India Inflation Poses Dilemma for Central Bank

...........With India looking rather stagflationary at present, the RBI faces somewhat of a dilemma -- does it ease policy further on the basis that economic growth is very weak and core inflation soft or keep rates unchanged as it worries about headline inflationary pressures?" ........................

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Voice-recognition apps: No small talk this

........Sunny Rao of Nuance Communications, the speech recognition company currently powering Apple’s Siri in the iPhone 4S, claims this is a first-of-its-kind initiative in India, where voice solutions have been adopted by the judiciary to read out judgments in courts. Rao, who is the managing director (India and South East Asia) for the firm, also adds that Nuance’s voice solutions are also being used by the Income Tax Department, RBI and NABARD...................

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Tighten the purse strings

......The Reserve Bank of India (RBI) can’t be faulted for what it did: doubling the interest rates between March 2010 and October 2011. Without a parallel reduction in government spending, growth was bound to be a casualty...............

Read - Hindustan Times

A liberalising central bank?

The Reserve Bank of India’s (RBI’s) restrictions on the operation of the Exchange Earner’s Foreign Currency Account, compelling holders to convert forex into rupees to the stipulated extent, are intended to augment the supply of foreign exchange to the market and arrest the depreciation of the rupee. The underlying forex is already with the authorised dealers and there will be no addition to the dollar supplies by the conversion. But, the RBI’s credibility as a liberalising central bank marching towards full convertibility has taken a beating.Moreover, the account holders will lose the advantage of having the best of both worlds. Their accounts were as good as having the money abroad but they fetched better interest. Think of a Resident Foreign Currency Account holder getting 0.24 per cent on savings bank account or 3.054 per cent on a one-year dollar deposit in India against about 0.05 per cent or 0.5 per cent, respectively, in the US. He could always access his dollars as easily as he would in a bank abroad. Now, the large number of non-residential Indians who have already returned home or are going to do so in the near future would prefer to keep the money on foreign shores. Exporters will delay the repatriation of the sale proceeds till the last moment.

A Seshan, Mumbai

Banks told to give farmers smart cards for easy access to credit

The Reserve Bank of India has asked commercial banks, regional rural banks and cooperative banks to give farmers smart cards/ debit cards so that they can access credit with ease................

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SBH refuses to supply five rupee coins

It is the usual norm to approach public sector banks to exchange soiled notes or even coins. But my recent experience with State Bank of Hyderabad (SBH), Ramachandrapuram (BHEL) branch has made me regret for doing business with SBH since 1973. I needed a few five rupee coins (worth Rs. 100) for my personal use and I visited SBH to request the bank officials for the same. The officials simply kept asking me to come back one day later. And since past one week, everyday I have been visiting the above bank to collect the coins. The SBH did not even bother to take action to my repeated complaints on the issue. Is five rupee coins banned by RBI and not in circulation? 

 -S. Murali Sudhakar, BHEL LIG Colony (HBL)

Unions slam RBI for coin disbursal through banks

.........Even now the facility is available at these banks but the general public still relies on RBI due to a lukewarm attitude of the commercial banks. "Even traders from nearby towns prefer to come to RBI to collect the coins or other currency," claimed Chakraborty. Mangesh Joshi, the secretary of the All India RBI Officers Association, said all the four recognized unions in the bank have joined hands over the issue. "Distributions of coins and exchange of notes has been a key function of RBI and it cannot be outsourced to other banks. The issue department which deals with it has a sizeable number of employees," .......

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Toll order: Keep 50 paise to pay for Gurgaon-Faridabad Road

....."Daily commuters travelling by car, jeep, three-wheelers need to pay Rs 22.50 for two-way journeys, which is one and a half times of the single-journey rate," an official statement said. The spokesperson added that the company had discussed the change problem with RBI, which has agreed to supply more 50 paise coins in Haryana. "Our toll plaza staff are also instructed to ensure that commuters do not face any inconvenience because of 50 paise coins," .........

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Small coin shortage: Common man loses Rs 27,000 crore a yr

One is to mint plastic tokens with security marks may be with a small metal foil type cover and also issue small currency notes with plastic lamination. The other is also to print currency notes of odd denominations like Rs 6, 7, 9, 11, 15, 19 and so forth. The problem is often with odd figures. This may solve the problem to a large extent..............

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More plaints against Ponzi operators

............."As per Thakor's complaint, he works as a building contractor. Ibrahim approached himwith a scheme offering more than 20 per cent returns. To convince him, the promoters also showed RBI certificate and their investment plans in various sectors. Thakor paid Rs 9 lakh in two installments," said PM Sarvaiya, inspector of Navrangpura police station.....................

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Indian expats hail RBI changes in bank rules

....India’s decision allowing non-resident Indians to transfer funds from non-resident ordinary (NRO) to non-resident external (NRE) account, subject to certain conditions, is seen as a “positive development” by many of its countrymen in Qatar. In a circular issued on May 7, the Reserve Bank of India (RBI) clarified that NRIs would be allowed to transfer funds from NRO to NRE account subject to a ceiling of $1mn in one financial year and payment of tax......................

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Gold import: Drag on economy

..... One shudders to think of the 1991 crisis. Although the policy- makers - both the Ministry of Finance and RBI - seem to have recognised the problem, the measures taken are inadequate. A small rise in customs duty is unlikely to reduce gold imports. What is required is a drastic step, including a quantitative ceiling on gold imports. One hopes the authorities would not take a decade to realise the seriousness of problem and take drastic measures immediately............


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A different stroke

...With the benefit of hindsight, it could now be argued that the RBI had indeed assessed the ‘coming decline' and avoided the baby-step to lower the repo rate by a surprising 50 basis points. The RBI Governor had justified the big drop on the ground that monetary transmission took a longer time when rates were cut. That the RBI wasn't entirely whole-hearted in its action came out sharply when the monetary authorities kept insisting that there was little leeway for further cuts in the absence of tangible efforts on the fiscal side. The non-alignment of steps between the two managers — monetary and fiscal — is hurting the economy. Time and again in the past, the RBI has reminded the fiscal mandarins of the need for discipline but with little result.......

Read - The Hindu

Goldman Sachs & CLSA split on RBI rate cut

...The warning was reiterated by the central bank again last week. "If you look at our inflation projections in relation to what we consider as long-term, or medium objectives, there are inflation pressures,'' said RBI deputy governor, Subir Gokarn last Tuesday. "That in a sense, limits the room that we have to reduce rates."

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Private banks upbeat on credit growth

......HDFC Bank Ltd, ICICI Bank Ltd and Axis Bank Ltd expect to disburse loans at a faster clip than the Reserve Bank of India’s (RBI) 17% credit growth target, mostly on demand from individuals, as corporate borrowers such as infrastructure and related companies may see a slowdown this financial year........

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Punjab National Bank wants to go to Pakistan in search of its roots

With trade ties between India and Pakistan beginning to normalise, state-run Punjab National Bank (PNB) plans to go tracing its roots. The nationalised lender has shown interest in opening a branch in Lahore, from where it started operations about 118 years ago. PNB has approached the Reserve Bank of India (RBI) to start operations in Pakistan as the two countries discuss ways to open their respective banking sectors to each other to facilitate trade. Presence of an Indian bank in the neighbouring country would bring down transaction cost for traders..........

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Compliance with Basel-III should be a breeze: PNB chief

Public sector lender Punjab National Bank (PNB) does not see any large pressure or problems in its transition to Basel-III, the new international standards for capital requirements of banks. This is despite India venturing into over-compliance with Basel-III with higher and more stringent requirements. The Reserve Bank of India came out with final guidelines on this on May 2.........

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Are the worst of bad loans over for banking industry?

RBI Deputy Governor Anand Sinha, State Bank of India Managing Director Diwakar Gupta and ICICI Bank Executive Director NS Kannan join CNBC-TV18’s Latha Venkatesh to discuss how banks will tackle with this double whammy of Basel III norms and rising NPAs.

Below is an edited transcript of their interview...........

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Govt lends voice to rate-cut chorus

........... “A co-ordinated action from the government and the RBI is called for ... Besides interest rate reduction, it is important that some key reforms are announced soon.”........................

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Officials fear economic meltdown in 2013

.....Although for the record, the Union Ministry of Finance is backing the Reserve Bank of India in its policy of incessantly raising interest rates, and most officials go along with their former colleague RBI Governor D. Subbarao in his restrictive credit stance, others worry that "falling growth caused by RBI policy may make several banks sick". They point out that in 2012, around Rs 200,000 cr of debt restructuring has become inevitable as a consequence of the economic slowdown and policy stasis, and that "this could double to an unsustainable Rs 400,000 cr (of corporate debt needing to be restructured) by mid-2013, if the economy continues to underperform at present rates". ..............

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Ask NRIs to increase remittances: Assocham

................"We will strongly recommend that high-level teams comprising of senior RBI officials, executive directors of banks and chairpersons and senior officials of the finance ministry do roadshows in areas such as the Middle East, South-East Asia and Europe where there is a concentration of Indian expatriates," he said. According to a survey conducted by economists and bankers, he said, remittances from NRIs had to be mobilised like never before. ........

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RBI to Defend Rupee

"To the extent that we have the power, we have the capacity, we have the instruments, and [if] the rupee is behaving in a way that suggests instability and risks of spiral, we will use those instruments,"

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Banks jittery over changes in banking correspondent model

.............Banks are nervous because the new arrangement creates a monolithic BC firm. "They might blackmail us," says the SBI banker. "And if the BC firm fails to deliver, the entire financial inclusion programme will come to a standstill." "It (monopoly) is not something that should be discussed now, because for the last six years, we have been trying out various execution models," counters Manish Khera, managing director of FINO, India's largest BC firm. "This is one more model and we feel it's not a bad way as long as it serves the purpose of financial inclusion." KC Chakrabarty, the Deputy Governor who is in charge of financial inclusion at the Reserve Bank of India, the banking regulator, says a BC firm "dictating terms" to a bank is a possibility, but it's not an immediate question for the regulator. "If the banks' businesses or consumers start suffering, we will look into this," he adds.......... 

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Banks must have Board-approved policy on loan takeovers: RBI

Banks should put in place a Board approved policy with regard to take-over of loans from another bank, according to the Reserve Bank of India. This directive follows the regulator receiving complaints that critical information on the health of the borrowal accounts (loans) being taken over is not being shared by the transferor bank with the transferee bank. This is resulting in inadequate due diligence at the time of taking over of accounts. The RBI said the policy should include norms relating to the nature of accounts being taken over, authority levels for sanction of takeover, reporting of takeover to higher authorities, and monitoring mechanism of taken over accounts.............

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RBI asks unregistered CICs not to accept public deposits

To protect depositors, the Reserve Bank on Friday asked unregistered core investment companies (CICs) to stop accepting public deposits. CICs are non-banking finance companies (NBFCs) which invest in shares for the purpose of owning a stake in a company, rather than for trading. They also do not carry out any other financial activities.........

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Dr. K C Chakrabarty poised to be new ED ADB?

As the grapevine has it, Dr. K C Chakrabarty who is one of the four Deputy Governors (DGs) of the Reserve Bank of India (RBI) is poised to be new Executive Director (ED) Asian Development Board, Manila. He is due to retire in June  2012. Tenure of present ED Ashok Lahiri is reportedly coming to an end in July.

http://whispersinthecorridors.com/index_home.html   

Going topless is govt policy: Trai chief will be next

........Reserve Bank and Sebi chairmen are supposed to get five-year tenures, but the finance ministry is happy to give them three, and then extend it by another two years. This is as if to show them who’s boss. Last year, while the RBI Governor (D Subbarao) got an extension, the Sebi chief (CB Bhave) did not despite doing a commendable job........................

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Student loans: Behave, banks tell staff

......An official with a private bank claimed that the bank does not follow the 'block' or 'ward' concept while deciding on loan applications. "We have reminded our staff to stick to this rule, which is that loans must be sanctioned based on need and not on the locality where an applicant lives. RBI rules have never stated that an educational loan should be sanctioned only by a bank branch located in the same neighbourhood as the applicant. Such an approach by a bank is not only laughable, but also ruins the career and future of the students,"....................

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Two names in circulation for DG, RBI

As the grapevine has it, names of two bankers are in circulation for the post of Deputy Governors (DGs) of the Reserve Bank of India (RBI). This slot is expected to fall vacant once Dr. K C Chakrabarty who is one of the four DGs of the RBI was posted as new Executive Director (ED) Asian Development Bank , Manila. They are: R. M. Malla Chairman and Managing Director (CMD) of IDBI Bank and K R Kamath Chairman and Managing Director (CMD) of Punjab National Bank (PNB).

http://whispersinthecorridors.com/index_home.html 

Verify IT Returns before opening businessmen A/Cs: RBI

In a bid to check frauds, the Reserve Bank on Friday asked the Urban Cooperative Banks (UCBs) to verify Income Tax returns and other documents before opening bank accounts of businessmen as part of the KYC exercise..............

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Levy uniform fee for collection of high value cheques: RBI

.......... In a relief to customers, the Reserve Bank on Friday asked the banks to fix a uniform fee for collection of cheques of over Rs 1 lakh, instead of levying it as a percentage of the value of the instrument. In another notification, the Reserve Bank asked the banks in remote areas to set up a mechanism to ensure that cheques are delivered and exchanged on the same day.............

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Electronic transactions keep cheque deals under check

Fewer Indians seem to be going the old-fashioned way of writing out a cheque, opting instead for the more convenient electronic transaction.  Data from the Reserve Bank of India (RBI) show retail banking through electronic channels accounted for almost 90 per cent of the value transacted in financial year 2011-12, a sharp increase from below 30 per cent in 2005-06, with the rest being via paper transactions — which would include cheques and demand drafts. The amount transacted through the electronic mode increased 70 per cent in 2011-12 against the previous year................

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ATMs turn mini-branches, offer all but customer care

..............ATMS have been a big innovation in the Indian banking industry with banks strengthening their distribution business and moving the crowd out of bank premises. Now ATMs are evolving into mini-branches, where besides withdrawing cash you can also pay utility bills, transfer funds, deposit cheques and cash and open a fixed deposit. In fact, it is now possible to do everything in an ATM, except of course interact with an executive. Total units in the country today stand at 90,524 ATMs and 646,228 PoS (point of sale) terminals and still counting, according to data released by RBI......................

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Why the Microfinance Bill is critical for SKS

..............The bill has gone soft on the issue of interest rates charged by the MFIs though the MFI sceptics were expecting the capping of the rates.The council will comprise members not below the rank of Executive Director of NABARD, National Housing Bank, the RBI and SIDBI. Joint secretaries from the Ministry of Finance and the Ministry of Rural Development will also be its members...............

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External sector looks vulnerable

........The RBI should go the whole hog and completely free the two accounts from control. There are NRIs who have returned to India and opened RFC accounts and transferred a part of their balances from abroad. It will be an incentive to them to bring more funds to India, if the rates are attractive. The RBI's disinclination to free the foreign currency account from rate regulation is, perhaps, the outcome of its experience in the Gulf Crisis of the 1990s. At its height, the central bank exempted non-resident deposits from cash reserve and statutory liquidity ratios and gave freedom to banks to fix the rates. There was an intense competition among banks..........

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'Yet to decide timeline for Destimoney stake sale'

.........."The Reserve Bank of India had told us that we could not continue as a dominant promoter in Destimoney, and has given us the go-ahead for a stake sale. The three-year bar on selling the stake as specified under NSE rules is the only hurdle. As such, we don't have a timeline for the sale. And, RBI too has permitted us to take our time with it; a formal exchange of letters would be enough to conclude the transaction whenever it happens,"....................

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HC vacates stay on recruitment of NU teachers

..................Asudani, working with RBI as class-I officer, pointed out that NU had issued advertisements for recruitment of lecturers three times in five years but failed to move beyond that till date.............

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Arresting decline

The Reserve Bank of India’s (RBI) latest steps to arrest the depreciation of the rupee, mainly by directing exporters and exchange earners to convert 50 per cent of their foreign currency balance into rupees, had a mild impact on the value of the rupee against the dollar. The RBI has also tried to curb speculative activity in....................

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Your money my money

..........A new era is being born with the Reserve Bank of India (RBI) putting the retail customer at the centre of a series of banking reforms. Banks will be forced to toe the line drawn by the regulator for protecting the interests of the customer. There’s more coming, once the planned banking reforms are in place, at the centre of which will be the retail customer, or rather what’s good for him. If they play their cards fairly, banks too will reap the benefits of the retail customer focus. There is optimism in the air. KC Chakrabarty, deputy governor, RBI says, “Banks are slowly getting into the groove. They are realising that without a customer base there is no business. Their products and services are irrelevant if there are no customers. Sometimes changes also come through peer pressure , it is an evolving situation and banks are also learning to assimilate global best practices. RBI is closely monitoring the situation.” See what’s in store for the retail customer........

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Spare the small players

The RBI's recent mandate wanting exporters to convert 50 per cent of forex earnings to rupees cannot be applicable across the board. While the RBI's move is to increase dollar liquidity in the market and arrest the weakening rupee, one wonders what the RBI was doing when the dollar was on the ventilator a few years back. The central bank did not take any meaningful step to allow a free rise of the rupee which could have prevented the current situation. On the contrary, it ensured that a suffocating dollar was given life support and brought back on the escalator at the cost of the rupee. Now, forcing every exporter to convert 50 per cent of dollar holdings affects the loan structuring, transaction costs and other issues concerning a small-time exporter or a not for profit entity. Such entities have dollar-denominated debts and higher import purchases than export revenue.  The RBI's bolt from the blue will affect them and force them to purchase fresh dollars at higher prices. The RBI should announce a partial rollback on its recent policy decision and allow small firms to retain 100 per cent of their dollar revenues in EEFC accounts.  Alternatively, the RBI can provide a schedule to ensure that dollars are not stacked for arbitrage purposes alone. In short, spare the small players.

S.Vaidhyasubramaniam Thanjavur (HBL)

Rupee fall: Reserve Bank of India can do little to help

.....one of the reasons for the rupee's decline is that investment inflows are thinning as investor confidence fades. Exporters benefit in such a scenario, while importers and borrowers with liability in foreign currency suffer. "Companies take view of the direction of currency movement and then decide to hedge," says RBI Deputy Governor Anand Sinha. But not all companies hedge, so the declining currency is likely to hit many bottom lines..............

Read - Business Today

Fearing inflation, RBI unlikely to cut CRR again, says Gokarn

RBI Deputy Governor Subir Gokarn said on Friday, too much liquidity is not good for the economy because it can lead to rise in inflation rate.

Gokarn said this at a CII organised function when he was asked if RBI will cut CRR (cash reserve ratio) again. At the interactive session on the topic ‘Monetary Policy Challenges in a Turbulent World’ Gokarn said, the inflation situation is still outside the comfort zone and RBI will respond to the situation by taking actions from time to time.

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Open Market Operations an option, says Gokarn

...............“What we are doing is using the interest rate tool to tighten the demand, and CRR as a liquidity solution when there is a pressure.” However, liquidity infusion is not a solution to the problems directly, and it's a matter of time “before we realise the effectiveness of these solutions,” said Dr Gokarn. ......

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Cause for concern, says Subir Gokarn

.............Addressing the media, after an interactive session organised by the Confederation of Indian Industry (CII) Southern Region here, Mr. Gokarn said the efforts to moderate inflation could have led to the slowdown in industrial growth....................

Read - The Hindu

March IIP’s a disaster, but will Subbarao budge yet?

........However, while the Reserve Bank of India had anticipated the need for aggressive action and slashed the repo rate by a deep 50 basis points in its April policy, it’s not as if RBI Governor Duvvuri Subbarao will rush to the phone to consult bankers and look at another round of rate cuts after looking at the latest IIP print. In fact, Subbarao had, even while announcing the April rate cut, given a clear indication that by its own reckoning the growth rate estimate of 7.3 percent for FY13 (2012-13) was near what should be India’s trend rate—or non-inflationary growth rate—of 7.5 percent. The RBI had made it amply clear that the headroom for further rate cuts is limited.....................

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Post offices to have ATMs: Sibal

......An application for converting post offices into banks has been made to the Reserve Bank of India (RBI). Once implemented, coverage of the banking network in the country will increase three-fold in one go, ...................

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Basel-III could trigger recession : K Kanagasabapathy

...........After continued inflationary pressures and an underperforming industrial sector, doubts are being expressed about the economy's potential growth rate. The RBI's macroeconomic review for 2011-12 acknowledged this and indicated that “recent experience suggest that the non-inflationary growth rate for India may have somewhat declined from the pre-Lehman crisis period”. The first two years of the Twelfth Plan may not see an average growth exceeding 7.5 per cent...............

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Women’s initiative banks on RBI licence

Cooperative looks to set up bank exclusively for fairer sex in region

Jammu, May 9 : An all-women cooperative bank, conceived to improve the socio-economic condition of women in the region, is set to take off here. The bank will only cater to women clients and will also be run by members of the fairer sex. Jammu Women Credit Cooperative Limited, started in 2004 and registered in 2006, inaugurated its 32nd branch in Paloura, today. The cooperative, which has over 12,000 members, has now applied for a licence from the Reserve Bank of India. While talking to The Tribune, cooperative chairperson Kailash Verma said: “The corporation is for women and our main aim is to strive for their socio-economic development in the region. We hope to get a licence for a bank soon from the RBI.” “Though we could have got a licence from the RBI last year, we never wanted a grade ‘B’ licence. We worked harder and now our membership has crossed 12,000, making us eligible for a grade ‘A’ licence,” she said. The corporation was registered as an initiative under the Self-Reliant Cooperatives Act of 1999 and had given loans worth Rs 2.20 crore against the business of Rs 4 crore in the past eight years. “Women from families living below the poverty line can open their accounts with us on a minimal deposit of Rs 50. While those from regular families can open their account by depositing Rs 100,” she added. “We have our branches across the Jammu division. There are five branches in Kathua, 20 in Jammu, three in Samba, one in Udhampur and one in Poonch. And a branch is set to open in Rajouri now. The best part is that women can avail of the loan facility at 1 per cent lower rate of interest than banks,” she said. They would soon submit a project report to the Union Ministry of Cooperatives for the provision of interest-free funds to spread their network, said Verma. The cooperative currently has a maximum loan limit of Rs 50,000, which is extended to women for various purposes, including setting up small ventures. “Once our initiative takes the shape of a cooperative bank, the future of women associated with us will be brighter because it will improve their socio-economic condition,” she added. 

Jammu Tribune

Bank of India chief may become Securities and Exchange Board of India member

Bank of India CMD Alok Misra has emerged as the front runner to be appointed member of Sebi, while Prashant Saran is in line to get a second term. Sources said a selection committee headed by cabinet secretary A K Seth is learnt to have backed Misra who is due to retire later this year. In addition, the panel has backed Saran's reappointment as member. Saran is a former chief general manager of RBI....

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RBI asks banks to share borrower's account information while transferring it with another bank

.........."The policy may include norms relating to the nature of the accounts that may be taken over, authority levels for sanction of takeover, reporting of takeover to higher authorities, monitoring mechanism of taken over accounts, credit audit of taken over accounts, examination of staff accountability especially in case of quick mortality of such cases after takeover, periodic review of taken over accounts at Board /Board Committee level, Top Management level, etc." said the RBI notification..........

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Microfinance one passes muster, RBI is overlord

.....Though it was largely agreed that a central legislation, unlike the one promulgated by the AP government, would bring the much required discipline in the microlending sector, official sources are sceptical about the actual implementation of the legislation since it is the RBI that has responsibility of the regulation. However, the bill also empowers the RBI to penalise the erring MFIs with a penalty extending up to `5 lakh..............

Story

Parliament clears MFI bill, RBI to regulate

The government of India on Thursday cleared the Microfinance Bill in Parliament. It has made the Reserve Bank of India as the regulator for all micro finance companies (MFIs). ..............

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IDBI Bank unveils state-of-the art currency chest at BKC

Govt banks to install 60,000 more ATMs

............“The banking space has seen considerable growth through ATMs, but it has been restricted principally to the urban/metro areas,” said the Reserve Bank of India in a draft report on White Label ATMs released in February................

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RBI to set up coin vending machines

GUWAHATI, May 10 – To meet the ‘growing coin scarcity’, especially those of smaller denominations, the Reserve Bank of India in association with banks operating in the State has decided to set up coin vending machines in different places of the State, including Guwahati...............

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Banks like SBI, ICICI will benefit from RBI's deposit measures: Traders

Shares in Indian banks rise after the RBI's deposit measures announced on Wednesday are seen improving cash positions in the sector. ..............

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RBI should check speculation in forex market: Basu

.............. Concerned over the volatility in Rupee, Chief Economic Advisor Kaushik Basu on Thursday made a case for RBI curbing speculative activity in foreign exchange market....................

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RBI orders exporters to cut forex kitty to halt rupee fall

In a bid to stem the slide of rupee against the dollar, the Reserve Bank of India (RBI) has put in place measures to make exporters sell half their foreign currency holdings in their account balances..........

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Basu for curbing forex market speculation

Concerned over the volatility in rupee, Chief Economic Advisor Kaushik Basu on Thursday made a case for Reserve Bank of India (RBI) curbing speculative activity in the foreign exchange market. He said the RBI intervenes in the forex market whenever there is sudden fluctuations in the rupee. "Some are natural processes. But there are also speculative moves that players make on this and those have to be watched very very carefully by the RBI," Basu said.

BS

Big rate cuts of little help

This refers to the report “Little room to cut interest rates: RBI” (May 9). The economy seems to be facing a new impossible trinity of money supply, inflation and growth. In its Monetary Policy Statement for 2012-13, the Reserve Bank of India slashed the short-term lending rate by 0.5 per cent to eight per cent. This was done with the avowed objective of boosting liquidity and growth. However, neither liquidity nor growth has improved since then. Many banks reduced both their lending and deposit rates simultaneously after the annual policy announcement. And, consequently, banks’ liquidity position worsened thanks to poor deposit growth owing to reduced deposit rates. The liquidity adjustment facility (LAF) borrowing exceeded Rs 1 lakh crore as on May 8. As for economic growth, it is a function of many variables of which adequate supply of cheaper credit to the industry is just one aspect. The other components of economic growth strategy, like fiscal reforms and the removal of supply-side bottlenecks in agriculture still remain elusive.

- G K Murthy Bangalore (BS)

Rupee rescue: Is RBI now gearing up for gold bonds?

....."There is strong talk that RBI may issue sovereign gold bonds with interest rate in the range of 7-8%," a market participant with a private sector bank told Moneycontrol.com on condition of anonymity. "Gold bonds would be issued to both resident and non-resident Indians against deposit of gold. Source (of gold) will not be questioned. Simple tax could be levied at the rate of 15%. Tenure is likely to be 10 years. Gold collected will be pledged with foreign lenders and funds will be availed at 3 to 4%. The proceeds are likely to be used in infrastructure sector." This news could not be confirmed, although a few currency dealers are endorsing the concept. A senior RBI official told Moneycontrol.com that gold bonds is one of the options. ......

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Spouses may get equal pie of payment for land acquisition

......Gender-disaggregated data on land holdings for this purpose should be collected by all leading number-crunchers including the National Sample Survey Organisation (NSSO), the agricultural census and the Reserve Bank of India (RBI) debt and investment figures, according to the committee............

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Thane co-op bank to expand to other states

.........The Reserve Bank of India has given permission to the bank to open 20 branches during the current financial year that would increase the number of its branches from 63 to 83................

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BANKERS OFF TO GERMANY TO LEARN MORE ABOUT AGRO INDUSTRIES

Indian bankers are set to have first-hand knowledge of the state of the agro industries. A team of 22 bankers is flying to Germany from Mumbai on Wednesday for an exposure to the sector. Reserve Bank of India conducts study trips every year and this time it has chosen Germany and the Netherlands to show local bankers how agro industries and food processing units operate there. As the focus is more on agro-based food processing units now, RBI wants bankers to gain some knowledge of the business from some of the best practitioners in the world. The timing of the trip in peak has caught the attention of many! 

ET

IDBI Bank unveils Currency Chest at BKC

RM Malla, Chairman and Managing Director, IDBI Bank, unveiled a Currency Chest - one of the largest in the country- at its Bandra Kurla Complex Branch today, in the presence of J B Bhoria, Regional Director, Reserve Bank of India, Mumbai............

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Verify authenticity of notes of Rs 100 & above:RBI tells banks

 In a step to check circulation of counterfeit notes, the Reserve Bank today asked all banks to ensure authenticity of notes of Rs 100 and above denomination before re-circulation. "In light of Para 127 of the Monetary Policy Statement 2012-13...banks should now re-align their cash management in such a manner so as to ensure that cash receipts in the denominations of Rs 100 and above should not be put into re-circulation without the notes being machine processed for authenticity," RBI said in a notification..................

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After ATMs, Coin Vending Machines in city soon

GUWAHATI, May 9: To meet the shortage of coins of small denominations in the city, the Reserve Bank of India (RBI) has told the banks to install coin vending machines in the city. M Hussain, branch manager of the SBI’s Currency Administration Branch, said that the SBI had already a coin vending machine in place at one of its branches in the city and had decided to install four more such machines at Vishal Mega Mart, Big Bazaar, Pantaloons and Guwahati Railway Station. Sources said that the RBI had been taking measures to ensure that adequate number of banknotes and coins are put in circulation so as to cater to the needs of people over a huge geographical area. So, in that connection, the RBI had already installed coin vending machines in other parts of the country to facilitate easy disbursement of coins to the people, added the sources.  Assam along with the rest of the country has been facing a shortage of circulating coins for the last few years. This coin shortage has been brought about by a combination of several factors. Reasons such as: once much used notes of 1, 2 and 5 rupees are no longer issued and thirdly, it is quite possible that too many people are holding on to too many coins.

The Sentilel Assam

Nagpur bench of Bombay high court asks state, RBI to act on chief secretary panel's report

The Nagpur bench of Bombay high court on Monday asked the Maharashtra government and Reserve Bank of India to say when they will act on the recommendations of the chief secretary panel on ailing cooperative banks.................

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Long View: India’s Very First Corruption Scandal

............Ostensibly, the shares were purchased by LIC to stabilize the market; in reality, they had the effect of bailing out a suspect businessman, and the puzzling order to do so seemed to have come from within the highest reaches of government. Mr. Mundhra benefited significantly; in an internal letter, A. Raman, a research officer with the Reserve Bank of India (RBI) in Calcutta, wrote in July 1957: “The truth is that Mundhra is now on a slightly firmer ground although he is far from being out of the woods.”.............

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Bank stripped of licence on promo letter

............The Urban Banks department of the Reserve Bank of India (RBI) rejected the application of ACB Ltd for a banking licence on April 30, after eight years of inquiries and legalities. The bank, founded in 1972, will not be able to retain the word 'bank' in its title and accept funds from the public as per the RBI notification which was published in newspapers on May 4...................

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RBI’s Limits

This refers to ‘RBI Role in Reining in Re Slide Limited’ (ET, May 9). The Reserve Bank of India’s role can at best be effective as a shortterm measure. But the present downslide is more due to the weak domestic fundamentals caused by uncertainty as well poor policy implementation. So, any intervention by the RBI in the currency market would only prove futile in the long term. The need of the hour is for the government to immediately implement reforms, especially in sectors like oil, coal, retail and banks, to make the domestic market attractive for retaining capital inflows.

- V SRIDHAR  (ET)

Touching 54

The RBI can at best manage the rupee's fall

.............The RBI must, however, also reckon with contingencies arising from debt-servicing obligations, and possible portfolio outflows. In end-December 2011, about $78 billion, or 23 per cent of external debt, was repayable in the next 12 months. That must be refinanced to avoid reserve depletion. Also, FII holdings in Indian debt and equity amount to over $205 billion in market value. Sustained FII selling would hurt. Worried about reserves, the RBI has deregulated overseas interest rates to encourage more forex repatriation by NRIs, whose current contributions to reserves amount to about $58 billion. It cannot do much more to boost reserves. Nor can it defend the rupee aggressively, given the numbers cited above. The risks of reserve depletion are too great.............

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Streamline senior HR rules, govt tells PSBs

Wants promotion at GM & ED levels after minimum tenure

.........The ministry has also asked banks to implement the recommendations (those accepted by the government) of the Anil Khandelwal committee on personnel practices in public sector banks.
Bankers, however, fear the ‘template’ on HR policies as proposed, similar for all banks, would curb innovation and limit their independence to decide on HR issues................

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Currency exchange crisis affects life, trade along Indo-Bhutanese border

,,,,,recently, Bank of Bhutan issued a notice asking all Indian nationals to close their bank accounts by March 15 this year and since then, it has stopped draft and TT facilities to Indians. The bank has also stopped giving Indian currency to Indians. This is causing major problems, especially for the labour class and the business community of Hatisar and Dadgiri. Due to non-availability of Indian currency in Bhutan and the ban on Bhutanese currency by the Reserve Bank of India in India, the popular market of Dadgiri is facing difficulties........

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'Indo-Iran Trade to Touch Dollar 24 Bn in Medium-Term'

......Meanwhile, the Iranian businessmen had a closed-door meeting with RBI and bank officials, apart from the Federation of Indian Exporters Organisation, in the evening. The Reserve Bank was represented by Deputy Governor H R Khan, who declined to talk to the media about the meeting...............

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NBA to engage financial cos for awareness in biodiversity

.....While the Reserve Bank of India (RBI) had issued a directive in 2007 for sustainable practices in banking sector, the Comptroller and Auditor General of India (CAG) had sent an advisory for development of an eco-audit in the country. Similarly, the Planning Commission had proposed to set up an Ecological Performance Index (EPI) during 12th plan period. Referring to the matter, RBI Executive Director Vijay Bhaskar said awarenss should be created among all stakeholders towards the financial importance of biodiversity. On whether funding of biodiversity projects will come under priority sector lending, Bhaskar said the central bank would look into the matter....................

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India needs separate micro-credit regulator: Rahman

......“Bangladesh is the only country in the world, which has a formal regulatory authority, micro credit regulatory authority (MRA). We have kept it separate from the Central Bank, unlike RBI. RBI initially distanced itself from micro-credit but now they are taking it on their own shoulder, I don’t know why. They (RBI) should have created another micro credit regulatory authority,” he said, adding that it was not enough to have lots of micro finance institutions (MFI) for financial inclusion, it is also important to have a proper regulatory framework.............

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Parliamentary panel for better coordination to check money laundering

Concerned over possible flow of tainted money in capital markets, a Parliamentary committee today suggested setting up of monitoring and coordination mechanism by all regulatory and intelligence agencies including RBI, SEBI and Enforcement Directorate to deal with the menace of money laundering
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Chamber plea to RBI

Kochi, May 9:  The Kerala Chamber of Commerce and Industry has urged RBI to ensure that reductions in repo rates are passed on by commercial banks to customers. Mr K.N. Marzook, chairman, Kerala Chamber of Commerce and Industry, in a representation submitted to the RBI Governor, said that majority of the commercial banks have not passed on the 0.5 per cent reduction in repo rate to customers. The banks are still charging interest on the higher rate on loans taken for business purposes, home loans and vehicle loans, he said. He also pointed out that most of the banks are still demanding and collecting pre-payment penalty charges from customers even though it was abolished by RBI.

HBL

High interest rates keep on haunting India Inc

High interest rates continue to eat into the profitability of Indian companies. Of the 26 Nifty companies, which have announced working results for the March 2012 quarter, 20 of them have seen interest charges rise...........

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Banks offering higher rates on savings deposits see inflows jump

The momentum in inflows into savings bank deposits has sustained for the second quarter running for banks that raised interest rates. The inlows into smaller banks have spiked after the Reserve Bank of India deregulated the savings bank rate in October 2011.............

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Case studies

....."The caller asked me if I had made a transaction of $39 using my credit card. When I said no, he explained that as per Reserve Bank of India guidelines, I have to send a request to the bank's customer care to cancel the transaction," said Grewal. The caller, Grewal said, told her that he was transferring her call to the customer care section. A few seconds later, a woman came on the phone line and asked her to share her personal as well as credit card details. "I fell in their trap and shared the details.............

Case studies - Hindustan Times

Set up joint co-ordination mechanism to monitor fund flows in stock market: Panel

.....The Standing Committee on Finance has recommended that the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) may set up a co-ordination mechanism to monitor funds flow in the stock market. This recommendation is a part of the Committee’s report on ‘the Prevention of Money Laundering (Amendment) Bill, 2011’. This report was submitted on Wednesday. Now the Government will consider all the suggestions before bringing the bill for consideration and passage in the Parliament...........

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“I don’t know of one moneylender who’s bankrupt!"

Dr KC Chakrabarty, Deputy Governor of RBI, speaks on financial inclusion

 

...........There was no plan or provocation. It was accidental and incidental. The RBI governor (Dr YV Reddy) was visiting Pondicherry to meet the chief minister. As Indian Bank was the SLBC (state level bankers’ committee) convener for Pondicherry he wanted me to accompany him. On the way, we were thinking of discussion points when the Governor suggested that we should propose to the chief minister that we will provide all households in the state with a bank account each. The chief minister liked the idea and assured us all support. The same evening he (chief minister) called a meeting of all bankers where the first circular on financial inclusion was drafted..............

 

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Competition panel sets up eminent persons advisory group

New Delhi, May 8: The Competition Commission of India (CCI) has constituted an Eminent Persons Advisory Group (EPAG) to give inputs and advice on issues impacting markets and competition, among others. The group of ‘wise persons’ include Mr N.R. Narayana Murthy, former Chairman, Infosys, Mr V.N. Kaul, former Comptroller and Auditor General, Dr Rakesh Mohan, former Deputy Governor, Reserve Bank, Ms Kiran Mazumdar Shaw, Chairman and Managing Director, Biocon, Dr Bakul Dholakia, former Director, IIM-Ahmadabad, Dr S.L Rao, former Chairman, CERC, Mr N.L Mitra, former Vice-Chancellor, NLSIU, Bangalore and Ms Rohini Nilekani, NGO activist, Bangalore. The first meeting of the group is tentatively planned in July 2012, a Corporate Affairs Ministry release said here on Tuesday. The group will have interaction/meetings with the commission two to three times a year, it added.

HBL

RBI sub-office starts functioning

Srinagar, May 8: The upgraded sub-office of Reserve Bank of India today started functioning here. The office shall work for summer months in Kashmir.  The Cell of Foreign Exchange Department is already functional in Srinagar. Besides, the Cells of Rural Planning and Credit Department (RPCD) and Department of Banking Supervision (DBS) carved out of the Jammu Regional Office, have started functioning from existing premises at Raj Bagh, Srinagar.........

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Traders knocking on temple doors for change

.........Chikkaballapur : The traders have approached the local banks to help them, but the bank authorities point fingers at the Reserve Bank of India for not releasing enough currency notes of lower denominations. But the officials in the Reserve Bank of India say that they have not received any request from banks for currency notes of lower denominations. Given the situation, the traders are left with no choice but pay commission to the temples for change to ensure that their business runs smoothly with no standoffs with customers...................

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Will RBI be a better judge for banking mergers?

......RBI is a prudential regulator of banks, while CCI is a competition regulator for the whole economy, including the financial sector. Prudential regulation requires laying out and enforcing rules that limit risk-taking of banks, ensuring safety of depositors’ funds, stability of the financial sector and other public policy requirements. Thus, regulation of M&As by RBI would be determined by such benchmarks......

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Seeking divine intervention

....There are three institutions that keep India running: the Supreme Court, the Election Commission and the Reserve Bank of India (RBI). To be sure, most of the economic mess in India has the government behind it. And often the RBI is called in as a vacuum cleaner. But even the world’s best vacuum cleaner cannot be successfully used to clean up a garbage dump. Further, the government appears to have infected the RBI, which recently cut policy rates by a bigger-than-expected magnitude while acknowledging further risks to inflation despite slower growth, and flagging several reasons why it should not have cut rates.............

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Supply system is not responding in line with demand, says Gokarn

.....“The Government is spending more on consumption and subsidies. Unless we can bring public spending back into capacity building, the gross investment will not go up,”.........

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Tweaking the policy in instalments

The RBI, in its policy liberalisation of September 25, 2011, raised the ECB limit. The limit was hiked by 50 per cent to $750 million for real estate, industrial and infrastructure firms, and by 100 per cent to $200 million for hotels, hospitals and IT firms by. Since then, the RBI has tweaked the ECB policy a number of times with the objective of facilitating higher overseas borrowings...........

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RBI must give 'I understand' signal to market: Mecklai

....Talking about the RBI’s role in helping the rupee gain further, Mecklai clarified that the RBI needs to walk away from its slightly 'draconian' stance, unlike what it had done in November-December last year. Providing cues that reflect the understanding side of RBI can also help, pointed out Mecklai. .............

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RBI to decide on probe into irregularities in Maharashtra State Cooperative Bank

....."The bank is already under direction of the Reserve Bank ... Decision on any further investigation in such case is to be taken by the RBI considering all facts and circumstances,".........

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Banks asked to adopt risk management system before rising insurance cover

NEW DELHI: The government has asked the Reserve Bank and Deposit Insurance and Credit Guarantee Corporation (DICGC) to adopt risk management system before doubling the insurance cover for bank deposits to Rs 2 lakh. The proposal of the DICGC for increasing the deposit insurance cover for banks from the existing Rs 1 lakh to Rs 2 lakh has been examined, Finance Minister Pranab Mukherjee said in the Rajya Sabha. "The government has advised the DICGC and the Reserve Bank of India to adopt a risk-based deposit insurance premium structure, before the proposal of the DICGC is considered for approval," he said...............

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RBI cannot rescue rupee, want to know what will?

......“While RBI is trying to buy time by some of the measures they have announced, the real solution lies with the government in terms of how the balance of payments on the current account is actually adjusted and you can’t have a dramatic adjustment. It has consequences as far as growth is concerned,” .......

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RBI’s final securitisation guidelines may leave the market cold

......On the whole, while it seems RBI has put a lot of thought since the September 2011 guidelines, neither are the Final Guidelines benign nor malignant. The Final Guidelines may just leave the market very neutral for acceptance.

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Rupee has more to adjust, RBI cannot be saviour: CLSA

........ "The real solution lies with the government in terms of how the balance of payments on the current account is actually adjusted and you can't have a dramatic adjustment. It has consequences as far as growth is concerned. To me, it is still a protracted period of adjustment that India has to go through. So, RBI is not necessarily going to be the saviour, it can't be.".................

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RBI has little room for lowering interest rate further: Gokarn

The Reserve Bank has little room for lowering interest rates further as it still sees inflationary pressure in the medium to long term, Deputy Governor Subir Gokarn said today. "We started that process (reducing interest rates) in April. But if you look at our inflation projections in relation to what we consider as long-term or medium objective, there are inflation pressures. That in a sense, limits the room that we have to reduce rates," he told reporters on the sidelines of a Ficci meeting........... 

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Relax, things are not as bad as doomsdayers claim

......... The government and the RBI are now ultra-cautious in their approach to the growth-inflation trade off, and that makes for sounder policies that the ones that were made in the clamor for growth in the 2000s......................

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RBI asks banks to conduct stress test on their securitisation

The stress tests should cover various factors like rise in default rates in the underlying portfolios in a situation of economic downturn, rise in pre-payment rates due to fall in rate of interest or rise in income levels of the borrowers leading to early redemption of exposures, the RBI said

Mumbai: In order to ensure an orderly and healthy growth of securitisation market, the Reserve Bank of India (RBI) on Monday asked banks to perform stress tests at regular intervals to ensure that they are not exceeding the prudential limits............

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