....In view of the fact that Bhimashankar Nagari Sahakari Bank Ltd had ceased to be solvent, all efforts to revive it in close consultation with the Government of Maharashtra had failed and the depositors were being inconvenienced by continued uncertainty, the RBI on May 3, 2012 delivered its order dated April 25, 2012 to the bank cancelling its licence to carry out banking business, an RBI statement said...............
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Wednesday, May 23, 2012
Nationalised banks NPAs at Rs 59,397 cr: FM
..........RBI collects the information on willful defaulters (non-suit filed accounts) of Rs 25 lakh and above from scheduled commercial banks and all India Notified Institutions on quarterly basis. The number of wilful defaulters, as per guidelines issued by RBI in respect of nationalised banks as on March 31, 2011 is 716
Cut in base rate better than spread reduction
Since the beginning of this year, banks have been lowering interest rates for home loan borrowers. Union Bank of India (UBI) set the mood for a rate cut in January with a 10-basis-point (bp) reduction in the base rate (100 basis points = one percentage point). After the Reserve Bank of India cut the benchmark lending rate last month, many banks (Punjab National Bank, Central Bank of India and ICICI Bank) reduced their base rates by up to 25 bps. A bank can’t lend below its base rate............
Bond issue a last resort as India frets over rupee
........“With markets testing RBI tolerance for rupee depreciation, the authorities might need to tap other measures in the toolkit to stem the unit's fall. Sovereign bond issuance is one of them, which will beef up the country's dollar reserves,” .....................
India Inc offers ideas to put India on growth track
......The RBI, to my mind, needs to be very clear to make an announce that will defend the rupee. When they made an announcement some months ago, at around August-September, that they would not defend the rupee, the rupee crashed....................
Pranab-da, without reforms rupee will head for 60
....The central government has much higher transparency in its spending than the states. The central government’s finances come under public scrutiny and at some levels there is a sense of accountability. The RBI prods and pushes the centre to keep its borrowings down while the market punishes the government for poor finances by taking up government bond yields.......
7 steps taken by Reserve Bank to support rupee
......The rupee has slumped more than 11 per cent since the start of March, making it the worst performing currency in emerging markets. Following are some steps taken this month by the central bank and the government that impact foreign exchange markets.......
Rupee on a slippery slope
.....There are limits to what RBI can do. On the one hand, if it does not use foreign exchange reserves to stem the rupee’s decline, there is a risk that the exchange rate will spiral out of control in the face of adverse expectations. On the other hand, large-scale intervention will lead to doubt or even deterioration in the confidence that India can meet its short-term external obligations. This is RBI’s stated position and it has stuck to it. In any case, the corridor between these two positions is quite narrow. That explains the central bank’s “feeble” intervention in the currency market. Its other steps—such as asking exporters to convert 50% of their dollar holdings in the export earner’s foreign currency account and imposing limits on banks in currency futures and options—should be seen in this light......
RBI may take big bang steps to tame rupee
...The rupee, which opened stronger against the dollar, soon started weakening steadily to close at the day's low. Dealers said that none of the central bank's measures to steady the rupee have had an impact. RBI has exhausted close to $20 billion of its reserves in supporting the rupee. It has allowed corporates to pay more on external borrowings, freed interest rates on non-resident deposits, and cracked down on banks going long on the dollar...........
RBI watches as rupee's losing streak continues
....“It is likely that in a country with a high current account deficit, the currency would depreciate in an uncertain global environment. It is difficult for the central bank to completely reverse the trend. So, the RBI is attempting only to slow the pace of depreciation,”..............
Cash-starved MFIs find saviour in IFC
.....“The sector has improved a lot in the past few months following RBI regulations that have brought clarity on investing in the sector. We are seeing signs of growth and the equity investments is proof of that,”
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Check on microfinance
.....The bill gives the RBI rights to grant certificates of registration and cancel them, which will be tantamount to cancelling their license to operate. The RBI can also inspect accounts and impose monetary penalty for non-compliance of the provisions of the proposed legislation. Besides capping rates, the RBI will prescribe methods of loan recovery as well as norms on governance.......
Bill seeking interest rate cap on MFI lending introduced in Parliament
The Indian government on Tuesday introduced a bill in the Lok Sabha to empower the Reserve Bank of India (RBI) to regulate the micro finance institutions (MFIs) and fix interest rates ceiling on loans to be provided by lenders, reports PTI. The Micro Finance Institutions (Development and Regulation) Bill, 2012, which was introduced in the House by Finance Minister Pranab Mukherjee, confers power upon the RBI to fix the maximum interest rates that MFIs can charge and also decide on the fair and reasonable method of loan recovery......................
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Tuesday, May 22, 2012
RBI asks Indian Institute of Bank Management to create pool of banking personnel
GUWAHATI: Expressing concern over the high rate of attrition in the banking industry, Sandip Ghose, the Chief General Manager-in-Charge of the Human Resource Management Department at RBI's central office, Mumbai, asked the Indian Institute of Bank Management (IIBM) here to create a pool of dedicated banking personnel in the region.............
RBI paper considers monetary transmission in India
Reserve Bank of India working paper focuses on operation of monetary transmission mechanism in India; demonstrates significant causal effect of rate changes
The Reserve Bank of India (RBI) published a working paper on May 18 considering the monetary transmission mechanism in India. The author, Deepak Mohanty, an Executive Director at the RBI, uses a structural vector auto-regression to assess the impact of policy rate increases on output growth and inflation. He finds that rate increases have a negative impact on growth with a lag of two quarters, and a moderating effect on inflation with a lag of three quarters. The overall effect lasts through 8–10 quarters. Furthermore, the author finds significant unidirectional causality from policy rate increases to output, inflation and some measures of liquidity.
RBI warning on phishing mail
Srinagar, May 21: The Reserve Bank has cautioned general public against an e-mail being fraudulently sent in its name to cone people. In its press note available on its website, the RBI says: “It has come to the notice of the Reserve Bank of India that an email has been sent in its name from mail id: alert@rbi.org and signed by RBI Online offering a 'new online security platform'. According to the mail, the 'new online security platform' offers to 'prevent online identity theft in internet banking by asking the customer to go through a two-way authentication factor before he/she properly logs into internet banking every time'. The email then asks the recipient to 'download the attachment and update'. “The Reserve Bank clarifies that it has not sent any such mail,” it said, adding that in fact, it does not have any mail ids with extension @rbi.org.......................
Claim deposit insurance by Mar 2013: RBI
Holders of two joint accounts in cooperative banks that failed before April 2007 have been given time till the end of this financial year to claim deposit insurance from DICGC, a subsidiary of RBI. "The benefit of the revised guidelines dated April 26, 2007 in respect of insured cooperative banks which have been liquidated prior to April 26, 2007 shall stand withdrawn and cease to have effect from March 31, 2013," RBI said in a statement.......................
India on lookout for OMOs, RBI board
.....The RBI board's routine meeting takes place on May 24, after which Governor Duvvuri Subbarao will address the media at 3:30 p.m. (1000 GMT). RBI Governor to meet Uttarakhand chief minister and other industry representatives on May 23 but possibility he will address media is low.
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White Paper suggest incentives for use of credit, debit cards
....The report also noted that as of now there are no legal restrictions to keeping very large amounts of cash with oneself or transporting it from one place to another. One is neither required to report it nor provide any explanation for it. "There have been suggestions that the government may consider amending existing laws, including the Coinage Act 2011, The Reserve Bank of India Act 1934, FEMA, and the Indian Penal Code, or enacting an entirely new statute aimed at regulating the possession and transportation of cash above a particular threshold limit,".............
Check cheque issues
.....Notably, the Reserve Bank of India (RBI) in its directive has stated, “No changes/corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers.” If there are any alterations on the cheque, except the date, customers will have to issue a fresh cheque...............
Fool's gold
This refers to the report “300% jump in gold export industry questions data” (May 13). What is more disturbing than the possible discrepancy in the export figures for gold is our continual need to import gold despite a handsome domestic stock of over 18,000 tonnes. This is a direct draft on our precious forex funds. It is unfortunate that the government has made no perceivable effort to discourage the accumulation of “ornament gold” in households, which is partly responsible for financial loss in middle-class families and, to some extent, dowry and security problems. The import and accumulation of huge quantities of gold in the form of jewellery has other social implications like the under-utilisation of financial resources for productive use, and the pledging of assets for raising funds, which ultimately help only the money lender. One way to check the current rise in imports, which is not commensurate with exports of gold products, is to link the quantum of imports to the past few years’ export record. Import of gold for pharmaceutical and other essential purposes could be outside such limits.
M G Warrier, Thiruvananthapuram (BS)
JK Bank fails to support agriculture sector: Mir
......Mir said it was disgusting that J&K Bank and other nationalized banks operating in the state have not even been issuing the Kissan Credit Cards to the farmers. “Contrary to the Reserve Bank of India instructions, the banks are demanding guarantors for issuing such cards,” he said. Mir said in his recent visit to the Valley, Governor RBI made it clear that no guarantor was required for KCCs up to Rs 1 lakh. “But J&K Bank and other banks are demanding the guarantors in this behalf, which goes against the very spirit of the central bank instructions,” he said..............
All asset classes will be affected by the euro zone crisis
.....The first thing I remember RBI has not taken the responsibility of the development of the country and that is the responsibility in the hands of the government of India. So, we shouldn’t be expecting RBI to be coming out and bailing the Indian economy every time we get into serious trouble.........
To stop the drift
Storm clouds are gathering over the Indian economy
....The rupee has been falling against the dollar and other foreign currencies week after week, and is crossing the historic low of Rs 54 to the dollar. The RBI has probably intervened in the foreign exchange market by selling dollars in order to stem the fall of the rupee. (I write “probably” because the RBI does not, for understandable reasons, conduct these interventions publicly.) But there is a limit to the extent to which the RBI can succeed in its efforts. Inevitably, market forces will determine the value of the rupee.........
Don’t defend the rupee
When the rupee is volatile and there seems to be no sign of light at the end of the proverbial tunnel, it makes a lot of sense to let things be as they are. RBI has limited ammunition to defend the rupee and any kind of sale of dollars gets absorbed soon and the situation reverts to the status quo.........
Sri Lanka to benefit from RBI's $2 billion swap arrangement
Sri Lanka is among the member nations of SAARC who will benefit from the RBI's $ 2 billion swap arrangement aimed at strengthening regional financial and economic cooperation, the Indian High Commission said today....................
RBI, Indian Govt. has no right track of free fall of Rupee
.... “Whatever may be the tall claims either by the Finance Minister Mr. Pranab Mukherjee or the Reserve Bank of India, the rupee has been nose diving continuously unstopped and it has broken all previous records of plunging below the level of 55 rupees per Dollar.....
Staying the hand on forex
.....The proponents of greater intervention, however, miss out on two things. The first is that the existing forex reserves, at around $292 billion (inclusive of gold), can pay for just over seven months of India's imports. In contrast, these sufficed for 13 months at the time when Lehman Brothers went belly-up. The crisis then, in a sense, presented an opportunity for the RBI to shed what many then considered as excess reserves in its kitty. Today, though, nobody can really compare the RBI's plight on currency reserves with that of the Food Corporation of India on grain stocks........
Economy in ICU as rupee has a big fall
....Spelling fresh trouble for the Indian economy, the rupee began the week on a shaky note, plunging below the psychological level of 55 to close at an all- time low of 55.04 against the dollar on huge demand for the greenback from banks and importers to meet month- end requirements. The sharp fall came on a day the RBI reportedly did not intervene in the market but came out later to impose restrictions of USD 100 million on " position limit" for forward contracts by banks............
RBI imposes restrictions on forex dealers as rupee hits 55 per dollar
As rupee breached the 55 level to its all-time low, the Reserve Bank on Monday imposed restrictions of USD 100 million on "position limit" for forward contracts by banks. "The position limit for the trading member...bank in the exchanges for trading Currency Futures and Options shall be USD 100 million or 15 percent of the outstanding open interest, whichever is lower," RBI said in a notification.............
RBI says more steps to arrest rupee fall
Amid rupee breaching the 55 levels spelling more troubles for Indian economy, RBI Deputy Governor Subir Gokarn on Monday said the central bank will continue to take steps to stabilise the domestic currency. "There is very strong pressure on the rupee to depreciate ... we have done a number of things and will continue to do things that we think have an impact of stabilising the rupee," Gokarn said while speaking on the sidelines of an event on Monday evening.................
Monday, May 21, 2012
National coin exhibition a hit with Hyderabad participants
...........Hanuman Sada, a numismatist at the exhibition, said he had started collecting coins as it was his hobby, and now he owned world's rarest coins. "I am fond of collecting old coins, since childhood I used to take out coins from the Ganga in Varanasi. I have exhibited coins in Reserve Bank of India (RBI) and they have awarded me. I have a collection of thousands of year old coins, including Kushan, Chattrap, Maurya Sassanian, Guptas and all ancient coins," Sada said..................
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InfiniteCourses.com Offers Information About RBI Recruitment Process, Eligibility Criteria And More
......However, so many of these aspirants fail to make it to the Reserve Bank of India (RBI) due to the lack of information. Like many government companies of India, the RBI has its own recruitment process and you need to be in complete knowledge of the same to get the job with ease. Not only do you need to know about the RBI Recruitment process, but also about the various openings in the bank as also the qualification requirement and age criteria for the same. You would also be able to prepare yourself thoroughly if you had substantial information on the important dates of the recruitment........
Financial inclusion is a business opportunity, says Visa
......'Financial inclusion', the phrase invented to paper over the widening economic disparities, has found a surprisingly new taker: Visa Inc, the transaction processing company that's taking baby steps into the evolving mobile phone payments business...................
Red herring, or the real cause?
...... The flow of funds from foreign institutional investors has become an uneven and uncertain trickle due to fears over amendments to tax laws. The RBI itself in a paper (April 11) on foreign direct investment flows to India has attributed them to certain institutional factors that dampened the investors' sentiments. In these circumstances, the Finance Minister may have to put under the scanner the strength of the macro-economic fundamentals themselves. The fall of the rupee is a complex syndrome which had predominantly to do with India's economic (mis)management, rather than being brought on by Greece or Euro Zone...........
Banking Laws Bill in Parliament today
..............The Bill, which was introduced in Lok Sabha in March 2011, seeks to empower Reserve Bank of India to dismiss a bank’s board and force a reconstruction of the board to protect the interests of depositors, shareholders and employees. This will pave way for the central bank to grant licences to industrial houses to set up banks. The other proposals in the Bill include increasing voting rights of an entity in a nationalised bank to 10% from the existing 1%. Besides, once legislated, the Bill will provide the RBI powers to ask for information from banks’ associate companies.........
Slippery moves
It isn't an overnight happening. It has been coming, and coming for a long time. When it actually arrives, the country finds itself sucked into the cross-currents of global politics of economics. All along, the Reserve Bank of India, which has sort of been pushed to announce a huge cut in Bank Rate, has been virtually pleading with the fiscal authorities to see the writing on the wall. The pleadings have largely gone unheeded. With the rupee sliding continuously against the dollar, the political leadership is beginning to sense the gravity of the situation......................
Report on capital needs under Basel III this week
............“Most public sector banks are well capitalised as of today,” said a member of the panel headed by State Bank of India (SBI) chairman and managing director Pratip Chaudhuri. “So, it will not be difficult to meet Basel-III requirements. The common equity of banks is good. The report will be submitted (to the finance ministry) very shortly after getting a green signal from all the banks.” It was the finance ministry that formed the committee to assess the additional capital needs of all PSBs in line with the recent Basel-III guidelines issued by the Reserve Bank of India (RBI)...................
The 'S' word returns
........... “We now have the worst of both worlds — not just inflation on the one side or stagnation on the other, but both together. We have a sort of stagflation situation.” The “S” word, which he coined, is being mouthed with increasing frequency by India-watchers. It describes the current conditions pretty well. Inflation has been above the Reserve Bank of India’s (RBI’s) comfort zone for the past two years. It is unlikely to fall any time soon, given that the consumer price index was up 10.4 per cent in April 2012.......................
Policy- making for Indian Planning
The book under review has contributions by fifteen experts in divers fields connected with policy- making. Dr.C.Rangarajan, in his Foreword invites pointed reference to a note prepared by Montek for the then Prime Minister in 1990, which charted the path for the economic reforms that were launched in 1991. Dr.Y.V.Reddy delineates the formal agreement concluded between the Government and the RBI for ending automatic monetisation, which laid the groundwork for legislation on fiscal responsibility. Montek also contributed in enabling the RBI to build up Reserves in its Balance Sheet. The current RBI Governor Dr. Subbarao showers praise on Montek for his extraordinary competence and skill in negotiating the settlement of the Rupee — Rouble deal with Russia.
The exchange rate: economics bites back
........... So, in theory, a cheaper rupee should, in time, improve both the current and capital accounts of our external finances. But sharp and unexpected depreciations can also be excessive and destabilising. So, the RBI is, quite correctly, trying to put some brakes on the process, even though market intervention in turbulent times is more an art than a science. However, RBI actions are palliatives, at best. The real cure lies with the government’s economic policies......................
BB not interested in India's swap funds
.......RBI Governor Dr D Subbarao announced formation of a $2 billion swap arrangement fund at the 24th Saarc finance governors' meeting in Pokhara, Nepal last week. The facility will be available in three instalments. “India has set the interest rates for the fund as it has provided the entire fund,” said the BB official, pointing at a higher interest rate. However, he said the fund is less costly than loans, such as Islamic Development Bank that charges a 5 percent interest rate..................
Dollar inflows from exporters' FX accounts to support rupee
.......“Rupee weakness is driven by a strong dollar against global currencies and it would need unwinding of dollar strength to provide relief to the rupee. The RBI’s actions could only limit excessive traction between the dollar index and the dollar-rupee exchange rate,” .......................
Gold lenders vow to be ‘fair’ to borrowers
The Rs.1 trillion organized gold loan market is implementing a code of conduct in an attempt to rebuild the image of lenders that took a beating after a recent clampdown by the Reserve Bank of India (RBI). The “fair practice code” released by the Association of Gold Loan Companies (AGLC), the industry body, prohibits non-banking financial companies (NBFCs) that lend money to borrowers with gold as collateral, from charging excessive interest rates. The companies also have to disclose the interest rate, processing fee and other service charges levied on customers. ........
Rupee needs to depreciate in nominal terms : S.S.Tarapore
The RBI should have bought foreign exchange in the market during the period the rupee was appreciating and sold when the rupee was depreciating. This would have avoided very large fluctuations in the dollar- rupee exchange rate....
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Rupee depreciation
With reference to “Austerity and the rupee”, the editorial has rightly observed that the rupee's problems are largely structural, having to do with the current account deficit. Had there been other significant reasons, we would have seen results when the government announced an increase in NRE deposits and EEFC measures. It is true that the RBI policy should be to buy aggressively when the rupee appreciates and sell when it is depreciates, besides cutting imports on fuel, fertiliser and gold and deregulating diesel and urea.
- K. G. Varma, New Delhi (HBL)
Global feeder fund investors reap returns on falling rupee
At a time when almost everyone associated with the financial markets is getting jitters from the depreciation of the rupee, there is a small set of investors that is rejoicing for having invested in global feeder funds. This is because when the investments in these funds were made they were converted into dollars. However, the NAVs, when converted back into rupee, are showing smart profits even if the dollar-denominated returns are not so good. So even though RBI Governor D Subbarao, Deputy Governor Subir Gokarn and other top central bankers are trying to contain the weakness of the rupee, these investors, along with the exporters, are a happy lot.
TOI
Punjab to disburse welfare funds online
The Punjab government has issued instructions to directly credit cash in the bank accounts of beneficiaries under various welfare schemes through Electronic Benefit Transfer system to check delays and redtapism. Informing this here today, state's Social Security and Health Minister Madan Mohan Mittal said the SAD-BJP alliance government in consultation with Reserve Bank of India has adopted the EBT model under which cash benefits to be disbursed to the beneficiaries would be directly transferred to their accounts.......................
Sunday, May 20, 2012
Why RBI Governor D Subbarao won't cut rates anytime soon
........"Structural inflation, and the middle class' demand for food, limits the RBI's ability to pursue easy monetary policy," said Chin Loo Thio, the Singapore-based regional strategist for BNP Paribas. "There is a limit to which the monetary policy can be effective." Deputy Governor Subir Gokarn himself poured cold water on any hopes of a sharp reduction in interest rates last week. "We started that process [of reducing interest rates] in April," Gokarn said in Hyderabad recently. "But if you look at our inflation projections in relation to what we consider as long-term or medium objective there are inflationary pressures. That in a sense limits the room that we have to reduce rates."..............
Little chance of further rate cuts, says Indian Overseas Bank chief
NAGPUR: There is little chance of further rate cuts by the Reserve Bank of India (RBI), feels chairman of Chennai-based Indian Overseas Bank (IOB), M Narendra..............
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Inflation control should not eat away growth
.............Subba Rao, RBI Governor feels that rate hike is necessary to curb inflation. If inflation is due to excess money supply, then RBI Governor’s prescription is correct. But in the present context, food price hike is due to demand supply mismatch which in turn is due to wastage of food produced. Under the circumstances, an interest rate hike will not bring in the desired results. Only fiscal measures can bring the desired solution to the problem. Rate hike will only help the fixed deposit investors to enjoy more returns. But here again, the fixed deposit return can be eroded by high inflation and the investor is a net loser. But he has no choice.......................
A silver lining in India's slowdown?
.........The RBI has continued to implement financial reforms to facilitate infrastructure financing, improve the transmission of monetary policy, and promote financial inclusion. If these positive signs are quickly followed by bolder government action, the recent slowdown would have a silver lining.
The postman will bring loans, besides moneyorders!
The Department of Posts could give the yesteryear Hindi film song Daakiya Daak Laayaa (Postman has brought a letter) a new twist. The lyrics of the1970s song could well change to ‘Daakiya Loan Laayaa, Daakiya Kisht Leney Aayaa' (Postman has brought a loan, Postman has come to collect an instalment) if the Department's plans to set up a bank pan out. So, the postman will give you money, that is loan, even if you do not get a money order from your dear and near ones! ..........
RBI to close down coin, currency counters
.........“If the RBI totally withdraws from the scene this will send a signal to the racketeers and the common people will be the worst victims. This will throw the entire currency management into a state of anarchy,” feared Thomas Joseph, convener, United Forum of Reserve Bank Officers and Employees and secretary, Reserve Bank Employees Association (RBEA). While the Central Bank will be shorn of one of its core functions, the move will also deprive the public of a valuable service enjoyed by them for decades.............
My Views on "Plea not to close down RBI counters":
Sections 38 and 39 of the RBI Act make it obligatory on the part of GOI to put rupee coins into circulation through RBI and on RBI to supply different forms of currency to the public. It is intriguing that within a short period after heralding its intention to be part of GOI’s outreach programmes to ensure financial inclusion to every village, RBI is being persuaded by Centre to withdraw from one of its core functions. RBI withdrawing from the scene will immediately put banks under pressure and short-supply of currency and coins in cities will result in several unethical practices. No big research is needed to see that already under-staffed banks will not be in a position to fill the vacuum created by RBI’s withdrawal. Already there are pockets like bus depots and religious centres where coins are piling up waiting for bank staff to accept. In such a situation, banks will scare away customers approaching for exchange of notes and coins.
M G WARRIER, Thiruvananthapuram
M G WARRIER, Thiruvananthapuram
My Views on "RBI not to interfere in bank service charges"
While in a deregulated environment, it is oaky that RBI should not interfere in Bank charges. Nevertheless, they have to see, especially in new private sector banks, whether the charges are reasonable and they should counsel the banks when they find that the charges and the minimum balance required to be maintained,especially of the new private sector banks, are unreasonable. It is not so easy to change bank accounts when several transactions of the customer including online payments are linked to the bank. |
Fake currencies found from ATM
MALDA (WB): Fake currencies, with the face value of over Rs one lakh, were found from two ATMs of a state-run bank in English bazar town of Malda district in the past two days.............
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India’s Mobile Banking Ekosystem
...........Agent networks are the main issue that mobile operators and banks need to get right if they are to turn branchless banking into a sustainable business. The Reserve Bank of India recently removed restrictions on agent exclusivity, so customers can now transact at customer service points of one bank even if their accounts are held at another bank. Such interoperability should mean greater efficiency and lower costs across the system............................
Bharti Airtel and Axis bank collaborate on mobile money and banking services
.............The venture marks Airtel's second attempt to extend its mobile money capabilities into the banking market. The telco announced a joint venture with the country's largest bank, State Bank of India, last year, to a offer a complete suite of banking services via both the mobile platform and a state-wide network of branches and retail distribution outlets. However, the plans were scuppered by the Reserve Bank of India over the equity arrangements for the venture, which would have given the telco a stake in the banking business without recourse to a banking license.
Saturday, May 19, 2012
RBI stall at Govt. exhibition
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| An official of the Reserve Bank of India explaining to the public at the RBI stall at Government Exhibition in Coimbatore on Thursday the features that help identify counterfeit currency notes |
COIMBATORE : The public can exchange soiled currency notes at the Reserve Bank of India (RBI) stall at the Government exhibition here. The RBI had a stall at the exhibition last year too. Every day, currency was exchanged for about Rs. 25,000 and nearly 200 people walked in. A special coin was also released last year, said District Lead Bank Manager J. Vanangamudi.The stall this year had details about identifying fake currency notes, coins released by the RBI so far and also about banking services. Soiled currency notes would be exchanged and coins would be distributed at the stall. With shortage in availability of coins, the demand was high for coins and a large number of visitors were expected to come to the stall for it, he said. Apart from currency exchange, clarifications would be available on the banking services too. Kaya Tripathi, Deputy General Manager of RBI, and District Collector M. Karunagaran participated at the inaugural of the stall on Thursday
Stagflation: Over to FM now; Subbarao can take a vacation
..............“The RBI is like a goalkeeper trying to prevent self-goals by the government. It cannot fix all the problems, many of which have been caused by fiscal policy and worsened by government’s inaction.”......................
Nothing more than normative wisdom
.......A senior colleague was recently trying to persuade one of the grey eminences of the monetary policy world to work on a ‘tell all' memoir. It was firmly refused on the grounds that he did not want to fall into the trap of most such books — of portraying events as happening around oneself. Or, that one had played a central role in the way things unfolded. All the persuasion didn't work. Thankfully, there are others who make up for the modest reticence of some. Bimal Jalan is one of them. He can claim to have been at the centre of many developments, having travelled the corridors of power in his career. As an economist, as Chief Economic Advisor, as a Member of the Planning Commission, as Reserve Bank of India Governor between 1997 and 2003 and as a Rajya Sabha member for six years thereafter, Jalan certainly played a pivotal role in the shaping of policy in India. Yet, this book is not in the tell-all genre. It is full of prescriptions and, one may add, even some sound advice............
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RBI to continue defending the rupee: Subir Gokarn
..."The approach over the last few months have been a combination of intervention at times when we have felt it will help us stabilise, and some administrative action. This is the approach that will work now," Deputy Governor Subir Gokarn said...................
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Plea not to close down RBI counters
Kochi, May 18 (PTI): Syndicate Bank Staff Association today strongly opposed the move to close down RBI counters delivering coins and currency notes in metro centres and state capitals in a phased manner. This move is 'disastrous and anti public' and would inconvenience the business community, .............
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Warmhearted succumbs to heart attack...............
I regret to advise the sad demise of Shri.S.Srinivasan on May 16, 2012. He retired as D.G.M from R P C D, Mumbai , after a long service of over 38 years. He was 77 years old. For over two decades Srinivasan worked in the Department of Statistics. He had served in Madras and Hyderabad Offices. He was not well for quite some time and passed away due to cardiac arrest. He leaves behind his wife, son, daughter and grandchildren , A warmhearted and genial person he had a wide circle of friends and admirers both within and outside R B I.
- P.P.Ramachandran (via e-mail)
India in the European mirror
.......A collapsing currency is a sure negative signal for international investors, and can accelerate their exit. A downward spiral is a possibility that therefore needs to be pre-empted. However, there appears to be no convincing response from the government thus far. The RBI is wary about stoking inflation by reducing rates to spur growth. The deficit on the government's budget and India's relatively high public debt to GDP ratio are preventing the government from raising expenditures (as it did in response to the global crisis of 2008). This is partly because of the government's own fiscal conservatism. But the more important reason is the fear that larger fiscal deficits or higher taxation would upset foreign investors and hasten their exit.....................
Reduce exposure to NBFCs giving gold loans: RBI to banks
......."Banks are advised to reduce their regulatory exposure ceiling on a single NBFC, having gold loans to the extent of 50% or more of its total financial assets (loans), from the existing 10% to 7.5% of banks' capital funds (tier I + tier II capital)," RBI said in a circular. ..........
Plateful of Inflation
Practically every trick that the government with the Reserve Bank of India on tag has tried to control food price inflation has failed. And that’s inflation at the mandi level. No one is talking of inflation of consumer level prices, where it actually hurts the consumer the most. Both RBI and the government have periodically trotted out excuses for the failure to control inflation.............
After forex intervention, RBI may now target oil to save rupee
.............The RBI is widely seen to have two options: it could open a dollar window for oil companies to buy dollars directly from the central bank or it could purchase oil bonds via special market operations. RBI opted for the latter in 2008 and then again in 2009 because oil companies back then were holding illiquid bonds. That helped the central bank both inject dollar liquidity and help the sector monetize its debt. However, 2012 would be different. Oil companies no longer hold much outstanding oil bonds and traders see a far more effective approach if the RBI were to sell dollars directly to the sector.............
ED imposed Rs 922.35 cr as penalty in 858 FEMA violation cases
...Besides ED, the Reserve Bank of India has powers to take action in any matter related with violation of FEMA, the minister said. "Appropriate action is taken by the ED and RBI, as and when, any matter of suspected contravention of the provisions of FEMA comes to the notice of Directorate of Enforcement," ............
TDS on interest
The voice of fixed-deposit holders has been ignored. While 4.75 per cent of a bank's deposits are held with the Reserve Bank (cash reserve ratio), 24 per cent is invested in Government and other approved securities, according to the RBI directions. Forty per cent of a bank's loans are directed to be lent to priority sectors such as agriculture, small-scale industies, and to SC/ST, women and other weaker sections. Rest of the money is lent mainly to industries and trade apart from retail loans. While depositors' money is routed for productive purposes, the Government is encouraging people to invest in stock markets, run on the whims and fancies of FIIs and greedy promoters. It is tiresome to get a TDS certificate from the bank. It is time the Government scrapped TDS on interest from bank deposits. Then people will not be persuaded to buy land and gold.
- K. Narayanan Chennai (HBL)
RBI’s hands tied, need FIIs: PM advisor
Arguing that the uptick in inflation has “considerably diminished” the Reserve Bank of India’s legroom to intervene in the forex market to prop up the plunging rupee, the Prime Minister’s top economic advisor has called for “more proactive steps” to attract capital flows as the more viable way out of the crisis..................
PSU banks report frauds worth almost Rs 8,850 cr in last 3 years!
..............The country’s largest PSU, State Bank of India tops the charts with frauds to the tune of Rs 1,221 crore. Bank of India has reported frauds amounting to Rs 709 crore, Canara Bank has revealed scams worth Rs 605 crore, IDBI Bank has indicated to RBI on frauds to the tune of Rs 609 crore. Central Bank has reported frauds amounting to Rs 562 crore..............
SBI winning the war on bad loans; Q4 net jumps
....The Reserve Bank of India expects loans to grow 17 percent in 2012/13, against 13 percent a year earlier. SBI's loan book grew to 8.7 trillion rupees at the end of March, up 14.5 percent from a year earlier. The net interest margin, a key gauge of profitability, rose to 3.89 percent in the March quarter from 3.07 percent a year ago............
Friday, May 18, 2012
Modulated depreciation is salutary - S S Tarapore
Regulatory autonomy, not autarchy
....... In certain quarters in India, the importance of the role played by the Reserve Bank of India is overstated by equating it with that of the Election Commission — and, by implication, free and fair elections. As we have witnessed repeatedly in the West and in India, regulatory autonomy has not prevented frequent financial market failures, since market and credit risk were allowed to build up to systemic proportions................
Finance Minister Pranab Mukherjee to resolve wage revision issue of IDBI staff
........The Minister said as soon as the Budget session is over, he will call the IDBI Chairman and all concerned and try to arrive at an agreed solution. He said that so far no solution could be arrived at as the IDBI Employees' Association had been insisting on parity with RBI employees for most of the time. He said IDBI employees, unlike in other scheduled banks in public sector, have refused to negotiate with the Indian Bank Association to negotiate its wage issue...........
Anini hosts DCC meet
............K K Pandey expressed his apprehension on not only the low but decreasing CD ratio in the district from 29.68% in September 2011 Quarter to 23.27% in March 2012, and advised LDM to take steps for increasing CD ratio to the minimum national norms of 60%. The RBI officer also emphasized the need to create credit demand at the grass root level through line departments of State govt to improve the CD ratio while assuring the support of RBI in future deliberations. S Mukherjee, Manager RBI also spoke on currency chest.............
RBI asks BCs to operate from ultra small units in rural areas
"...It has been decided that BCs can operate from such Ultra Small Branches as their association with the branch will increase their legitimacy and credibility in the area and give people increased confidence to use their services," RBI said in a notification.................
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RBI staff concern over coin, notes distribution
.......Either coins supplied by RBI remain accumulated or are distributed only in bulk in preference to retail customers or small businessmen, who are mostly in need. This would only aggravate the crisis and people in cities would only rush to RBI counters even more. Strangely, RBI has sought to restrict entry of customers on specious pleas creating panic about shortage of coins. Even the Finance Minister has recently said that “currency distribution is a key sovereign function and among the primary functions of a central bank. “It is also the most visible of its functions, as it touches directly and immensely the common person.” The unions also referred to complaints from members of public with regard to supply bottlenecks. Unscrupulous people are already taking full advantage. If the RBI were to totally withdraw from the scene, it would only sound out racketeers who would be emboldened to carry in with their nefarious activity. This could lead currency management to anarchy, the unions said.
SKS Microfinance pins revival hopes on proposed law
The central bank, as the sole regulator, would cap interest rates and fees levied by microfinance companies under the new law, and also stipulate rules for debt collection
......SKS, backed by Sequoia Capital, forecasts relief from a Bill approved by Prime Minister Manmohan Singh’s cabinet last week that would enable the Reserve Bank of India (RBI) to regulate the industry......
Microfinance Bill will regulate the sector to death, to the joy of moneylenders
The Cabinet has cleared a proposed Bill empowering the Reserve Bank of India (RBI) to regulate all microfinance institutions (MFIs). A central legislation makes sense only to the extent that it over-rides draconian state-level laws. However, the Bill suffers from many infirmities. And it is unfortunate that these have been overlooked. The law, if enacted, is likely to kill small MFIs and hurt the sector that is struggling to stay afloat.....................
UCBs can offer higher rates on FCNR deposits
In order to attract more dollars into the country, the Reserve Bank of India on Thursday increased the interest rates on foreign currency deposits of non-resident Indians (FCNR-B) held in Urban Co-operative Banks (UCB). In the first week of May, the central bank had revised interest rates on such deposits held by scheduled commercial banks (SCB). The ceiling on one to three year foreign currency deposit rates in UCBs has been upped to 200 basis points above...............
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Exporters slam RBI order on foreign exchange
....Earnings in other currencies such as pound and Euro were normally used for meeting overhead and other expenses. Therefore, the RBI order would cause a great loss to the MSME sector, which does not have the skill to handle foreign exchange risk......
RBI opens additional counters for tax payers
......Rajeev Dwivedi, Deputy General Manager (Banking) of Reserve bank of India informed that facility for depositing income tax by cash or cheque was available at 145 branches of public sector banking including State bank of India and ...............
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Office bearers scot-free as Nagpur District Central Cooperative Bank stares down the barrel
NAGPUR: With RBI setting a deadline of September 2012 for Nagpur District Central Cooperative Bank (NDCCB) to improve its financials, it is a race against time for the bank. As the management is busy compiling list of assets it can sell to garner funds, an inquiry that could have made the chairman and directors pay for the losses which led to the bank's troubles has been conveniently forgotten............
Why will RBI go for a rate cut in its July review?
.... Liquidity is expected to tighten in June due to first quarter advance tax payments. The higher than expected inflation for April 2012 will drive out any rate cut expectations in RBI's June policy review.
Bond yields will trend down post RBI policy review in June as liquidity situation will ease on the back of advance tax money coming back into the system while the country will have seen the onset of monsoons. Rate cut expectations will gain momentum for July as inflation is likely to keep its head down on weak commodity prices........
CPI-based inflation data: A good start, but a long road to stabilisation
.....The CPI also has an edge over the WPI, as it includes some services in the miscellaneous category like education, medical care, recreation & amusement, transport and communication, personal care and effects, and household requisites. However, for now, RBI would have to consider both the WPI and the CPI for policy decisions. Some economists even feel the WPI would have to be there even if the CPI stabilises, to gauge movement in wholesale prices. It would also offer a picture of production........
Understanding loan to value under new RBI norm
....The Reserve Bank of India has brought about many new directives and guidelines in order to curb speculation in the property market as the sector stands poised for a revival post recession recovery. One of the guidelines that has dampened the mood of real estate developers as well as prospective home buyers is the exclusion of stamp duty, registration fees and all other allied charges while calculating the loan to value when taking a home loan......
Growth vs inflation
Apropos the debate “Should policy focus on growth or inflation” (May 16), it is ably argued that growth with price stability is most desirable. However, it is equally important to maintain consistency and contain policy uncertainties to achieve robust economic growth and tackle inflationary expectations. Further, proper co-ordination between various policy authorities is needed to avoid a clash of interests.
- Raman Kumar Agrawalla, Bhubaneswar (BS)
RBI’s hands tied, need FIIs: PM advisor
Arguing that the uptick in inflation has “considerably diminished” the Reserve Bank of India’s legroom to intervene in the forex market to prop up the plunging rupee, the Prime Minister’s top economic advisor has called for “more proactive steps” to attract capital flows as the more viable way out of the crisis................
Rupee plunges to new low before RBI pulls it back
.....Most economists Mint spoke to said they are not revisiting their current forecast that the rupee would trade in the 52-55 to a dollar range over the next three months. The gyrations in the currency market are knee-jerk, they say. RBI deputy governor H.R. Khan had said on Wednesday that the central bank was keeping a close eye on the rupee, and “will take all steps to curb volatility”. He did not elaborate further. The RBI’s stated policy is to intervene only when the foreign exchange market becomes volatile rather than target a particular exchange rate.........
Rescuing the rupee: What RBI can do next
....In a special report, Deutsche Bank notes that the rupee has lost about 3 percent this month, which is in line with the fall in the value of of some other regional currencies, and even lower than some other emerging market currencies. Thank the RBI for that because were it not for a slew of central bank measures, the rupee would have fallen even further. Is there anything more the RBI can do? Yes, says the brokerage, noting that there are three further steps the central bank can take.....................
Weakening currency bane for RBI rate cut
The sharp decline of the rupee in the last one month may complicate things further for the central bank, in terms of lowering interest rates, as concern of imported inflation is set to weigh on Reserve Bank of India (RBI)’s decision making. With the country importing more than 80 per cent of its crude oil requirement, a weakening rupee will push up oil prices which will affect inflation............
The ropey rupee
......The RBI governor, Duvvuri Subbarao, remains in an unenviable position as he tries to devise polices to support the rupee while also facing the ongoing monetary policy dilemma. On the one hand, the dismal industrial production reading means that he will continue to face pressure from businesses to cut interest rates further. He appeared to succumb to such lobbying in April, when the central bank reduced the repo rate by 50 basis points to 8%. On the other hand, when considering the RBI’s determination not to undermine its credentials as a monetary institution unwilling to tolerate excessive price instability, it would be difficult to justify further monetary loosening when inflation is still so high......
Rupee: What exactly is RBI intervention?
In the wake of the rupee’s slide, there has been much talk about the RBI’s intervention in the currency markets to support the Indian currency, including a massive selloff of dollars. But what exactly is RBI intervention, how does it work and what impact can it have? Here’s a quick guide to understanding what tools the RBI has at its disposal and what it can do......................
Thursday, May 17, 2012
RBI dy guv Chakrabarty may be India rep at ADB: Sources
..........Come July, the RBI could be on the hunt for a new Deputy Governor. According to sources in the finance ministry and RBI, Chakrabarty could be headed for a bigger and better role as the Indian representative at the Asian Development Bank pending government approval.....................
RBI announces SAARC swap arrangement
.........With a view to strengthening regional financial and economic cooperation, Governor Dr. D. Subbarao announced in the 24th SAARCFINANCE Governors’ Meeting, in Pokhara, Nepal, that the Reserve Bank of India will offer Swap Arrangement of US$2bn both in foreign currency and Indian rupee. The facility will be available to all SAARC member countries, viz., Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. With launching of this facility, member countries can now approach Reserve Bank of India for availing of the facility...................
‘We're already geared to meet proposed norms'
What recommendations of the Usha Thorat Committee will be implemented, in your opinion?
Higher capital requirement for NBFCs (12 per cent tier-1 capital) will surely be implemented. Recognition of non-performing loans after 90-day due, instead of 180 days, may also be implemented. Directionally, the RBI is saying that NBFCs should be more prudent in the way risk capital is being provided. While we would like the RBI to govern us more we would also like to be given a level playing field. The RBI shouldn't worry that credit to NBFCs is going up.............
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