Jawahar Nagar (Rajouri) welcomed the Lead District Manager Rajouri, Panchs, Sarpanches and other locals to the camp and thanked them for sparing their valuable time for the occasion. Meanwhile, the awareness camp at Kakapora was organized by the Financial Literacy and Credit Counseling Centre, Lead Bank Pulwama in collaboration with NABARD. A large number of village elders, government officials, representatives of financial institutions and VLEs participated in the programme. The workshop specially focused on RBI‘s Financial Inclusion programme. LDM Pulwama G. R Kumar briefed the audience about the benefits of banking and stressed upon the participants to be part of greater success story by opening their accounts with J&K Bank. Present on the occasion, AGM NABARD spoke at length about the Financial Inclusion programme and its importance for the general public. He asked the audience to come forward and get banking benefits through financial inclusion programme.  He made it clear that all the facilities would be made available at the door steps of the common masses with the active participation of the business correspondents and Khidmat centers in the near future. The BDO Kakapora Fayaz Ahmad also spoke on the occasion and assured financial institutions of every help in the block for their services through Panchayat Raj system. The representatives of J&K Bank, Agriculture, Animal Husbandry, KVIB, Handicrafts and other departments also participated along with Khidmat Center owners. 

http://www.jkbank.net/pressreleasetemplate.php?id=494

JK Bank disburses Rs 2100 cr to priority sector in 9 months

.... The meeting was presided over by Madhav Lal, Chief Secretary and among others attended by Commissioner/Secretary, Industries & Commerce, Umang Narula, Commissioner/Secretary Labour and Employment, Yadullah, Commissioner/Secretary, Agriculture Production Department, Navin Chowdhary, Director, Department of Financial Services, Government of India, Ministry of Finance, Sanjeev Jindal, Regional Director (for J&K) RBI K. K. Saraf, Chief General Manager, NABARD, S. C. Rabra.....

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The future of hacks

In the past few weeks, Bangalore has reportedly seen over 150 instances of money being fraudulently withdrawn from automated teller machines or ATMs. The fraudulent transactions have been carefully timed at the cusp of midnight, to bypass daily withdrawal limits. The modus operandi is otherwise unclear; footage from surveillance cameras has not been helpful. The criminals may have cloned cards by copying data off magnetic strips. They may have hacked the software that validates transactions. Or perhaps, the chips in specific ATMs have been compromised. Bangalore has a large population possessing the requisite skills. The Reserve Bank of India and the banking/financial services industry will now have to brainstorm to identify and plug the specific hole, or holes…………

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Monetary policy before Union Budget

This year will see an unprecedented inversion in the sequence of Budget and annual Credit Policy

.......However the date for RBI’s annual monetary policy is March 15 (as of this writing). Hence apart from clever economic models and analysis, the RBI will also have to exercise clairvoyance and mind-reading to be able to come up with a policy that is consistent with the fiscal stance, which will be revealed only 24 hours later. (Who knows, there may be several roll-backs of budget proposals too!)  Hence there are three possibilities: (a) monetary policy date will be postponed; (b) RBI will have secret advance insight of the Budget (dangerous! and possibly illegal); or (c) RBI will fly blind. Interesting times ahead for monetary and fiscal policy tango......

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RBI to wait for Budget proposals before rate-cut

The Reserve Bank of India has said interest rates have peaked and indicated that it would reduce them after taking into account the Budget proposals and global commodity prices….

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Slowing investment may impact GDP growth in FY12-13: RBI panel

.........“Given the fragility of the global situation and slowdown in capital flows, there was a need to remain extremely watchful insofar as the external sector was concerned,” ............

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RBI to issue Rs 10 notes with inset letter 'P'

MUMBAI: The Reserve Bank will shortly issue banknotes of Rs 10 denomination with inset letter 'P' in the Mahatma Gandhi series. "The RBI will shortly issue Rs 10 denomination banknotes with inset letter 'P', in the Mahatma Gandhi Series bearing the signature of D Subbarao, Governor, RBI, and the year of printing on the reverse of the banknote," the central bank said in a statement.  The design of these notes to be issued now would be similar in all respects to the banknotes in Mahatma Gandhi Series 2005 issued earlier.  All the banknotes of Rs 10 denomination issued by RBI earlier will continue to be legal tender, it added. 

ET

Let's bet on the economy

....No wonder, analysts Sujan Hajra and Gautam Singh at brokerage Anand Rathi expect the Reserve Bank of India (RBI), which had hiked interest rates through the last 18 months to rein in inflation, to cut rates in another six months. That will drive down borrowing costs for mortgage holders and businesses , lower the effective cost of car loans and allow banks to lend more freely. It can boost growth, which has sagged from 9% levels to below 7% now.......

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Government distorts reality on inflation

.... it is strange that the policy literature of the RBI and the Finance Ministry is silent about inflation in services, even as services accounts for nearly three-fifths of the GDP. That services sector inflation numbers are available only on a quarterly basis, does not justify their exclusion from the public documents of the RBI and Finance Ministry.......

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Pranab Mukherjee holds parleys with regulators on budget

In possibly the last in the series of pre-budget consultations ahead of the Union Budget on March 16, Finance Minister Pranab Mukherjee on Saturday had a meeting with the financial sector regulators to discuss ways and means of improving the investment climate and boosting a sagging economy.The meeting attended, among others, by Reserve Bank of India Governor D. Subbarao and SEBI (Securities and Exchange Board of India) Chairman U. K. Sinha.........

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FM holds pre-Budget talks with regulators

.."This is a pre-budget FSDC meeting. Finance Minister heard all the regulators. Of course the RBI has responsibility both for macro-economic management and for banking regulation. The outcome of today's meeting will be reflected in the Budget," Subbarao told reporters ...........

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Majority of Indian MFIs might have to close shop

.... At slightest 80% of microfinance institutions (MFIs) might have to close down in a subsequent two-three years since of tough new regulatory mandate laid down by a Reserve Bank of India (RBI) and a necessity of funds, attention executives warn……

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Outward remittances: Who gets what

According to RBI data, money sent abroad by resident Indians crossed the $1 billion mark for the first time in 2010-11. Between April and November of the current fiscal, such outward remittances stood at $628 million or around Rs 3,000 crore, down 15 per cent over a similar period in 2010-11. The dip was mainly on account of a drop in money sent for maintenance of close relatives living abroad.............

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Founders' Day of Karnataka Bank to be Celebrated on Feb 18

Mangalore : Karnataka Bank will be celebrating its 88th Founders' Day at 4.30 pm on Saturday February 18 at its head office near Mahaveera Circle here. The bank, which was established with the objective of supporting agriculturists and such other rural folks in order to bring about the development of villages, still has most of its branches in rural and semi urban areas. The bank has several loan schemes to provide loans to its rural clients at competitive rates for the convenience of agriculturists and is thus fulfilling the dreams and vision of its founding fathers, said P Jayarama Bhat, managing director of the bank. The founders' day will have a lecture by Usha Thorat, former deputy governor, Reserve Bank of India and director, Centre for Advanced Research and Learning. She will enlighten the audience about the current scenario in the international as well as Indian banking sector. Ananthakrishna, chaiman of the bank will preside. The programme will be followed by a musical concert by Sangeet Samrat Chitravina N Ravikiran. P Jayarama Bhat has invited students, customers and shareholders of the bank as well as music lovers among the general public to attend the programme. 

http://www.daijiworld.com/news/news_disp.asp?n_id=129776

Praise & tips on Montek lips

....The RBI governor prescribed the state government to switch its emphasis from traditional agriculture sector to industries and services. “You (state) cannot improve your CD ratio only through agricultural development. You must go beyond agriculture to industries and services to improve the CD ratio.”.......

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Subbarao calls for roadmap on deficit

....“Fiscal deficit is one of key drivers of inflation. It is very important that fiscal deficit has to be brought down to help control inflation. For fiscal consolidation has to be embarked upon, we need a credible commitment from the government”,......

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Bank as partner in growth - K.C.Chakrabarty

........Banks have a vital role to play in addressing several problems faced by the sector. Banks have to view themselves not just as providers of credit but as partners in the growth of these enterprises, by hand-holding first generation entrepreneurs. In financial management, MSEs do not have the size to support the competence they need. Operational skills, including accounting and finance, business planning, marketing and human resource management, etc. can often pose a challenge and necessitate support for the MSE borrowers.........

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RBI to watch Budget, other events to formulate policies

…."The inflation and interest rate cycles have peaked and have to come down and for that, the RBI will look at events like the Budget (2012-13), international crude oil prices and other variable factors to calibrate its policies," Subbarao said at the 'Global Summit on Changing Bihar'……

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Fiscal situation, a cause for concern, says RBI panel

...The level of inflation expectations, according to some members, was high and the RBI should continue to keep monetary policy tight (at the present level). It was necessary to bring down inflation significantly from the present level, even if it meant lower growth for the next few years. ..........

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RBI needs to walk the talk and release funds for banks to lend

………………..The cash crunch facing banks is for a variety of reasons, including the fact that RBI has sucked out about Rs 60,000 crore from the system by selling dollars in the market over the past four months. Simultaneously, oil prices have hardened and, therefore, oil and fertiliser importers are purchasing foreign currency in a big way in their anxiety to build up stocks. At the same time, the government continues to regularly issue bonds to keep up with its enhanced borrowing programme. As long as the cash crunch persists, there can be no hope of interest rates coming down.

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On policy actions, RBI guv goes with the minority

It seems Reserve Bank of India’s (RBI) governor D Subbarao favours the minority when it comes to monetary policy actions. Last month, Subbarao heeded the lone voice in the technical advisory committee (TAC) on monetary policy, that sought a cut of 50 basis points in the cash reserve ratio. Other members of the panel had recommended that the rates be kept unchanged, while some sought a cut of 25 basis points.........

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Policy panel voted for rate cut; Subbarao opted for status quo

.....Reserve Bank of India (RBI) Governor D Subbarao overruled the advice of a majority of external members of its Technical Advisory Committee (TAC) by keeping the repo rate steady at the monetary policy review in January............

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Online Complaints: Cyberscream

....Various regulators, such as IRDA (Insurance Regulatory and Development Authority), SEBI (Securities and Exchange Board of India), RBI (Reserve Bank of India) and the NSE (National Stock Exchange), allow you to file complaints online.......

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Pakistanis may be able to invest in India soon

.....All foreign exchange transactions in India are governed by FEMA, which came into force in 2000. This is a civil legislation and the Reserve Bank of India can make changes to allow Pakistani investments after taking approval from Finance ministry......................

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Slowing investment may impact GDP growth in FY13: RBI panel

............ RBI will put out a formal projection on India's economic growth for 2012-13 in the Annual Policy Statement in April. However, RBI's baseline scenario is that the economy will exhibit a modest recovery next year, with growth being slightly higher than during this fiscal year.……….

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Clueless, cops ask customers to be wary of ATM frauds

.....The National Payments Corporation of India, an umbrella institution under the RBI managing all ATMs in the country, has identified five ATMs as compromised in the city. Banks though are indulging in pointing as in most of the cases reported the withdrawals have been made from ATMs of banks where the affected people had no accounts.....

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Banks will continue with their schedule on setting up of ATMs

The Reserve Bank of India has draft guidelines for the setting up of White Label ATMs (WLAs). If the plan is implemented successfully then non-banking entities could set up ATM networks for the disposal of the customers.The banks, however will not withdraw from installing their ATMs. The continuous increase in the number of ATMs in the country and with that, the exponential growth in transactions is evident to the importance of ATMs. ATMs have proved to be an important factor for the banks to connect with their customers. The move from RBI of allowing WLAs has been appreciated by the banks but they are also concerned about convenience of the customers. The setting up of WLAs can lead to increase in the efficiency of the ATMs as well as it will also help in lowering of installation charges of an ATM. The Managing Director of Prizm Payment Services, Mr. Loney Antony said, "It was imperative that the RBI permit white label ATMs. It was only a matter of time. The main concern for the RBI was the regulatory framework, but with several banks outsourcing ATM management, white label ATMs are a natural extension."  

Rupee Times

Borrowing limit breather for Bengal

........On Wednesday, the Reserve Bank of India had said seven state governments had planned to raise Rs 5,600 crore through SDL auctions slated for the coming Tuesday. West Bengal was not among the seven. Today, in a revised list, Karnataka and West Bengal have joined the queue of state governments planning to raise loans through SDL……..

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New RBI home loan norms a dampener

……..…The RBI's move is an attempt to introduce an additional lever to ensure that the buyer does not overstate the realizable value of the property. This is an important metric for banks in the event that the borrower defaults. But developers say such riders will choke the industry's growth. "We are totally directionless. Does the RBI want to promote housing or kill the industry? RBI's latest move will persuade customers to defer home purchases,"……..

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Short-term rates harden amid tight liquidity

….............Liquidity has been in deficit of around Rs 1.2 lakh crore daily, despite a 50-bp (basis point) cut in the cash reserve ratio by the RBI last month. The central bank has also been infusing liquidity of about Rs 8000-10,000 crore every week via bond purchases in open market operations. However, this is being offset by higher market borrowings of Rs 12,000-14,000 crore every week by the government. Traders say the RBI’s forex intervention in the forwards market in the November-December period may also be contributing to the tightness in rupee liquidity now. According to RBI data, the central bank intervened to the tune of $1.37 billion in December and $1.6 billion in November 2011.

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Time to step up investor confidence

....What is more worrying is the composition of the fiscal deficit; it is being financed by huge borrowings that are expected to amount to Rs 5,10,000 crore this fiscal, against the budgeted Rs 4,17,128 crore. The government borrows to subsidise consumption which provides fuel for pressures from inflation and depresses investment. The RBI can reduce interest rates to prop up investments only if inflation remains under control..........

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Informal corporate rescue mechanism

.... This led to institutionalisation of informal rescue through debt restructuring via the Corporate Debt Restructuring (CDR) mechanism established by the Reserve Bank of India (RBI), in 2001. This platform was largely on the lines of the London principles and has been used quite extensively in recent times. Various Circulars have been issued by the Reserve Bank of India with regard to the CDR procedure……

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Haryana suspends giving old age pension through public sector banks

.... “We were expecting 20 lakh transactions per month, but the banks were able to do only 3 lakh transactions per month. So, we have suspended the disbursement of pension by the banks till they set up the required infrastructure,”……

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Management week celebrations to begin today

KOCHI: The management week celebrations of the Kerala Management Association (KMA) will begin on February 17. The week-long celebrations will include competitions and lectures. As part of the celebrations, KMA conducted the Young Mangers Contest on Thursday. Mayor Tony Chammany spoke on this year's theme 'Emerging Kerala' before declaring the contest open. K N Shastry, president, KMA, said management day is devoted to recognizing the importance of the profession in all spears of life. In this highly competitive scenario, expectations from managers have been increasing. Elias George, special commissioner, Industries, will deliver this year's M K K Nayar commemorative lecture. Dignitaries from different walks of life will talk on topics of contemporary relevance, and G Padmanabhan, Executive Director of RBI, will be the chief guest at the inaugural function on Friday. The celebrations will come to a close on February 23.

TOI

RBI's Board of Directors meet held at Bhubaneswar

RBI Governor D Subbarao being welcomed as he arrives for the RBI Central Board meeting in Bhubaneswar

Bhubaneswar, Feb 16 (PTI) Central Board of Directors of Reserve Bank of India (RBI) met here today to provide an overall direction to the bank's affairs in light of present economic scenario. The meeting chaired by RBI governor D Subbarao discussed the present financial situation in the country and the impact of global economy on India, RBI sources said. Among others the issue relating to the non-performing assets (NPA) with the banks was also taken up, while the question of interest rate revision was also examined in the backdrop of declining inflation, they said. RBI's central board meets at least once every quarter. Apart from holding meetings in Mumbai, Chennai, Kolkata and one in New Delhi, the rest of the meetings are held in other state capitals by rotation. Besides the governor, directors like Anil Kakodar, M V Rajeev Gowda, Y H Malegam, Dipankar Gupta, G M Rao, Ela Bhatt, Indira Rajaraman and Najeeb Jung attended the meeting here. "The governor or any of the director will not speak to media in view of the model code of conduct," RBI's Chief General Manager Alpana Killawala told reporters. The governor, according to an official release, met local bankers and Odisha government officials last evening where he discussed issues relating to opening of additional bank branches by commercial banks in rural areas, progress in financial inclusion plan and deliver of assistance under the beneficiaries oriented programmes through electronic benefit transfer (EBT) mechanism and credit support to agriculture and allied sector by the commercial banks. Besides, the governor also discussed on financing of micro, small and medium enterprises, SHG-Bank linkage programme, recovery climate and organisational aspects of rural self employment training institutes and financial literacy and credit counselling centres and licensing of district co-operative banks.

IBN Live 

RBI Governor discusses bank expansion in rural Odisha

Focus on small and medium enterprises and SHG-bank linkages

The Reserve Bank of India Governor, Dr D. Subbarao, who met the bankers and officials of the Odisha Government at Bhubaneswar on Thursday, discussed the issue of expanding banking activities in rural areas of Odisha. An RBI press release said on Thursday that the Governor discussed issues relating to opening of additional bank branches by the commercial banks in the rural areas, and also credit support to agriculture and allied sectors by the commercial banks. Progress in financial inclusion planning and delivery of assistance under the beneficiaries-oriented programmes through the electronic benefit transfer mechanism also formed part of the discussions at the meeting. Apart from this, the meeting also focussed on financing of micro, small and medium enterprises (MSMEs) in the state, and the SHG-bank linkage programme.  There was also a mention about the recovery climate in the State.  Earlier, Dr Subbarao met the Odisha Chief Minister, Mr Naveen Patnaik, and discussed issues relating to growth and development of the state. On Thursday, Dr Subbarao also chaired a meeting of the Central Board of Directors of RBI in Bhubaneswar. The Central Board meets at least once every quarter.  Apart from holding meetings in Mumbai, Chennai, Kolkata and one in New Delhi after the Union Budget, the rest of the meetings are held in other State capitals by rotation. The main function of the Central Board of Directors of RBI is to provide overall direction to the Reserve Bank's affairs, the release said. Dr Anil Kakodkar, Mr M.V. Rajeev Gowda, Mr Y.H. Malegam, Mr Dipankar Gupta, Mr G.M. Rao, Ms Ela Bhatt, Dr Indira Rajaraman and Dr Najeeb Jung (all Directors) attended the meeting. The Deputy Governors, Dr K.C. Chakrabarty, Dr Subir Gokarn, Mr Anand Sinha and Mr Harun R. Khan, were also present on the occasion.

HBL

Resurrection of the Bank rate : K Kanagasabapathy

................The Reserve Bank of India (RBI), on February 13, revised the Bank Rate by 350 basis points from 6.0-9.5 per cent, the highest one-time change in any policy rate ever. It is apparently an innocuous and technical correction, but in reality it could mean setting a new landmark for the course of monetary policy in the coming years. The announcement is on top of a series of measures rationalising the operating procedures of monetary policy, based on two path-breaking reports of the RBI Executive Director, Mr Deepak Mohanty, in the recent past. ........

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Oriental Bank of Commerce convenes its first SLBC meeting for Delhi

VITALINFO - A great step forward........

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.".......

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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...............

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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……….

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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...............

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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...................

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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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RBI among world’s best central banks,says The Economist

Mumbai: India's central bank,which was under pressure for failure to control inflation,has been the recipient of effusive praise from UK-based weekly publication,The Economist. The article also indirectly vindicates RBIs decision to go against the tide and chase multiple objectives rather than merely rein in inflation. The 169-year-old magazine (which calls itself as a newspaper) has described Reserve Bank of India (RBI) as one of the world’s best central banks and one of Indias best institutions.Relative to most Indian state bodies,the RBI has more brains,muscle and integrity.It is about the only institution in the country you never hear accused of graft. Thats a big turnaround for a body that became a politicians plaything after India nationalized its banks in 1969, the report said. The endorsement for the central bank comes at a time when it has been resisting pressure from the finance ministry to open up banking sector and grant more bank licences.The government had also not taken too kindly to RBIs 13 rate hikes,which it felt was hurting growth.RBI has also been steadfast in its stance that,in India,the central bank needs to have multiple objectives and not restrict itself to inflation targeting.Since 1995,wholesale prices have risen by an average of 6% a year,not too far from the RBIs comfort zone of about 5%.Growth has averaged 7% a year.The RBI is also in charge of the safety of the financial system,to which end it yanks more levers than Willy Wonka in a chocolate factory, the article said. 

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