Gold loan curbs are because of risk concentration: RBI

……..RBI Deputy Governor Anand Sinha said the gold loan NBFCs had expanded in a very rapid manner and that led to underlying risks. “The predominant business for these companies is gold and they are relying on just one product. So there is a lot of concentration risk. What we have tried to do is to bring about some stability through our measures and also take care of customer issues. That is why the fair practice code has also been strengthend.” Sinha said there was no concern on banks’ direct lending against gold because banks were very diversified.………….

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RBI asks banks not to levy pre-payment charges on home loans

Providing relief to home loan borrowers, the Reserve Bank of India (RBI) on Tuesday asked banks not to levy any penalty on pre-payment of loans taken on floating rate. "Though many banks have, in the recent past, voluntarily abolished the pre-payment penalties on their floating rate home loans, there is a need for ensuring uniformity across the banking system in this regard," RBI said in the annual monetary policy announcement for 2012-13.....

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'Monetary policy is a sentiment booster’

The RBI’s monetary policy for 2012-13 is a sentiment booster, according to an economist. Terming it as a positive surprise, Dr Biswa Swarup Misra, Associate Professor, Xavier Institute of Management, Bhubaneswar, told Business Line that before the policy, the expectations were that it will be a 25 basis points cut or the rates will be kept unchanged. “Now, the RBI has gone for a 50 basis points repo rate cut. If not anything, it will act as a sentiment booster,” he said...........

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‘If Calculations Go Wrong, Remedies will be Different’

RBI Governor Subbarao chats up with ET on rate cut, inflation, current account deficit, customer service and more

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A risky wager

......Central bankers as a breed are not exactly known for their gambling instincts, driven as they are by cold economic numbers in their decision-making. Yet, Reserve Bank of India Governor D. Subbarao has gambled big in deciding to drop policy rates by a larger-than-expected 0.50 percentage points in his Annual Monetary Policy Statement announced Tuesday.........

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RBI's rate cut to arrest worsening asset quality of banks

.....In a bankers' meeting in Mumbai on Tuesday, the RBI Governor said the banks' asset quality continues to be under pressure and they are keeping strict vigil. In February, the two deputy governors - CK Chakrabarty and Anand Sinha - also met close to a dozen bank chairmen to assess the NPA situation. "The banks told us they are more sensitive to the need to manage NPAs than in the past," Subbarao said on Tuesday........

Read - Business Today

RBI's repo rate cut after three years is just a token

........ "The reduction in the repo rate is based on an assessment of growth having slowed below its post-crisis trend rate which, in turn, is contributing to a moderation in core inflation," RBI said in its annual monetary policy statement. "These considerations inherently limit the space for further reduction in policy rates," RBI added...........

Read - Business Today

Credit policy: Are Government, RBI on the same page?

……..However, Governor D Subbarao's policy statement reads more like a warning letter to the government than an effort to stimulate growth. He is clearly not convinced that the government would deliver on promises that it has made on fiscal consolidation or even on supply-side infrastructure that could help curb inflation……..

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Loans to get cheaper as RBI cuts repo rate ‎

The Reserve Bank of India cut repo rates by 0.50 per cent to 8.0 per cent. Repo rate is the rate at which banks borrow money from RBI. This is a reference rate used by banks to lend to their customers like companies and individuals

RBI Monetary Policy: Here is the trailer wait for the movie to hit the screens

On most of the significant policy issues—implementation of Basle III, NBFC regulation, gold loan companies, securitisation guidelines, etc, all that we have in the policy are datelines for policies to be announced by the RBI. There is more in the offing than we have in the policy, reducing the much-awaited policy to be trailer for a movie to hit the screens............

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RBI brings cheer to common man

...........At a time when personal banking has gone mostly impersonal, thanks to the invasion of technology, the RBI has asked banks to offer a “basic savings deposit account” with certain minimum common facilities. This should be done to all customers without insisting on the need for a minimum balance. The RBI has also advised banks to initiate steps to allot unique customer identification code number to all customers. These three indeed are direct-impact initiatives and go a long way in beefing up customer confidence in the banking system...........

Read - The Hindu

We are not ruling out a rate increase - D.Subbarao

.....Textbook economics says central banks take policy decisions based on inflation expectations and not the prevailing level of inflation. You seem to be very hawkish when it comes to inflation expectations and yet you have gone for a deep rate cut. Is there a disconnect?

I don’t believe so. We have looked at inflation numbers and how much they have traversed from their highs. You must remember that we had done our last rate hike in October 2011, when headline inflation was 10% and core inflation was above 8%. We have to recognize that there has been a significant drop both in headline and core inflation numbers, and we also have said that over the last one-and-a-half years, our bias has shifted from inflation towards growth.......

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‘As a central bank, we don't micro manage'

....As a central bank, we do not micro manage. We give a policy rate signal. We increase or reduce CRR and expect banks to response. We are not telling banks that they should behave one way or the other. But it is our expectation that monetary transmission has been effective and will be effective. It may take time but it will translate into lower lending rates......

Read - The Hindu

Limits to efficacy of monetary policy

...What is required is the use of supply management policies such as investments in building suitable infrastructure, focusing on new technology to improve agricultural productivity, better water management to reduce volatility of agricultural output, and, more importantly, policy coordination between the Ministry of Finance and the RBI. ....

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RBI's annual monetary policy review: Proposals & guidelines

.... RBI says the working group chaired by Usha Thorat on regulatory framework for NBFCs to release draft guidelines by end-June, 2012. The group had submitted its report in August, 2011.

RBI says the working group chaired by B Mahapatra to study guidelines on restructuring of advances by banks and financial institutions and is expected to submit report by end-July, 2012. The group, formed in January 2012, will suggest revisions taking into account the best international practices and accounting standards……

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Central bank playing with fire

....The central bank’s other goal in changing monetary policy is to make rates “consistent with the current growth moderation”. But where is the moderation? Not in RBI’s projection. It expects growth to average 7.3% in fiscal 2013. At present (the last data point we have), growth is running at 6.1%. Moving from 6.1% in the fourth quarter of 2011 to an average of 7.3% in fiscal 2013 implies a pretty strong expansion.......

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One- time wonder or more to come?

....." The RBI was clearly itchier to cut policy rates than expected, but the 50 bp cut may have been a bit too premature and aggressive, in our view. If that turns out to be the case, it could hurt RBI's credibility while doing little to raise growth on a sustained basis," .........

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Reactions to RBI policy.........

Behind the positive surprise :A.K.Bhattacharya

 ........ If the government does not reciprocate with necessary policy initiatives to fix the fisc and remove bottlenecks in fresh investments, the monetary policy is not likely to see any further easing. Finance Minister Pranab Mukherjee could not have missed that signal, even though the RBI governor may have been a little guarded about his comments on the fiscal policy authority. Who knows, Duvvuri Subbarao may have been inspired by an old Sanskrit saying that goes like this: speak what is true, speak what is pleasant, but speak not what is unpleasant even though it might be true.

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Subbu’s subtext: Don’t believe in FM or rate cut, but what to do?

......... But the makeover is unconvincing. Reading between the lines of Tuesday’s policy statement, and the previous day’s macroeconomic review by the Reserve Bank, it seems that Governor Subbarao is unconvinced about the possibility of a genuine moderation in inflation, but has instead persuaded himself to believe that his real problem is to prevent an unwholesome crash in growth......

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RBI cutting rates to boost growth: Montek Singh Ahluwalia

........I read the RBI lowering repo rate as a balanced judgement that yes inflation is matter of concern, but the time has come to change signals ... You cannot wait until it comes down to a very low level. "Policies should be adjusted as things move and that's what I think they (RBI) have done,"...............

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RBI repo rate cut surprising: Fitch

......"The governor also announced that the draft guidelines pursuant to Usha Thorat committee report on regulatory framework for NBFCs would be issued by end June 2012 while the final guidelines on securitisation would be issued by end April, 2012……………

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RBI dons activist hat for consumer cause

...... According to sources, RBI deputy governor Chakrabarty is behind the moves to get banks to be more customer friendly. Earlier in the day, a banker defended differential rates, stating that it was similar to a situation where someone who bought a television two years ago cannot complain if current rates are lower. Chakrabarty, however, refuted this argument in the press conference, stating capital costs cannot be compared with current expenditure. "If you are running a restaurant, you don't charge more for a daily customer and less for a newcomer."............

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Upside risks to inflation, downside to growth persist: RBI

RBI Deputy Governor Subir Gokarn is worried that upside risks to inflation and downside risks to growth persist. The RBI will act proactively on the tricky issue, he said in an interview to CNBC-TV18................

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Growth moderation behind cut

.............The other instruments also have to be flexible. We cannot have a financial system where part of the system responds to RBI’s policy rates and the other is rigid. I don’t know if interest rates will come down on all these products, but I think they should come down. In fact that is one of the recommendations of the Shyamala Gopinath committee on small savings that the interest rates must be calibrated to the 10-year government security.

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Sebi in talks with RBI, Irda for common KYC norms

Aiming to ease procedural hurdles that investors face, market regulator the Securities and Exchange Board of India (Sebi) today said it was in talks with other regulators, including RBI and Irda, for common know-your-customer norms for the financial sector……

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How RBI Governor D Subbarao moved in withdrawing expansionary policies

Reserve Bank of India Governor Duvvuri Subbarao has come a full circle - probably beginning the second round of easing after taking the tightening cycle to a peak. His policy pronouncement gives little hope that he will be in a hurry to declare the beginning of a loosening cycle. ET tracks how he moved in withdrawing the expansionary policies……………..  

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Remembering R.H. Patil

.....As an economist who worked in the research department of the Reserve Bank of India before going into development banking, he also provided valuable advice to the government on how to deepen the bond market in India, an issue that still demands policy attention. Any modern economy needs an efficient financial sector to ensure that national savings are used in the most efficient enterprises. What Patil did to help improve the Indian capital market should be understood against this background..........

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Use your PAN card carefully

....Waving a PAN (Permanent Account Number) card as a form of identity, when such a document is required with a photograph, has become second nature to many of us. Keeping a laminated copy as a spare, and placing the original in safe-keeping, is the strategy adopted by many. But now, with more and more transactions requiring a copy of a PAN card, or at the very least the number, it appears that the role of this essential piece of plastic, and its consequences, are rapidly changing, in a way and manner not anticipated by the authorities........

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Man held for debit card fraud

.....In the past few months, cases of ATM thefts have increased with fraudulent persons peaking into details of ATM cards while a transaction is being swiped. The RBI has come out with repeated warnings to ensure that secrecy is maintained during ATM transactions.......

Read - Indian Express

PMO asks MCA to look into Sahara co-op society issue

........The Prime Minister’s Office (PMO) has asked the ministry of corporate affairs (MCA) to look into the matters concerning Sahara Credit Co-operative Society. The MCA, in turn, has asked the registrar of co-op societies, Lucknow, to look into the issue and take an appropriate action. The PMO’s directive comes on the back of a letter written by Mumbai-based investors’ group, Investors and Consumer Guidance Society (ICGS), last year alleging the Sahara Group was mobilising deposits without going through the regulatory rigours of any central agency. The October 2011-letter by ICGS was directed to the prime minister, along with the finance minister, minister for corporate affairs and the Reserve Bank of India (RBI) Governor.……………..

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Current account deficit threat to India's financial stability: RBI

The Reserve Bank of India has warned that India's financial stability could be impaired if the current account deficit widens to uncontrollable levels........

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Banks' balance sheets in poor health

........... The Reserve Bank of India (RBI), in its Macroeconomic and Monetary Developments report on Monday, said sharp deceleration in economic activities had resulted in poor credit offtake. And, some parameters indicated deteriorating health of banks’ balance sheets. This has made lenders seek refuge in “safer” investment avenues, resulting a “compositional” shift in banks’ asset portfolio in favour of investments in government securities.............

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Finance Minister Pranab Mukherjee to visit US to attend IMF-World Bank meeting

........... "Issues relating to setting-up of working-cum-experts group for BRICS Bank, Transfer Pricing and Tax Avoidance etc. are likely to be discussed in the BRICS meeting," a finance ministry statement said here ahead of the visit. Besides senior finance ministry officials, Mukherjee will be accompanied by Reserve Bank of India Governor D. Subbarao.................

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FIIs' asked to take RBI approval before buying Bank of Baroda shares

MUMBAI: Foreign institutional investors (FIIs) are being asked to take prior approval for buying Bank of Baroda (BoB) shares even though the current FII holding in the bank is well below the maximum permissible limit.........

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Microfinance Bill faces fresh roadblocks

.....The effort to formulate a national regulation on microfinance began in 2007 but it lapsed due to this lack of consensus. Last year, the government revised the Bill after consultations with microfinance industry officials and the Reserve Bank of India (RBI). The proposed Microfinance Institutions (Development and Regulation) Bill is expected to supersede all state-level regulations, including the controversial Andhra Pradesh Microfinance Institutions (Regulation of Money Lending) Act, 2010.
The Bill includes a provision that allows MFIs to collect small savings from SHGs known as thrift........

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A cut without conviction?

In many ways, the annual monetary policy for fiscal 2013, to be unveiled on Tuesday, will be one of the toughest for D. Subbarao since he took over as Reserve Bank of India (RBI) governor in September 2008 in the thick of a global credit crisis.....................

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Et tu, RBI

The government has attracted considerable criticism for making mistakes in the economic data it puts out and, some months ago, Reserve Bank of India Governor D Subbarao alluded to the wide variations between provisional and actual numbers that made monetary policy-making difficult. But the central bank is hardly free of the same problem. The RBI bulletin, a monthly publication, went off track by stating that the outstanding number of credit cards declined by close to 2 million in January over December. An enquiry from this paper revealed that instead of a decline, the number had actually increased by 0.07 million and the mistake was subsequently corrected on the website.

BS

Should we worry?

....RBI Governor Duvvuri Subbarao made an important point when he said, at the launch of the updated festschrift for Prime Minister Minister Manmohan Singh, the macro situation was nowhere as severe as it was in 1991, a comparison being increasingly made today in policy circles..........

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Rising rural, urban wages aiding inflation: RBI report

"The pressure on generalised inflation from sustained increase in wage costs has been one important characteristic of the recent high inflation episode. Wage increases for unskilled labourers in rural areas continue to be at a rate faster than the comparable rate of inflation," the RBI's annual macroeconomic and monetary developments report said..................

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A rate cut followed by a hike!

.....So, we fear that the April 17 rate cut may well be the last for this year. And come June-July we’ll all be talking about the next rate hike. For India to return to the high-growth and low-inflation environment of the mid-2000s, corporate investment has to revive. Monetary policy didn’t cause its demise and it isn’t its savior. The solution, alas, lies with the government..

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RBI in a tight spot on inflation: Moody's Analytics

The Reserve Bank of India will need further proof that inflation has been tamed before it can start reducing policy rates, according to Moody's Analytics. The growth side of the economy has cooled, but inflation remains elevated, leaving the RBI in a tight spot, Moody's Analytics said in a research note issued after the announcement of India's headline inflation for March. The research firm said that it had always maintained that RBI should have begun lowering rates to shore up the economy's demand side. But it is not so simple for the central bank, which raised rates aggressively in 2010 and 2011 to counter inflation, the note said...........

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RBI should support growth, cut rate: Experts

Q: What is your key takeaway as far as the macro economic report is concerned and its effect on the policy tomorrow?

Rao: The RBI has clearly articulated all the problems as they get more and more intertwined - be it on the external sector in terms of the widening current account gap, the pressure on how to fund it in terms of the capital flow adequacy. For capital flow adequacy you need corporate earnings, which are getting impacted because of input costs and interest burden. The RBI has also articulated adequately on systemic pressures in banking. The future scenario doesn't look too bright in terms of maintaining asset quality………………

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RBI has a tough unenviable job with credit policy: Nilesh Shah

Nilesh Shah of Axis Direct speaks to NDTV Profit ahead of RBI's annual credit policy announcement on Tuesday. He says that the RBI is in a tight corner as the bank had an unenviable job to do with liquidity remaining tight and inflation not easing completely. "I would not like to be in RBI's position. They have a tough job," he said.

'Monetary policy can't address all external risks'

Saying there existed limited room for the monetary policy to manage external sector risks, the Reserve Bank of India (RBI) on Monday favoured a hike in petroleum product prices and steps to curb demand for precious metals to arrest a widening current account deficit (CAD). Further reforms in policies are a must to attract more foreign direct investment (FDI) or equity in the country, the central bank said in its Macroeconomic and Monetary Developments report released ahead of its annual policy for 2012-13..............

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Deciphering RBI’s actions

........In RBI’s transition from a closed economy credit distributor to a open economy regulator—started by C. Rangarajan in 1992, strengthened by Bimal Jamal and structurally adapted by Y.V. Reddy—D. Subbarao has contributed by changing the style of monetary policy communication. There is no denying the fact that his personal style—participative, democratic and accommodative—has got reflected in the monetary policy management. Last year, setting out his agenda of reaching out, Subbarao emphasized the need of listening to and learning from the “‘wisdom of the crowds’ in reaching a monetary policy judgement”. In explaining the “known knowns” and indicating the “known unknowns”, using the informally formal channels of communications, RBI has become open about its thoughts and intentions. The formal forward guidance, even if short of a commitment, has been getting bolder. The manner in which RBI’s guidance has been worded it really amounts to an assurance...........

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Economists say rate cut not advisable now

....“The inflation figures for March do not seem to be very comforting. Personally, I feel RBI should not cut the interest rates right now. The macro-economic factors still do not favour a rate cut. The saving rate is dropping, the liquidity in the system still remains tight. Thus a rate cut will not help and the rupee will continue to depreciate,”.......

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Central bank still worried about prices

The Reserve Bank of India (RBI) on Monday cautioned that inflation in Asia’s third largest economy will remain sticky in the current fiscal and chances of any significant moderation are low, even as it expects a modest recovery in growth. On the eve of the central bank’s monetary policy announcement, which is widely expected to see the beginning of the rate-reversal cycle, the report reflected the division among economists, some of whom say inflation is still too clear and present a danger for rates to be cut.
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Banks allowed to run ads on ATM screens

...The notification reads: In exercise of the powers conferred by the Banking Regulation Act, the Central Government hereby specifies “display of financial products conforming to the regulatory framework as provided by the RBI, SEBI, IRDA and PFRDA, on the Automated Teller Machines” as a form of business in which it is lawful for a banking company to engage. Banks can bring down the cost per transaction by generating some revenue through advertisements, say bankers.......

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Banking: The urban bias

.....Despite all talks of inclusive banking of the last decade, figures available from the Reserve Bank of India suggest the opposite trend. Banking continues to be the prerogative of urban and semi-urban elite. ........

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More rejection than redressal

............The 15 banking ombudsmen in the country spend more time rejecting consumer complaints than redressing them. If you look at the annual reports of the Ombudsman Scheme in the last three years brought out by the Reserve Bank of India, you will find that 60-70 per cent of the complaints is rejected by the Ombudsmen. And this percentage is on the increase..................

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Financial exclusion is bad for banks too

....Financial inclusion is good business for banks especially if farmers use their increasingly sophisticated services and products to transact their farm produce. That is why deputy governors of the RBI have variously announced the importance of FI in the RBI's agenda for banks. As part of its platinum jubilee celebration two years ago, the Deputy Governor, Mr K.C. Chakrabarty, spoke on various occasions on television, to print media, about the RBI's three-year plan for including the excluded, for bringing banks to every Indian. Another Deputy Governor, the now retired Ms Usha Thorat, talked of using High Technology for the purpose; financial inclusion became the new currency for banks and New Delhi to trade their policymaking craft in. But all those bent on standing on the right side of FI missed the irony that more than four decades after bank nationalisation, India's formal banking system excluded far more segments than it included. Banking in India despite the pious political rhetoric was still an exclusive domain for the few......

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Usha Thorat address Indian Bank

ET

RBI likely to stop cash against pledged gold

The Reserve Bank of India (RBI) appears to be moving toward stopping gold loan companies from handing out cash as loans against pledged gold. RBI had earlier put a cap on the extent of loans that can be given against the value of pledged gold. These firms have been giving loans, sometimes worth several lakh, in cash instead of handing cheques or crediting the money to the borrower’s bank account. RBI wants to curb this practice, say analysts tracking public sector banks............

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Pre-mature capital account convertibility can harm economy: RBI

Reserve Bank of India (RBI) Governor D Subbarao has said that India will 'gradually' move towards capital account convertibility only after preconditions like fiscal consolidation are met........

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Those who stick to their dharma…

....So it is with the RBI. The Governor and his team of managers at the top know too well that they are waging a hopeless fight against inflation when they are confronted with a Government that goes about the task of governance in such a manner that renders any monetary policy initiative of the RBI, to contain inflation, utterly ineffective. .......

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Playing it safe

"...if making monetary policy is like driving a car, then the car is one that has an unreliable speedometer, a foggy windshield, and a tendency to respond unpredictably and with a delay to the accelerator or the brake,"...................

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Subbarao's dilemma

....Duvvuri Subbarao's shoes are something that not many may want to be in right now. The Reserve Bank of India (RBI) Governor is under tremendous pressure from the government to start the interest rate reduction cycle from Tuesday's policy announcement. Equal pressure, if not more, is being built up by monetary policy hawks who aver that circumstances are still not right to reverse direction on rates....

Read - The Hindu

Monetary policy dilemma : What is in store?

.......It is clear that RBI is in a catch 22 situation whether to control inflation expectations or stimulate growth. Many analysts are expecting rates to be cut in order to spur growth. However some analysts are of the opinion that the time is not ripe for a rate cut. Given this background, it would be interesting to watch the steps that RBI would take...................

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RBI's cup of many woes

Politics, said that economist-turned-astute-politician Dr Manmohan Singh, is 'the art of the possible'. Politics, yes! But central banking? On the eve of his penultimate annual monetary policy statement, as Reserve Bank of India (RBI) governor D Subbarao wrestles with the choices before him, chances are he too is veering round to the same view as his Prime Minister. Central banking, like politics, is increasingly becoming the art of the possible..........

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All eyes on Subbarao on interest rate move

HT

Meaningful upside is ruled out

...... At this stage, it is difficult to assume that even if RBI would cut the repo and reverse repo rates, interest rates in the economy would come down meaningfully, given the heavy government borrowing programme. There is certainly going to be a crowding-out effect and this would not let corporates cut their interest cost in a meaningful manner. The government has not taken any initiatives for cost reduction. The only change is the shift of focus towards revenue maximisation. However, in a slow global and domestic growth environment, taxing corporates and individuals would not give the desired results........

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See rate cut on Tuesday, but what can RBI do thereafter?

Rarely has an RBI policy been so keenly awaited by markets, the economy and citizens. For three years inflation seemed never to fall, and for the past three quarters growth appears never to rise. What are the options before the RBI, what will be the impact of its actions given the climbing current account deficit, an entrenched fiscal deficit and an unstable and slowing world economy where central bankers stand ready to flood more cash?............

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All eyes on apex bank rate signal

........“Though the hopes may be rightly placed for a cut in policy rates, entrenched liquidity deficit will make such a rate cut meaningless and may not be transmitted into the system meaningfully,’’.............

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A rate cut can wait

.... The growth-versus-inflation conundrum is likely to haunt RBI governor for sometime at least. It will be interesting to see how steadfastly he will defend his conviction.......

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Signs of RBI rate cut, cheaper home loans

.... D Subbarao, who took charge immediately after the global financial crisis in 2008 has been famous for what he describes as the `baby steps' approach. After an initial monetary stimulus following the crisis, Subbarao sought to fight inflation raising interest rates slowly and consistently by 25 basis points in every review. In December, he announced that the phase of increasing rates was over and any future move will be towards reducing interest rates.......

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Long-distance marriage not a reason for divorce: HC

MUMBAI: If a spouse is on a posting, it cannot be termed desertion and cited as a ground for divorce, the Bombay high court ruled on Friday. A division bench of judges P B Majmudar and Anoop Mohta was hearing an appeal by an income tax officer Satish Mane against a family court order rejecting his divorce plea. Satish (38) married Seema (35) on May 9, 2001, as per Buddhist rites. On June 1 that year, she left for Ahmedabad to resume duty at the Reserve Bank of India, where she was an officer……..

………On Friday, the HC bench observed that just because Seema was posted in Ahmedabad, it could not be a reason for Satish to get a divorce citing desertion. "How can it be desertion? This is an eye-opener. Employers should consider whether ladies (sic) should be transferred," said Justice Majmudar.

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Debating Manmohan's reforms legacy

............. Subbarao directly addressed fears that under Singh, India had come full circle. 2012 was not 1991, he said, although “the twin deficits are here once again”. Short-term debt was high, too; but the structure of the economy had changed fundamentally, and the financial system, he insisted, could absorb shocks. In addition, there are other reasons for optimism: the services sector dominates today, and its performance is a source of resilience; not all of the fiscal deficit is structural; and forex reserves are much larger. Subbarao also addressed external-sector liberalisation, which he viewed as the most far-reaching of Singh’s reforms.........

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Should the RBI have an 'easy' or 'tight' Monetary Policy?

.... The RBI now needs to act via a mix of policy instruments. It has to effect changes in CRR and resort to open-market operations. These changes must affect the quantum of liquidity, and policy rates such as the bank rate and repo rate to influence the price of liquidity. Also the RBI should manage its liquidity adjustment facility on a daily basis to transmit interest rate signals to the market. Given the macroeconomic environment of rising fiscal deficits, slow growth and price instability, the RBI must opt for an aggressive monetary policy to increase liquidity and reduce interest rates......

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Current downturn short-term phenomenon, says RBI Governor

....Describing the current downturn a short-term phenomenon, Reserve Bank of India Governor D. Subbarao on Saturday said Indian economy is mature enough to absorb ‘shocks’ and the country’s growth story is intact. “The structure of the economy has changed (since 1991). Our financial markets are more matured, more diverse and much deeper. They have the resilience to absorb shocks,” he said while participating at a panel discussion on India’s economic reforms and development..............

Read - The Hindu

Take money out of the system to tame inflation: Lord Paul

..........."We need to control inflation which will hurt the industry, because the only way to control is to tighten the money flow. That is the temporary measure, but you have got to take (it)...This is the only way to control inflation...take money out of the system,"...........

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RBI monetary review: Banking sector focussed on performance

Even as the Reserve Bank of India (RBI) is readying to cut the repo rate for the first time in three years in its monetary policy review next week, bankers have little to cheer when it comes to performance........

Read - Business Today

Economy facing challenges but we'll overcome them: Manmohan

....Dr. Subbarao, while expressing concern over the widening fiscal and current account deficits, asserted that the economy now (in 2012) was far more resilient than what it was in 1991. The current downturn, he noted, was a short-term phenomenon and the economy was mature enough to absorb ‘shocks' and the country's growth story was intact. “The structure of the economy has changed [since 1991]. Our financial markets are more mature, more diverse and much deeper. They have the resilience to absorb shocks,” he said.....

Read - The Hindu

RBI gold loan norms hit NBFCs

.......The RBI's recent regulations have hit the top as well as bottomline of the NBFCs. In India, gold buying is a regular process, and the attraction to the yellow metal is expected to continue..

The regulations may negatively affect the gold loan business in the short term for NBFCs but, in the long term, the overall gold loan market is set to grow as long as the demand for gold is growing in the country.

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'Microfinance Bill impediment for self-help groups'

... The Microfinance Bill in its present form may hurt the growth of the Self-Help Group (SHG) programme being run across states to bring people above the poverty line, according to Union rural development minister Jairam Ramesh. “The Bill needs to be rewritten. MFIs are not instruments for poverty alleviation,” Ramesh said in an interaction with reporters after he reviewed initiatives by NABARD in an SHG-bank link programme.......

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Approaching a banking ombudsman

....There is also a listing of the addresses and area of operation of the different BOs in the RBI Web site along with hyperlinks to mail your complaints to them. You can either click on these links and email the BO directly or fill up the online complaint form in the RBI Web site. A written complaint can also be filed. A printed form is available for the same. Note that there is no fee/charge for filing........

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Demand for coins goes up on Vishu eve

Kochi : As Vishu, the old Malayalam New Year is just two days away people are queuing up in front of the Reserve Bank of India (RBI) counter here to collect fresh coins and currency notes...........

Read - Deccan Chronicle

Banks told to allow customers to use NEFT facility

....The Reserve Bank of India has advised all banks to allow their customers to use the National Electronic Funds Transfer (NEFT) facility for repaying loans. This directive comes as the RBI has received some complaints from customers regarding non-acceptance of NEFT for credit to loan accounts, thereby causing inconvenience to them.......

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Banking channels hit by counterfeit notes

BANGALORE: Despite new security protocols adopted by the RBI and stringent measures taken by public sector banks (PSBs), counterfeit notes continue to be pushed through “banking channels” via innocent customers and hawala operators on a day-to-day basis. Many bankers say, “The volume of transactions is so huge that it is not possible to detect every fake Indian currency note (FICN) that is circulated by conduits surreptitiously either sandwiched between bulk deposits or in the ATMs.” According to RBI Annual Reports, the number of detection of FICNs has increased from 1,04,743 pieces detected in 2006 to 4,35,607 pieces in 2011. “With 90 per cent detection, it shows there is a high level of awareness among bank employees,” the report claims.....

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High court notice over proposed merger of cooperative banks

AHMEDABAD: The Gujarat high court on Friday issued notice to authorities after a PIL challenged the proposed merger of the Kalupur Commercial Co-operative Bank Ltd with Surat's Udhna Citizen Co-operative Bank Ltd. The HC sought reply from the Centre, the Reserve Bank of India, the co-operative registrar and banks' authorities within a week's time on petitioner Consumer Protection and Analytic Committee's plea……………

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Crisis hits cooperative banks in Maharashtra

….The crisis of these banks is mainly attributable to a tight stranglehold the unscrupulous politicos have long exercised over them. Additionally, the banks have seriously been damaged by a series of financial scandals. The DCCBs get money from the banks that in turn get their fund from National Bank of Agriculture and Rural Development (NABARD). As these banks play an important role in the distribution of agricultural credit, their collapse would have serious consequences.…..

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Court notice to state, RBI on cooperative bank irregularities

.... A division bench of justices Bhushan Dharmadhikari and Prasanna Varale also served notices to National Bank for Agriculture and Rural Development (NABARD), Reserve Bank of India and state cooperatives commissioner besides MSCB. Anil Kilor pleaded for petitioner Jan Manch while Bharti Dangre represented the government………….

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RBI to conduct onsite inspections on banks' overseas arms

In a bid to stem the cascading impact of global economic turmoil, the Reserve Bank of India (RBI) has decided to delve deeper into international businesses of domestic banks. The regulator has revived the process of making onsite visits to foreign branches/subsidiaries of domestic banks after more than two decades, a source from RBI told Moneycontrol.com. "In two weeks time, a core team from the department of banking supervision (DBS) at RBI will start conducting such onsite visits. It will conduct random inspections on any/all overseas branch(s) if they sniff problems in the concerned region. Currently, the focus is on Singapore and Hong Kong," said the source on condition of anonymity.…………

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Coming: a mortgage guarantee company

....The dream of banks and Home Finance Companies (HFCs) is going to be realised very soon as NHB (National Housing Bank), the regulator for HFCs, has set up a Mortgage Guarantee Company (MGC) which will be operational soon.........

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Online RTI remains far cry for NRIs

.... Department of posts had offered its e-commerce portal of department of posts at to help Indians living abroad in filing RTI applications. The matter is stuck now as Reserve Bank of India (RBI) has put a number of technical conditions, including security issues, before the service can be opened up for the consumers……

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RBI advocates implementing corporate governance code for SMEs sector

Reserve Bank of India (RBI) on Thursday said there is a need to implement a corporate governance code for SME sector. "There is a need to implement SME's corporate governance code," RBI Deputy Governor K C Chakrabarty said while speaking at the Economic Times Thought Leadership Conclave.He 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. "Adoption of corporate governance framework by SMEs in India is indispensable for taking this sector to a higher growth trajectory," he said……….

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Major strides: India opens door to more trade with Pakistan

…..…The Reserve Bank of India (RBI) and the State Bank of Pakistan (SBP) have held several rounds of talks in this regard and a very positive situation has emerged. “Both RBI and SBP are in favour of opening up of branches on both sides of the border,”……

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Banks meet RBI’s credit, deposit targets

Banks have managed to meet the credit and deposit growth targets the Reserve Bank of India (RBI) set for them in the fiscal ended 31 March. The latest data from RBI shows banks managed to achieve a credit growth of 19.3% and a deposit growth of 17.4%. RBI’s targets were 16% and 17%, respectively. RBI had lowered its credit growth forecast to 16% from 17% in its January monetary policy
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Bank deposits in the district Rs 35,202 crore

…..V Raveendran, Assistant General Manager, Reserve Bank of India, and K T Thrivikraman, District Development Officer, NABARD, reviewed the performance of banks. V R Muralidhar, District Manager, Deputy/Assistant General Managers of various banks, senior officers of various government departments and others participated……..

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"Financial regulatory structure riddled"

……………The Reserve Bank of India, for instance, is the banking regulator besides a banker to the government and also a monetary policy maker. Apart from regulatory and quasi-regulatory bodies, there are central and state government ministries involved in policy making, said secretary general D.S. Rawat. A Financial Stability and Development Council (FSDC) has recently been set up for macro-prudential supervision of the economy. Its mandate includes addressing functioning of large financial conglomerates and inter-regulatory coordination issues besides promoting financial literacy and inclusion. But the FSDC is neither a statutory body nor an oversight agency…………

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RBI Governor’s perennial dilemma: Growth Vs inflation

..... The Reserve Bank of India (RBI) is again facing a chicken and egg situation, as it has the unenviable task of deciding its priority, whether controlling inflation or propelling growth, when it announces its annual monetary policy on 17 April, 2012. The central bank has been flooded with suggestions and expectations, bordering on pressure, to cut interest rates and ease liquidity with a view to encourage growth, which has fallen below 7% during 2011-12. The macro-economic indicators, however, are giving contrary signals, indicating on the one hand continued high inflation and on the other, slower growth of industrial production. The index of industrial production (IIP) numbers of February 2012 just released shows a growth rate of 4.1%, which is much below expectations, What will the RBI do under these circumstances is being watched with keen interest......

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Pranab orders probe into ‘baffling’ IIP data

….The latest episode is seen to have cause a huge dent to the already sagging credibility of economic data in the country. Even RBI has in the past complained about the volatility in data……

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Hard decisions needed to boost economic sentiment: Rangarajan

…..Asked if he saw a case for rate cut by the Reserve Bank of India (RBI) in its credit policy to be unveiled on April 17, Rangarajan said, "It's not just a monetary policy (by RBI). 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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This is a serious handicap for policymakers: C Rangarajan

Dealing with data when he was the Reserve Bank of India governor, as the Finance Commission head and now as the chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan finds the index of industrial production numbers (IIP) for January a serious handicap…………

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70% expect RBI to cut rates on Tuesday: CNBC-TV18 poll

The dismal IIP performance has raised hopes of a rate-cut from the RBI come Tuesday. Among 70% of those polled by CNBC-TV18 expected the RBI to cut repo rates by 25 bps. A minority 15% expect a 50 bps cut. About 45% of the respondents expect a 25 bps CRR cut. But a majority 55% expect no change on the CRR front. According to C Rangarajan, chairman, PMEAC, "It's not just a monetary policy (by RBI). 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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RBI credit policy: CRR cut or rate cut?

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Subbarao, pls set more realistic inflation targets

..... If inflation does trend down sharply, the RBI will have room to cut policy rates aggressively. The RBI should not be expected to stick to its forecasts throughout the year, but forecasts should broadly be in line with policy actions rather than policy actions being driven by forecasts going wrong.

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Why expectations are high that RBI may cut rates

……… According to the RBI, reducing the key policy rates to promote investments depends on a moderation in the inflation rate and fiscal consolidation. The RBI has been following a tight monetary policy stance since the beginning of 2010, following a spike in prices of commodities. For a change this time there is widespread expectations that the central bank may cut the key policy rates to accelerate growth and investments………..

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Will the RBI change its mind?

……It is critical that the RBI should cut the repo rate and should start doing that now. For, every passing week means a loss of 21.8 billion rupees in investment, 73.6 billion rupees in GDP and 30,000 in employment. The deeper the cut, the sooner the economy will recover. But the rise in repo during inflation was in baby steps; and the fall may not be faster. At best a 25 bps is likely next week when the RBI goes in for its quarterly review. That is not enough but can at least be the beginning.……

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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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