Time not yet ripe for rate cut : K Kanagasabapathy

....The RBI will, therefore, be compelled to balance other downside factors, which may not warrant an immediate cut in policy rate. These vulnerabilities arise from an unsustainable external sector, including pressure on the rupee, high inflation expectations, and serious fiscal imbalance, combined with some of the adverse banking indicators........

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Independent DMO likely to manage govt's borrowing: Sources

.........the government’s point of view is that there is a conflict of interest in the inherent responsibility of the RBI as the monetary authority and as a debt management body as well, since it would be biased towards a low interest cost regime. Hence the government says that debt management should be a separate independent and autonomous body, which now has been envisioned in this bill and the DMO is likely to be an independent body.............

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RBI to issue Rs 20 and Rs 50 notes with rupee symbol

MUMBAI: he Reserve Bank will soon issue Rs 20 and 50 notes with the rupee symbol. "The Reserve Bank of India will shortly issue of Rs 20 and Rs 50 denomination Banknotes without inset letter and with (Rupee) symbol...bearing the signature of D Subbarao, Governor, RBI," the central bank said in a statement. The design of these notes to be issued now is similar in all respects to the banknotes in Mahatma Gandhi Series 2005 issued earlier, except for rupee symbol, RBI added. The Indian rupee got an unique symbol, a blend of the Devanagri 'Ra' and Roman 'R', in 2010, joining currencies like the US dollar, euro, British pound and Japanese yen in having a distinct identity.

http://economictimes.indiatimes.com//articleshow/12639875.cms

Gold management needs a makeover - M G Warrier, Former General Manager, RBI

.....Establishment of ‘Gold Corporations' with state participation could also be debated. Such an institution can act as a depository where the gold possession of individuals now in bank lockers and the pledged gold can find a safe shelter, provided the purity can be ensured, and the ‘Corporation' can find the resources and skill to deal in gold and retain the customers' confidence.

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Financial inclusion and literacy should go hand-in-hand

With less than half of India’s 1.2 billion-strong population having access to organized financial services, the urgency in implementing financial inclusion activities begs no second-thoughts. However, the push of financial inclusion activities (increasing availability of financial services infrastructure) alone is not enough to bring more people under the fold. Financial literacy programmes need to go hand-in-hand with financial inclusion initiatives to create the pull for accessing formal channels of finance. Further, these programmes need to be tailored to take into account the demographic profile and regional differences of the target population for a stronger impact......

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R.H. Patil, founder of NSE, dies at 74

....Apart from NSE, Patil was instrumental in setting up NSDL, National Securities Clearing Corp. Ltd, Stock Holding Corp. of India Ltd and Credit Analysis and Research Ltd. He also served as chairman of various committees of the Reserve Bank of India, including the technical advisory committee on monetary policy. Other jobs that he held included executive director of IDBI Bank, chairman of the disinvestment commission of India and chairman of UTI Asset Management Co. Pvt Ltd, apart from being a board member of several prominent Indian corporate houses.......

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Coriander’ has Aadhaar number

Nandan Nilekani, the Chairman of the Unique Identification Authority of India, (UIDAI) hopes that Aadhaar card and rural mobile telephony will bring transformation in rural India, but the cards being issued at times spot some real gaffe. Here is one case. A coriander plant in rural Andhra Pradesh received its unique identification number and of course a card for itself with the photo of a mobile phone. An Aadhaar card with number : 4991 1866 5246 was issued in the name of Mr Kothimeer (Coriander), Son of Mr Palav (Biryani), Mamidikaya Vuru (Village Raw Mango), of Jambuladinne in Anantapur district. As the card displayed the photo of a mobile phone, officials have no clue of the address where the card has to be delivered……..

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Know it all

RBI Deputy Governor Dr KC Chakrabarty was in a mood for quotes at a recent lecture on the ‘Uses and Misuses of Statistics’ at BHU on March 20. Some of the famous ones he used in his address: “The safety of science depends on the existence of men who care more for the justice of their methods than for the value of any results obtained by using them”; “All knowledge is, in the final analysis, history. All sciences are, in the abstract, mathematics and all methods of acquiring knowledge are essentially statistics”; “Measure again and again to find out the difference and difference of the difference.” And finally, “There are three kinds of lies: lies, damned lies and statistics”.

FE

Need to implement SME's corporate governance code: RBI

 …..There is a need to implement SME's corporate governance code," RBI Deputy Governor KC Chakrabarty said while speaking at the Economic Times Thought Leadership Conclave here. Chakrabarty said that in spite of various measures taken by the RBI and the government, availability of credit to Small and medium enterprises (SMEs) continues to remain a major issue in the development of the sector in the country……

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'Hard decisions needed to boost sentiment'

….“I think hard decisions are required in terms of creating proper environment for industry to grow,” he told reporters while replying to questions. Asked if he saw a case for a rate cut by the RBI in its credit policy to be unveiled on April 17, Rangarajan said, “It’s not just a monetary policy. I don’t think adjustment on interest (rate) alone will bring about the desired results. All that we really need to do is to push up the sentiment in the economy.”……..

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System-Based NPA Reporting Improves Transparency

When recently asked about the reason for spike in Non Performing Assets (NPAs) of select Indian banks, RBI's Deputy Governor Subir Gokarn attributed it to the migration of NPA calculation from manual reporting to an IT system-based approach . By bringing to the fore previously unreported NPAs the system based approach led to an increase in the overall NPA reporting…..

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Govt, RBI will take steps to revive IIP: FM

Attributing the "disappointing" industrial growth performance to tight monetary policy and global factors, finance minister Pranab Mukherjee on Thursday said that the government and RBI would take steps to revive growth. "These (IIP) figures will have bearing on monetary policy announcement scheduled for next week. The government along with RBI will take required steps to revive activity in the economy," .......

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Chambers disappointed, want a rate cut

Expressing disappointment at 4 per cent growth in manufacturing, the FICCI President, Mr R.V. Kanoria, said, “A reduction in interest rates of at least 50 basis points should be seriously considered by RBI as part of its next monetary policy.” .............

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RBI may cut policy rate by 25 bps, feels market

…….“Bond markets have discounted a 25bps rate cut in the annual policy because of poor industrial production numbers. So, markets are expecting RBI to cut rates to support growth,” said T S Srinivasan, general manager-treasury at Indian Overseas Bank. He added the uncertainty on the government being able to reign in the fiscal deficit might limit RBI’s comfort in starting the monetary easing cycle. During its mid-quarter review, RBI had said a credible plan for fiscal consolidation was essential to have lower inflation…….

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RBI may ease CRR to inject cash: Kidwai

....Reserve Bank of India (RBI) may look at further easing of CRR, which may eventually inject more money into the system, Naina Lal Kidwai, country head India and director HSBC Asia Pacific, said on Thursday. Her statement came days before the apex bank is scheduled to announce its credit policy and also at a time when the industry has been stressing more on a repo rate cut. In March this year, the RBI ......

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India's Subbarao contrasts Fed and ECB's roles during financial crisis

Reserve Bank of India (RBI) Governor Duvvuri Subbarao said on April 9 how the co-ordinated international response to the current financial crisis comes in stark contrast to the un-co-ordinated actions during the Great Depression of the 1920s and 1930s, when the "animosities of the inter-war period prevented a co-ordinated policy response". But Subbarao added during the opening address of the Fourth PR Brahmananda Memorial Lecture in Mumbai, that ..........

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RBI may consider easing forex trading curbs: Deputy governor

…….The Reserve Bank of India will consider gradually relaxing curbs on intra-day position limits in the forex market that were imposed in December to curb speculative bets on the rupee, a deputy governor said. The central bank will consider such measures "within the overarching prerequisite of facilitating genuine hedging needs of the customers," H.R. Khan said in a speech at a foreign exchange dealers' conference in Zurich, which was put up on the RBI website on Wednesday………

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RBI holds meet on currency management

PATNA: The 13th high-power meeting of the Standing Committee on Currency Management (SCCM) for Jharkhand state, falling under the jurisdiction of RBI Patna issue circle, was held on Monday here to discuss issues relating to currency management, including implementation of clean note policy, customer services, availability and retail distribution of notes and coins, detection-impounding-reporting of fake Indian currency notes and movement of treasure. Regional director, Bihar and Jharkhand, Mohit Kumar Singh chaired the meeting. The meeting was attended by SP, CID (EOW) S Tabrez, senior officers from the department of posts, controlling heads/senior officers from major banks in Jharkhand and officers from the issue department, RBI, Patna. SCCM is the apex forum in the state set up to bring together commercial banks and other government agencies on a common platform to discuss and sort out issues/challenges in areas of currency management, keeping in view the broad policy framework and customer satisfaction.

TOI

Obituary

M. SOMASUNDARAM, Aged 82 Retd Staff Officer Grade-B RBI, expired on 10-4-2012 at his residence in Ayanavaram.  9884027739/9840837739

The Hindu

Business correspondents serving other banks' customers will help expand financial inclusion

.....Technological compatibility is another issue. The RBI says that the technology available with the bank, which has appointed the BC, should support carrying out such operations with other banks. The RBI had mandated that transactions and authentications should be carried out online on a core banking software platform.......

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Moderation in FDI flow worries Reserve Bank

....The Reserve Bank of India (RBI) is concerned over a significant moderation in the flow of foreign direct investment (FDI) into the country in 2010-11. This moderation in FDI flow must be read in the context of other emerging market economies in Asia and Latin America receiving large FDI inflows.

According a study by the apex bank, the moderation in investment flows in India despite a faster recovery from the crisis period “appears somewhat inexplicable”......

Read - The Hindu

Low-cost bank branches under lens

TELLER TALES

* Performance parameters like opening of new accounts, deposits and advances and loan recovery would be examined

* Move to ensure financial inclusion drive is not restricted to meeting branch opening targets

* Customers at low-cost branches are to be serviced by banking correspondents, doing cash transactions where the population lives

* In 2006, banks were first allowed to adopt the BC model for delivery of services in unbanked and under-banked areas

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Mahesh Bank to expand operations in west

..... “We have already obtained approval from the Reserve Bank of India (RBI) to expand our area of operation to the entire states of Maharashtra, Rajasthan and Gujarat. We will be opening a branch each at Surat in Gujarat and Bhilwara in Rajasthan and two in the twin cities of Hyderabad and Secunderabad this year,”........

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CRR: A monetary policy or liquidity tool?

........ Following the CRR cut in January, and then in February, yields on the 10-year benchmark government bonds eased on the hope that interest rates have peaked and a rate cut is around the corner. RBI, however, disappointed the street by holding the rates during the mid-quarter review in March and sounded a hawkish note. The RBI's March statement, along with the high government borrowing numbers announced during the Budget, hardened bond yields. However, there is also a view that CRR should not be seen as either of the tools.

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RBI monetary review: Banking sector focussed on performance

.....Recently, a Reserve Bank of India (RBI) committee under former Union Bank chairman M.V. Nair had proposed that half of all agricultural credit should go to small and marginal farmers. The discussion with bankers will be based on a report prepared by the National Bank for Agriculture and Rural Development (Nabard) and RBI’s College of Agricultural Banking. Nabard officials were not immediately available for comment. Nabard and the RBI wing reviewed the existing credit delivery mechanism to farmers and suggested ways to improve the credit cover.......

Read - Business Today

What to expect from RBI on April 17?

.... A combination of economic woes and monetary tightening through tight liquidity and high cost of liquidity has killed investor sentiment and consumer confidence; both considered critical for economic development. The downtrend in growth momentum is sharp (into 6%) against a very ambitious FY13 target of 7.6% while inflation is expected to stay below 7% with support from consolidation in crude oil price and rupee. It is high time for RBI to shift into pro-growth monetary stance; considered critical at this stage to address economic woes relating to growth and fiscal deficit.........

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RBI unlikely to cut rates on April 17

... The banking system’s loan-deposit ratio has hit an all-time high of 78.1 per cent, with deposit growth still remaining below loan growth. Finally the sequential and year on year headline core inflation still remained too elevated to try to revive aggregate demand so soon. The inflation was not in the comfort zone which RBI would like it to be….....

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RBI's hard choice

...... This might be too hopeful, given that the RBI has consistently said that action from the government is needed to give it the space to cut rates. The government’s abdication of fiscal responsibility cannot have any other outcome but to force the RBI to zero in on controlling inflation.

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One cannot make a strong case for rate cuts: Leif Eskesen

...... I think it will be a close call for RBI next week, as one cannot make a strong case for rate cuts. There hasn’t been a substantial shift from inflation risks to growth risks since the last monetary policy meeting. Domestically, in terms of economic activity, there has been some moderation in overall growth. The inflation risks that RBI highlighted........

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Defaulters delay Prudential Bank liquidation

………Officials said Reserve Bank of India's clearance was required for revival of the bank as a society or again to start banking operations. However before that, the liquidation process has to be completed by clearing all outstanding dues. "The proposal of allowing the bank to operate as a society is being examined by the state government. But before giving permission, the amount to DICGC should be cleared," Prudential Bank liquidator and deputy registrar of the department of cooperation B Nanda Kishore told…….

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RBI implements web-based bidding for G-Sec primary auctions

.... Reserve Bank on Wednesday said it implemented its web-based online bidding in primary auctions of government securities. The module on web-based negotiated dealing system auction will allow internet-based direct participation of gilt account holders.......

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Lavasa plays infra card to get RBI leeway on debt recast

.... Now, lenders have approached the RBI, requesting to treat a part of the loan to Lavasa project as infrastructure funding. Till date, banks had categorised loans to Lavasa as exposure to commercial real estate. This, according to the central bank, is a sensitive sector. The banks' exposure to commercial real estate has higher risk weight, which means lenders have to set aside higher capital......

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Banks asked to roll out new farm loan products

.....Recently, a Reserve Bank of India (RBI) committee under former Union Bank chairman M.V. Nair had proposed that half of all agricultural credit should go to small and marginal farmers. The discussion with bankers will be based on a report prepared by the National Bank for Agriculture and Rural Development (Nabard) and RBI’s College of Agricultural Banking. Nabard officials were not immediately available for comment. Nabard and the RBI wing reviewed the existing credit delivery mechanism to farmers and suggested ways to improve the credit cover.......

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Govt plans to regulate pyramid marketing

...MLM schemes are mostly a state subject, according to CEIB. They come under RBI scrutiny if the entities running them function as non-banking financial companies, and under Sebi if listed......

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SHYAMALA GOPINATH TO HEAD ADVISORY BOARD ON FRAUDS

Former Deputy Governor of RBI Shyamala Gopinath will now head the Advisory Board on bank, commercial and financial frauds, which looks at cases relating to state-run banks and financial institutions, referred to it by the Central Bureau of Investigation and over which the Central Vigilance Commission has oversight. Gopinath is also on the board of the NSE as a director.

ET

Now, chamber of commerce for rural women entrepreneurs

After successfully running a bank and a business school for rural women entrepreneurs, Mann Deshi Bank is now all set to form its own chamber of commerce at Mhaswad in Satara district, 180 km away from Pune. It is formed coordination with Mann Deshi Foundation has formed the first Mann Deshi Chamber of Commerce for Rural Women in India (MCCRW) in partnership with 'President Clinton Foundations’ initiative - Clinton Global Initiative (CGI) based in New York, USA. MCCRW is first of its kind for rural women who have been created to provide women entrepreneurs in rural areas with mentorship, knowledge, and support through policy advocacy. The chamber of commerce will organize monthly workshops for members, and eventually provide targeted support to address each member’s specific needs. The announcement was made on Tuesday by Chetana Sinha, founder chairman, Mann Deshi Mahila Bank and CEO Rekha Kulkarni in Pune.……….

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Banking Act changes to give RBI needed flexibility

……Providing the regulator with more effective control of the industry and proposing to increase penalties to crores from thousands, the Bill will provide the RBI with more flexibility in its efforts to manage liquidity and rein in inflation via the Cash Reserve Ratio (CRR) tool. The words 'at least three per cent' is proposed to be replaced by 'such per cent'. The Bill also empowers the RBI to grant banks such exemptions from the CRR provisions as it thinks fit. The Bill also seeks to activate the significant funds that accrue in dormant accounts by aggregating into a single fund, which can be used to promote the interests of depositors…….

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RBI Outreach Programme for Financial Inclusion held at Dungarasan, Sihori, Mehsana on 31.03.2012

Smt. Nupur Mitra, CMD, Dena Bank addressing the gathering at RBI’s Outreach Programme for Financial Inclusion held at village Dungarasan, Tal. Sihori, Dist. Banaskantha on 31.03.2012. Seen on the dias are R-L Dr. K.C. Chakrabarty, Dy. Governor RBI, Shri Sudarshan Sen, Regional Director, Reserve Bank of India, Ahmedabad; Shri K. Chandrachoodan, Banking Ombudsman, Ahmedabad and Shri Vikrambhai Gambhirji Thakore, Sarpanch, Dungarasan village

APN News

Who can lead the World Bank? : Subir Roy

..... Looking back, no modern-day Indian could have filled the role better than I G Patel. After successively heading the Department of Economic Affairs, the Reserve Bank of India and the London School of Economics, he became one of a group of wise men who were repeatedly called upon to draw the contours of a better world. Manmohan Singh, whose career ran in tandem with Patel’s, would have been a formidable nominee had he been available and younger…….

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The conundrum before RBI : A.Seshan

.... Conundrum — a hard or puzzling question; Fallacy — faulty reasoning; Paradox — a seemingly contradictory statement, even if actually well-founded; and Pandora's Box — a process which once activated will generate many unmanageable problems.

The situation before the RBI as it prepares the annual review of policy is such that all the expressions defined in the previous paragraph are found to be applicable.....

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Why Subbarao could be the loneliest man in India today

..... As S.S. Tarapore, former RBI Deputy Governor, noted: “If the RBI is to pull itself out of the quagmire it would need to raise the repo rate from its present level of 8.5 percent to 9.5 percent.” Now you know why Subbarao is a lonely man. To fight the tide of overblown expectations on a rate cut, when the macro numbers are telling him to do the opposite, he will have to hold rates. He is not going to be the most popular gent around for a while.

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Is the independence of auditors in government banks being compromised?

....However, from the year 2008-2009, the government in its wisdom granted managerial autonomy to the public sector banks to appoint their statutory auditors, by directly sourcing the names of auditors from the panel maintained by Controller & Auditor General of India (CAG) and getting it approved by the RBI, which in effect is a mere formality. However, the RBI has informed the banks that though the autonomy is given to PSBs, the norms for empanelment and remuneration of auditors shall continue to be as prescribed by it. Further, RBI has advised all PSBs to frame their own policy for appointment of statutory central/branch auditors.......

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RBI seeks economists' views as inflation worries persist

The Reserve Bank of India (RBI) on Tuesday reiterated its concerns on inflation and a widening current account deficit in a meeting with economists a week before its annual monetary policy review, according to two economists who were there…….

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The only alternative to gold: inflation-indexed bonds

…..The Reserve Bank is now trying to put in place measures that will make it convenient for individuals to buy and sell gilts. However, this might take some time and might require the central bank to make sure that the public sector banks, which have built a fairly extensive branch network, use their distribution capacity to sell down government bonds without adding a steep bid-ask spread. There are also lessons to be learnt. The Reserve Bank had introduced in 1996 a network of small shops – called satellite dealers — to retail government bonds. The scheme had to be shut down in 2002 for a variety of reasons, including the fact that the market micro-structure was not evolved adequately to allow for retail participation……

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Nationalised banks to speed up processing of corporate loans

.....Until a few months back, large loan proposals could only be cleared in management committee meetings (MCMs) of the boards. “The MCM is convened only once in 20-30 days. Presence of the bank chairman and managing director, executive directors, RBI nominee director, Finance Ministry representative and two other directors is a must in the meeting......

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Court sets aside Paramount plea to quash IDBI order

.....Judge noted that Redressal Committee of IDBI had held that there was no merit in submission of petitioner and that IDBI should declare the company and its directors in RBI list of wilful defaulters, keeping in mind time frame indicated in orders of High Court.....

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Beyond interest rate cuts

.....Many a time the expectations from monetary policy get whittled down to expectations around reduction in policy rates and greater availability of liquidity. From a long-term perspective, the efficiency it injects in the financial sector in bringing down the cost of intermediation is important. A key contribution of monetary policy should be in promoting efficiency and bringing down the intermediation cost as well as spreads.......

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Banks’ business correspondents may get to sell micro-insurance

....The Reserve Bank of India (RBI) has permitted banks to use the services of intermediaries such as business facilitators and correspondents to provide banking services to expand the reach of the banking sector. BCs service 76,801 villages and 3,653 urban locations as of end-March 2011, according to RBI data......

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MFIN seeks RBI's intervention to enable MFIs to collect dues

Microfinance Institutions Network (MFIN) today sought Reserve Bank of India’s (RBI) intervention to enable micro lenders to collect their Rs 7,000-crore dues, which is stagnated since November 2010 in Andhra Pradesh. "We requested the Reserve Bank to take more direct role in the dialogue with the Andhra Pradesh government. Sidbi (Small Industries Development Bank of India) has also been doing the dialogue," MFIN President Vijay Mahajan told PTI.……..

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RBI removes `1.2 lakh cr from the banking system

.....But bankers said that the cash conditions would stabilise ahead of the RBI lean season credit policy as the government begins disbursal of plan expenditure resources to the states and return of advance tax funds into the banking system......

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Oriental Bank of Commerce cuts base rate by 10 bps

......The RBI's move in the recent months to cut the cash reserve ratio has helped OBC get as much as Rs 2,000 crore released. This money was not earning any interest when it was placed with the central bank. ......

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Credit policy important for infrastructure and banking stocks: Deven Choksey

………More than the action at this point of time the beginning of the financial year, it would be the tone of RBI which would matter a lot because if they end up suggesting that they want to bring down the rate of interest over next 4 to 6 quarters by 1% to 1.5%, then in such kind of a situation, the banking stocks particularly would find lot of favour………

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Glum external sector data worry RBI

…..According to several economists who attended the customary pre-monetary policy meeting with the Reserve Bank of India (RBI) on Tuesday, since there was no stable source of funding the gap, the regulator was concerned that if growth did not pick up, capital flows would suffer……

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Compensate bond investors at 8% for late interest credit: RBI

"........an agency bank should compensate an investor in relief/savings bonds for financial loss due to late receipt/delayed credit of interest warrants/maturity value, at a fixed rate of 8 percent per annum," RBI said in a circular……..

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Odisha opposes RBI decision to hike rate of RIDF loans

BHUBANESWAR: Strongly opposing the Reserve Bank of India's (RBI) recent decision of enhancing the rate of interest over RIDF loans by the NABARD, Odisha government today asked the Centre not to implement the new interest on loans sanctioned prior to April 2012………………

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RBI allows RRBs, cooperative banks to transfer funds online

To popularise electronic transfer of funds, the Reserve Bank today allowed regional rural banks (RRBs) and cooperative banks to participate in the centralised payment systems. With this, all the banks can now transfer funds electronically through real time gross settlement system (RTGS) and national electronic funds transfer (NEFT).……..

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More banks can join electronic payment system

In a move to popularise electronic payment system, the Reserve Bank of India (RBI), on Monday, allowed all licensed banks, including urban co-operative banks, State co-operative banks and district central cooperative banks, to transfer funds through the centralised electronic payment system as sub-members. These banks would participate in the centralised payment systems, Real Time Gross Settlement System (RTGS), and the National Electronic Funds Transfer (NEFT), through their sponsor bank, which is a direct member of this system, the RBI said in a notification to all banks.......

Read - The Hindu

‘Note’ worthy: Fake currency flooding banks

….Sources in the RBI said in a meeting of Fake Indian Currency Notes (FICN) Co-ordination Cell (FCORD), fake currency operators are using banks in West bengal’s Malda district to introduce fake notes into organised banking channels…..

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Proposed KYC depository may not be limited to banking sector

….The central know-your-customer (KYC) depository announced in the Union budget may not be limited to just the financial sector but may include others such as telecom as well. The KYC database is expected to facilitate easier customer acquisition and reduce the possibility of fake documents being used as identity proofs.……

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Ministry wants bank audit panels to get more time to vet earnings

….The audit committee is part of the bank board. At present, both the audit committee meet and the board meeting take place on the same day, because of the price-sensitive nature of the information. The bank management first presents the balance sheet to the audit committee, which then approves and gives it to the full board on the same day. The results are communicated to stock exchanges after the board approves these……..

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Dhanlaxmi Bank to grow gold loan business

......Speaking to newspersons in Mumbai on Monday, Mr Jayakumar said gold lending is a very attractive and secure business and many banks are aggressively pursuing it. The RBI is perhaps more comfortable with banks doing this business than NBFCs because banks follow the required Know Your Customer norms before giving loans.........

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Most candidates who clear bank clerical exam are from UP

......Uttar Pradesh had the highest number of successful candidates in the common written exam for clerical posts conducted last year. The Institute of Banking Personnel Selection had conducted the exam for recruitment to 19 public sector banks in four phases during November-December 2011.....

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Be wary of investment schemes that guarantee very high returns

.....The RBI and Sebi regularly issue public notices and warnings about such schemes and companies. In a July 2011 notice, the RBI observed, "Certain firms posing as MLM agencies for consumer goods and services have been mobilising large deposits from the public (with promise of high return) by opening accounts at various banks. These funds, running into crores of rupees, were being pooled at the principal accounts of the firms and eventually flowing out of the accounts for purposes appearing illegal or highly risky."..........

Read - India Today

RBI fixes Rs 50,000 cr ceiling for market stabilisation scheme

In order to absorb excess liquidity, the Reserve Bank has pegged the quantum of intervention through Market Stabilisation Scheme (MSS) at Rs 50,000 crore...........

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RBI cancels licence of Bhadran Cooperative Bank

The Reserve Bank of India (RBI) has cancelled the licence of Gujarat-based Shri Bhadran Mercantile Cooperative Bank, following deterioration in its financial condition and save the interest of depositors. The decision was taken in view of the fact that bank had ceased to be solvent, all efforts to revive it in close consultation with the government of Gujarat had failed and the depositors were being inconvenienced by continued uncertainty, RBI said in a statement……….

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Sahara co-op society not under us: RBI

….In an e-mail response to the complaint, a senior RBI official said, “It is observed that your complaint pertains to the functioning of Sahara Credit Co-operative Society Ltd., which is a co-operative credit society. We advise that Reserve Bank of India (Urban Banks Department) does not regulate and/or supervise the functioning of co-operative credit societies.”……

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Credit growth to Gujarat small units shrinks

….“There is immense uncertainty in the market. We do not know what the Reserve Bank of India (RBI) will announce in its monetary policy review later this month. Macro economic factors are hurting. All banks are concerned about an increase in non-performing assets (NPAs),”……

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Service tax: Your bills will jump. So will inflation

……..The RBI has repeatedly urged the government to get a handle on its wayward finances in the past. However, apart from an assurance of reducing the fiscal deficit to 5.1 percent by the end of the next financial year, there was no road map on how it plans to reach that mark. So, overall, high service charges, climbing inflation and lower chances of an interest rate cut. Not a great way to start the new financial year.

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RATE CUT WILL BE A CLOSE CALL

Reserve Bank of India (RBI) Governor D. Subbarao will present the first monetary policy of fiscal year (FY) 2013 next week. Interestingly, when one looks back, the first monetary policy of FY12 was a watershed event. The RBI changed its approach of gradual calibrated tightening and surprised the markets with a 50 basis points (bps) hike in rates. One bps is one hundredth of a percentage point. RBI firmly acknowledged that in the long run high inflation hurts growth because investment suffers from inflation uncertainty............

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Crisil floats new method to measure core inflation

....According to some school of economists, the core measure used by the RBI has two drawbacks: a) It is prone to volatility: it includes base metals prices, directly linked to international price movements, which are influenced by temporary shocks and b) It is less useful for gauging future demand-side pressures: it excludes processed food prices (manufactured food)......

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Markets need more information

....Until Dr Y V Reddy became its Governor, the RBI was fairly indifferent to the importance of public communication too. He, ably assisted by Rakesh Mohan, who was the economics deputy governor, completely changed the template. The RBI didn't make the transition because it loved the public. It did so because it realised how important it was to counter the rumours on which the financial markets depended in the absence of proper central bank communication. True, there is a lot that the RBI doesn't put out and there is a lot of scope to simplify the language in which it communicates during its policy reviews.....

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RBI must innovate to manage crunch

We are a week away from the Reserve Bank of India’s (RBI) annual monetary policy for fiscal 2013. Two sets of critical data—factory output for February and inflation in March—will be released before the policy, and both have a bearing on its theme. At this point, what is crystal clear is that partial devolvement of the year’s first bond auction is not a happy omen, and the Indian central bank will have a challenging year ahead grappling with tight liquidity and a record government borrowing..........

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HYC form?

Regulations are at the top of my mind now. I am not running a small business but I just completed a set of forms that the Reserve Bank of India site tells me is to prevent money laundering. As per the euphemistically called KYC or ‘know your customer' norms, I am required to provide very confidential information, including account numbers, specimen signatures, photo, contact information, copies of passport, address proof, etc. all in one form. Clearly designed by somebody who hadn't had their first cup of coffee in the morning. I am threatened that my account will be frozen if I do not comply by a certain date. I have done this once before but bank rules require it to be updated regularly. I cannot for the life of me understand why my bank cannot selectively identify large customers prone to money transfers, a more likely group for money laundering. Moreover, all this information placed on one form lends itself to leakages, stolen identity, and so on. I couldn't find any report on whether any money laundering effort been prevented since these were instituted? At least till such a review is undertaken, the RBI may be better off calling this the HYC form, to stand for Harass Your Customer.

HBL

Inflation will hurt the Common Person - S.S.Tarapore

.....Ideally, the RBI should raise the present repo rate from 8.5 per cent to 9.5 per cent, though the RBI would then face extreme hostility from all economic agents. If it cannot face this heat, the least that the RBI should do is to retain the repo rate at 8.5 per cent and it certainly should not reduce the cash reserve ratio. If the RBI signals a reduction of the repo rate on April 17, 2012, the Common Person should immediately lock in all available funds into 2- 3 year deposits.......


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Govt eases promotion rules for PSB officers

.... Human resource reforms in the state-run banks have been a major concern for the government and policymakers in the face of a high attrition. Besides lower compensation, slow promotion is also seen as a reason for high attrition. Reserve Bank of India governor D. Subbarao had said in late 2010 that there was a “good reason” to revisit the salary structure in government-owned banks to check losing talent to competitors in the private sector.........

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Matter of concern

The picture presented by the Reserve Bank of India of the country’s current account deficit (CAD) is very disquieting. CAD is the difference between the export of goods and services and the foreign exchange outgo on imports and other payments. In the last quarter of 2011, the CAD was 4.3 per cent of the GDP and from last April to Decmber, it was 4 per cent. It was 2.7 per cent in 2010-11 and is now much higher than official projections. What is worrying is that it is more than the 3 per cent figure of the foreign exchange crisis period of 1990-91……………….

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Online fraudsters pose as RBI Governor

Online fraudsters have devised a new modus operandi to dupe gullible netizens, by sending emails, purportedly from none other than the Reserve Bank of India. Going a step further, not only the names of United Nations Secretary General Ban Ki-moon and RBI Governor D Subbarao are being used in the mails, purportedly being sent as 'payment notification', released by the RBI; but going a step further, the mails also carry D Subbarao's picture adding to their 'authenticity'. In return, the 'target' is asked to furnish all his personal and financial details and deposit a sum of few thousands rupees initially to avail a bounty of thousands of US Dollars..............

Read - Indian Express

Financial nightmare starts, RBI ban likely, Rs 400 Crores in arrears

...Possibly, the Reserve Bank of India may ban the State Government from drawing funds any time after April 19 . An official source informed The Sangai Express that on March 31, the last day of the financial year 2011-12, an amount of Rs 700 crores was drawn for different purposes including payment of salaries for employees.....

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Widening current account deficit is a matter of concern, says Jalan

Expressing concern over the country's widening current account deficit (CAD), the former RBI Governor, Mr Bimal Jalan, has asked the government to take “tough decisions” to deal with the problem.........

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Fiscal policy support

This is with reference to “Fiscal indiscipline curbs RBI's options” (Business Line, April 6). Monetary policy initiatives will make sense only with implicit fiscal policy support. The Prime Minister and Finance Minister must look into three issues that have a bearing on the country's economic development. These are: Corruption and black money including balances held abroad; Forex Reserves Management. Enforcing austerity and prudence in recourse to import should not be seen as ‘controls'; Super-rich should be encouraged to be more participative in productive deployment of their resources and social security arrangements.

- M G Warrier, Thiruvananthapuram (HBL)

Rising and buzzing

.....Wide anticipations of rate cut by the Reserve Bank of India (RBI) in the April 17 policy meet amid expectation of a $1 trillion investment over the next five years are also fuelling sentiments. RBI has already pumped in Rs 80,000 crore worth of liquidity into the system through 125 basis points cut in cash reserve ratio in two tranches. The fall in interest rate is expected to help the capital-intensive sector to raise cheap loans......

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‘Our asset portfolio is robust'

.....In an interview to Oommen A. Ninan, Chairman and Managing Director of Bank of Baroda (BoB), and Chairman of Indian Banks' Association, M. D. Mallya, says he is keeping his fingers crossed on the rates decision. The state-run bank gets a quarter of its business from international operations, which are growing at about 30-35 per cent. Excerpts:-

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The carrot and the stick

…..But perhaps rather than swapping the carrot of expected policy easing for the stick, and implied rebuke, of unchanged policy rates, RBI could maximize its increasingly limited room for manoeuvre by announcing a modest 25 bps repo rate cut while highlighting that any further rate actions await both the decisive action on subsides implied by the budget’s forecasts and an assessment of their inflationary impact. The decision is clearly finely balanced. What is clear, however, is that RBI has little scope for any significant easing of policy and that the radical reshaping of the policy mix that the Indian economy desperately needs can only be driven by fiscal policy rather than the central bank.

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The hidden Ponzi scheme : A.Seshan

…..The government is planning to set up a Public Debt Management Agency on the ground that the existing arrangement results in a conflict of interest for RBI. Then, can RBI continue to engage in buybacks with a view to providing liquidity to the market to subscribe to fresh issues of securities? Would it not be defeating the purpose inherent in stripping RBI of public debt management?......

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No significant exposure to euro zone: RBI

Policy makers need to be cautious about the indirect effects of the euro zone’s sovereign debt crisis on India, though the country’s banks do not have a significant exposure to these according to the Reserve Bank of India (RBI). Speaking at a seminar yesterday, RBI Deputy Governor Anand Sinha said, “The Indian corporate sector and banks had an exposure of about $206 billion as of June 2011, according to data provided by the Bank for International Settlement (BIS). Of this total, our exposure to European banks is not significant.”…….

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NREGS: Meghalaya to pay via smart cards

....“Under the financial inclusion goal of the RBI, NREGA payments have to be made mandatory through bank accounts and not as cash payments. This is to ensure transparency and promote technology-based banking. Most areas in the Northeast are un-banked. So, we are disbursing NREGA payment through individuals representing banks who visit remote villages.......

Read - Indian Express

Regional Economy of India – Book review by P. P. RAMACHANDRAN

One of the happy developments in the field of “ economic literature” is the collaboration between the Academic Foundation and the Reserve Bank of India resulting in a series of books that throw a flood of light on banking, economics and our economy. The book under review is the latest and is edited by Deepak Mohanty, Executive Director of RBI

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RBI mela to root out coin shortage

BHUBANESWAR: Shopkeepers asking customers to buy a toffee or a matchbox instead of asking for change is a common phenomenon these days. It seems as if coins of Re 1, Rs 2, and Rs 5 have suddenly disappeared from the market. To meet the coin shortage and help traders, the Reserve Bank of India, Bhubaneswar, on Saturday organized a coin mela at the Unit-I market. "We distributed coin worth Rs 10 lakh among the traders. Our aim is to bring more coins into the market and help both traders and consumers," said Venkateswar, Deputy General Manager of RBI. He, however, denied that there is a shortage of coins. "People are not recycling the coins resulting in this artificial shortage," he said........

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Inclusive growth is key for financial deepening: Pranab

.......“Financial inclusion is close to my heart …It is a necessary condition for financial deepening, which will help us address the basic issue of growth with equity,” ........

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When banks lose your cheque...

....... keep this as a thumb rule – if you have deposited a local cheque, RBI rules say that credit should be given on the same day or utmost, the next day. For outstation cheques, the maximum timeframe for collection of cheques drawn on State capitals/major cities/other locations is 7/10/14 days respectively. So, if the amount has not reached your account within the mandated days, you can immediately approach your bank to find out what is wrong.............

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Nabard to oppose any amendment to Co-operatives Act

... "If the West Bengal government goes ahead with amending the Act without informing Nabard, then we will oppose it," National Bank for Agriculture and Rural Development (Nabard), Chief General Manager of regional office, S Padmanabhan said.......

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Saving the debt markets

......Indian investors love fixed returns and the Indian government is a prodigious borrower. Why, then, is the Indian bond market in the doldrums? This is the question analysed threadbare in a recent speech by the RBI Deputy Governor, Mr Harun R Khan, at a recent conference of money and bond market participants .....

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Panel suggests easy fund availability for MSME sector

..... According to a recent RBI directive, collateral-free loans up to Rs 10 lakh should be extended by banks to MSE sector. Greater availability of credit can contribute to the faster modernisation and expansion of these enterprises and the augmentation of their productivity and competitiveness.
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Dr Subbarao, easy money isn’t the answer. Stand firm

….Dr Subbarao, as you set your monetary policy goals later this month, think of the retirees and middle class earners who lose the value of their income and savings from easy money. It may seem like a lonely fight when you deal with the political and governing class, but there is a silent majority that appreciates sound money and stable prices…..

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Fear of higher slippages from restructured assets overdone : RBI

..... "Anecdotal evidence points to the fact that maximum 15-20 percent slippages happen in case of restructured assets. That is not bad as 80 per cent of assets remain standard," Sinha said on the sidelines of 6th International Banking and Finance Conference......

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Dynamic provisioning: What can it do to banks?

The Reserve Bank of India has put out a discussion paper on dynamic provisioning norms stating that banks should start maintaining higher provisions in good times so as to adjust for bad times................

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Slow economic growth may hurt banks' asset quality, says Pranab

...... Quoting the financial stability report of the Reserve Bank of India (RBI), Mukherjee said though there had been some deterioration in financial soundness indicators yet capital adequacy remained well above the regulatory requirements and asset quality indicators continued to compare favourably with ratios in peer countries.......

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State Bank of India Sees Lower Deposit Growth

.... . Chaudhuri expects the banking system to report 14%-15% deposit growth in the last fiscal year. Separately, central bank Deputy Governor Anand Sinha said banking system deposit growth isn't as high as envisaged. These statements come at a time when the government is scheduled to borrow a gross 5.7 trillion rupees ($111.66 billion) and a net.....

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'Subsidy to discoms must be transparent'

.....“The State budgets follow cash accounting as opposed to accrual-based accounting,'' says a study by the RBI on State finances. As such, “information on unpaid subsidies, loans extended against State government guarantees/letters of comforts as also guarantees invoked, if any, should be transparently reported by the State governments,'' the apex bank feels........

Read - The Hindu

The dollar drain

....Very clearly the capital inflow surge was forcing the central bank to buy up the surplus foreign exchange in the country, to prevent excessive appreciation of the currency, since that was eroding the competitiveness of India’s exports. The result was that the RBI was burdened with excess foreign reserves, and was therefore finding it difficult to control money supply.....

Read - The Hindu