............And similarly, the Reserve Bank of India has told domestic banks they must start reporting on aspects of Basel III liquidity strength measures from as early as June this year, ahead of the reporting timetable laid out by the Basel Committee. Furthermore, it has stipulated that banks go above and beyond Basel III requirements and provide a statement outlining their bond spread movements compared to their share price in a bid to better monitor early signs of systemic risk.........
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.
Saturday, May 26, 2012
Rakesh Mohan condemns 'metro mania' amongst urban transport policy makers and planners
Metro projects should be restricted to cities with over 5 million population and all urban transport costs should be borne by cities through user charges and fiscal imports, said Rakesh Mohan, Chairman of the National Transport Development Policy Committee today...................
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The malaise within
The growth of the last two decades had been properly utilised, India’s GDP would have been several times more
The Indian rupee has touched a record low of 56 per dollar and continues to go down. The interventions of the Reserve Bank of India have been of little avail and the finance ministry remains clueless as to how to reverse the trend. Two years ago the rupee-US dollar exchange rate was at around 44.00. Thus, there has been a fall of about 25 per cent during the last two years. Rupee has been on the decline consistently and is expected to fall further in the near future.
Welcome the fall
.....A falling currency is a sign of weakness, and the decline of the rupee reflects the many ways in which the economy has been mismanaged; the loss of competitiveness gets neutralised through a cheaper currency. Some players may have got caught unawares by the sudden drop, but commentators have woken up to the positive macroeconomic effects of the rupee’s depreciation. Players should be relieved that a key element of macro-adjustment has been more or less achieved — partly through fortuitous commodity price movements. While ........
Rupee slide: RBI Governor meets Manmohan Singh
A day after hinting that the central bank would take necessary steps to arrest the rupee's slide, RBI Governor D Subbarao today met Prime Minister Manmohan Singh and is believed to have discussed the issue with him. Although the rupee has recovered after yesterday's announcement by Subbarao on the possibility of selling dollars directly to oil companies, it had fallen to 56.07 to a dollar in the morning trade, after yesterday's close of 55.65..............
We will look beyond consumption expenditure to estimate poverty: C Rangarajan
Suresh Tendulkar is a reputed economist, known for his work on poverty. Why has the new committee been appointed when his estimates of poverty were already there?
This committee has been appointed due to concern over estimating poverty using the Tendulkar committee’s method. We need to look at how to define and measure poverty. So far, the level of consumption expenditure has been used as a way to estimate poverty. This is based on the basket of goods and services, and estimated using the least possible level to sustain someone. It is adjusted for price increases and consumption patterns every five years.....
RBI Central Board of Directors meets today at Mussoorie
Dehradun, 24/May/2012 : The Central Board of Directors of the Reserve Bank of India met today at Mussoorie, Uttarakhand. Dr. D. Subbarao, Governor, Reserve Bank of India chaired the meeting. Directors Dr. Anil Kakodkar,Kiran S. Karnik,M.V.Rajeev Gowda,Y.H.Malegam,Dr. Indira Rajaraman and Dr. Najeeb Jung, as also, Government nominee director on the Central Board D. K. Mittal, Secretary, Financial Services attended the meeting. Deputy Governors Dr. K.C.Chakrabarty, Dr. Subir Gokarn,Anand Sinha and Harun R. Khan were also present. The Board reviewed the current economic situation and global and domestic challenges and policy responses..............
Friday, May 25, 2012
RBI to relax policy norms to encourage banking in Uttarakhand
....."The Reserve Bank and the government, as the case may be, will relax the policy guidelines to see that there is greater penetration of banking system in the hilly areas," RBI Governor D Subbarao told reporters after the central bank's board meeting here........
Reserve Bank's G. Gopalakrishna: 'We Have No Target for the Rupee'
An edited transcript of the conversation follows...............
Real time gross settlement delays payment of Nagpur Municipal Corporators contractors
....If you use the RTGS route, the money goes through RBI. Even if there is a minor mistake in the form describing the work and payment, it gets rejected. That is why we are advising the contractors to open an account with us. Then there would be no formalities involved.".....
Tender exact change, govt tells shopkeepers in Meghalaya
.....It has been observed that shopkeepers are offering chocolates in lieu of the balance money/exchange that they have to return to customers, East Khasi Hills deputy commissioner Sanjay Goyal said. Violation of the instruction shall invite stern action which may go up to the extend of imposing penalties on the shops under relevant provision of the laws, he said. Goyal said the shopkeepers are responsible to tender exact changes to customers as the Reserve Bank of India has clarified that there is no shortage of coins.
RBI, finance ministry differ over rural bank branches
The Reserve Bank of India, RBI, and the finance ministry seem to have differences on the way banks should go about ensuring financial inclusion. While both the regulator and the ministry are passionate about providing banking services at low cost to the disadvantaged, a difference of opinion between the two has confused bankers...................
A road India needs to travel
India has had a long history of initiatives to bring about financial inclusion since 1947. The Reserve Bank of India (RBI) and the ministry of finance have been striving to achieve financial inclusion through a series of programmes starting with nationalisation of the Imperial Bank to State Bank of India in 1955, introduction of cooperative banks, State takeover of major banks in the 1960s, opening of regional rural banks, priority sector lending programme, banking correspondent model, the no-frills account etc. However, all these initiatives have met with limited success..........
Read - Hindustan Times
The forex problem
This refers to my article “Ways to handle forex crisis” (Business Line, May 24). Inter alia, I have proposed that the Reserve Bank of India (RBI) open a refinance window for foreign exchange loans issued by commercial banks. When the bank intervenes in the market to stabilise the exchange rate, it sells dollars absorbing rupees, thus causing a shortage of liquidity, apart from a decline in reserves. To offset the shortage, it has to engage in a debt buyback operation. If the suggestion on a refinance window is adopted, the problem of rupee liquidity will not arise as the transactions will be in forex. The reserves lent will return to the bank when repayments are made, apart from the RBI earning a better yield than what it is now.
- A.Seshan (HBL)
Rupee slide: Why is the RBI not doing anything?
..........The inter-bank forex market would immediately drop within the said band. Why is RBI not taking such a step? Possibly, the RBI is a little uncertain that such an action would deplete forex reserves of the country (hovering around $290 billion) with the belief that authorised dealers would be on a dollar-buying spree at the rate of Rs 49.40. Such a belief is unfounded. India continues to be a highly-regulated forex market. Authorised dealers have to be square or near square in respect of their forex positions as at the close of business hours each day. RBI also prescribes overnight limit of forex position for each bank. No authorised dealer can buy forex from RBI and offload it in the international forex market...........
RBI cracks down on exporters, banks Rs sees sharp rebound
The Reserve Bank of India (RBI) on Thursday threatened exporters and banks with penal action if they were found violating its instructions on converting dollar funds into the domestic currency in a fortnight.
The central bank’s move came on a day the rupee saw sharp swings —Read............
Spate of regulations change face of financial sector
....Removal of priority sector status for gold financing firms, loan-to-value (LTV) cap of 60% on gold loans, guidelines on securitization, recommendations for PSL and Usha Thorat committee recommendations for NBFCs intend to bridge the regulatory gap and strengthen balance sheets.............
Subbarao indicates more interventions over Re slide
.....The rupee has been falling for the last three-four months, especially after some appreciation in January-February. The RBI has taken action to improve current flows and curb speculation. The rupee movement is a function of external factors, the capital account and other factors like balance of payments. Some structural changes are necessary for improvement in the current account,” .......
Declining value of rupee a heartburn for all
...“The fall in the value of rupee is a gain for exporters. But it is not good for the economy. The government, the RBI, and the finance ministry have to take steps to see that rupee does not fall further. Ultimately, all losses will have to be borne by the common man,”........
Surge in April inflation a surprise: Subbarao
...We noted that inflation has been a surprise upside for month of April...We will consider how the inflation scenario has evolved. We will take into account the growth statistics and take a decision," RBI Governor D Subbarao said while addressing a press conference after the board meeting...........
It’s not just about depreciating R
.....The government and RBI need to avoid this trap. The Chairman of the Prime Minister’s Advisory Council, Dr Rangarajan, has been constantly communicating on the exchange rate in the past two weeks. About a week ago he said RBI should not allow temporary ebbs in the capital flows to unduly impact the exchange rate. That gave the impression that RBI would defend the currency by selling dollars in the market. Indeed, RBI did sell dollars in the market on several occasions to counter the speculators. However, the expectation was that RBI will come down with a sledgehammer if the exchange rate weakened beyond R54-55. Those levels have got breached now, creating a further scare in the market. Some feel RBI has been a bit half-hearted.......
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RBI to take steps to arrest rupee fall: Subbarao
Dehradun : "RBI will do whatever is necessary. Some structural changes are necessary for improvement in current account. Meanwhile, the RBI is monitoring the situation and we will do whatever is necessary, consistent with our policy," RBI Governor D Subbarao said while addressing a press conference after a meeting of the central bank board here.................
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Running on empty: Why 8-9% growth isn’t coming back
.......As RBI Governor D Subbarao has repeatedly pointed out, it is these supply-side constraints that have kept inflation unsustainably high, despite extraordinarily high interest rates last year, which in turn choked off yet more growth.......
Thursday, May 24, 2012
The paradox of forex reserves
Bharat Co-op Bank to Launch Visa International Debit Card on May 28
Mumbai, May 23: Bharat Co-operative Bank (Mumbai) Limited will launch Visa international debit cards in ‘The International Year of Co-operative’ as bonanza for its customers on Monday May 28. Reserve Bank of India Executive Director S Kuruppaswamy will launch the debit cards in the presence of Visa India and South Africa national group manager Uttam Nayak and Corporation Bank former chief manager B R Bhat at Sai Palace Hotels, Mahakali Caves Road, Andheri (East), at 10.00 am Monday May 28, stated the press release issued by CEO C R Mulky.
Financial inclusion nearing completion in state
.......It may be noted that during a special meeting of State Level Bankers' Committee (SLBC) chaired by Reserve Bank of India (RBI) Governor D Subbarao, it was decided that banks should open at least 200 brick and mortar branches in unbanked villages. Pursuant to the meeting, the RBI-Bhubaneswar has allocated the remaining 146 centres among different banks of the state. Most of the banks have opted for opening ultra small branches at these centres........
Andhra to wait for passage of MFI bill before review of law
......Even as finance minister Pranab Mukherjee tabled the microfinance bill in the Parliament on Wednesday, which allows the apex bank RBI to keep a firm grip on micro lending companies, the Andhra Pradesh government has not lost hope of continuing to reign these players. “There are fundamental differences between the bill and the AP Act. While at this juncture there cannot be much done, we will wait for sometime, and if the bill is passed, we look at various ways to protect the poor borrower. It is not known now on what exactly could be done, ”.....
Electronic transactions
The Reserve Bank of India has come out with a new notification on rationalisation of agency commission for Government transaction payable to banks. According to the new guidelines, banks will get Rs 50 a transaction. However, they will get only Rs 12 for an electronic transaction. Electronic transactions involve remittance of funds from the remitter's bank account though the Internet as well as all such transactions which do not involve physical receipt of cash/instruments.
Banks should be encouraged to make customers use the electronic mode, whereas this decision of the RBI will have the opposite effect. Banks may also advise customers to issue cheques for tax payment as that will fetch them more commission. This is a retrograde step.
- S. Kalyanasundaram, Chennai (HBL)
Ways to handle forex crisis
...........It is time the RBI constitutes an expert group to take a total view of the issue of the stability of the forex market, taking cognisance of its interface with monetary, fiscal and debt management policies and come out with feasible recommendations within a month. The group should be broad-based, including all stakeholders. In the meantime, the central bank should continue with administrative and regulatory measures to curb speculation............
Difficulties in crop loan disbursal due to RBI norms: Chavan
Maharashtra Chief Minister Prithviraj Chavan today conveyed to Finance Minister Pranab Mukherjee the difficulties being faced by district central cooperative (DCC) banks in crop loan disbursal owing to RBI restrictions.......................
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‘Banks should work for uplift of minorities, farmers in State’
........RBI Governor Subbarao said that Uttarakhand which is in its infant state should try to come at par with other developed State in E-Banking. Banks would be asked to focus on remote areas and maintain proper ratio while opening bank branches at plain and hill areas. Banking sector is ready to extend its network provided State Government extends all required assistance to them. Regional Office of RBI would be further strengthened. Uttarakhand should take advantage of Dehradun’s image as education hub and should try to make other districts too an education hub. He also asked to develop e-banking in the State...........
U’khand CM for norm relaxation for opening bank branches
......Bahuguna said the benefits of welfare schemes launched by the state and the centre for scheduled caste, scheduled tribes, weaker sections and women would also reach the beneficiaries faster by opening of more bank branches. The Chief Minister said the visit of RBI Governor to the hill state would be a "milestone' and help in expanding banking facilities in the state. During the meeting, Bahuguna said the RBI Governor asked him to facilitate enhanced use of e-transferring of funds, which he said is quite less in Uttarakhand................
Banking tightens UAE-India ties
..........National Bank of Abu Dhabi (NBAD) has applied for a licence to the Reserve Bank of India to open a branch in Mumbai, its first in India. "India is the biggest trading partner to the UAE so it will make perfect sense for us to be there," said Prakesh Sheth, the head of the international credit and marketing unit at NBAD, at the Arab India Partnership Conference in Abu Dhabi yesterday. "It will be the gateway for the Arab world who want to do investment and business in India and also for Indian companies wanting to set up in the Arab world.".....................
India Inc frets as clueless Reserve Bank of India struggles with Rupee
As the government blames the crisis in Greece and the Reserve Bank of India waits for New Delhi to act, corporates are sensing the central bank's and policymakers' helplessness to pull back a sinking rupee. Treasury heads of large companies and fund houses voiced concern at a meeting with the RBI last week even as corporates suggested a flurry of measures before it was too late. And chances are, Governor D Subbarao may have to answer questions on a battered currency and on what to do next when the RBI board - which usually discusses the state of the world stuff over tea - meets in idyllic Mussourie on Thursday....................
Hold It, RBI
The central bank should stop piecemeal intervention in the currency market
The rupee has dipped below . 56 to the dollar, despite intervention by the Reserve Bank of India (RBI). It is time the central bank stopped intervening in a piecemeal fashion. Such intervention serves, at best, to smoothen the path of the rupee’s relentless fall; not to stop or reverse it. At worst, it erodes credibility in the central bank’s ability to influence the currency. In any case, it is not the RBI’s goal to manipulate the exchange rate and hold it at any artificial level. True, no one knows what the appropriate exchange rate is. Players in the currency market are making bets, informed or otherwise. The most informed guess would be the RBI’s. It should signal that it would refrain from intervention till the rupee reaches.............
RBI policy to check rupee fall is appropriate: Rangarajan
The Reserve Bank of India has taken the right policy to check the rupee’s fall without being too aggressive about it, C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, told CNBC-TV18 in an exclusive interview on Wednesday............
Re breaches 56/$ level; FM dials RBI Governor
On a day the rupee plunged further to touch 56 to a US dollar, Finance Minister Pranab Mukherjee discussed the situation with Reserve Bank of India Governor D Subbarao via videoconference. Sources said that it has been decided that any action in the form of an intervention in the currency market to support the rupee would be taken solely by the central bank....................
Currency trouble
Depreciation is a problem, but it also presents opportunities
..... The purpose of regulating the currency markets is to arrest speculative trades, which the Reserve Bank of India has been trying to do; but some statements created an ambiguity about government action that has fuelled the rupee’s excessive fall. Quick measures to control the situation are in order.
However, there is little doubt that a correction from the rupee’s levels of last year was warranted and useful.........
Securitization deals likely to take a hit
Loan securitization deals, or the practice of commercial banks buying out the loan portfolios of non-banking financial companies (NBFCs), may see a significant drop in volume after the Reserve Bank of India (RBI) tightened the norms on such transactions........................
Rupee: FIEO seeks drastic measures from RBI
Apex exporters' body FIEO today sought "drastic" measures from Reserve Bank like directly selling dollars to oil companies, to arrest the weakness in rupee...................
New RBI norms to curtail securitisation volume: Icra
The securitisation market is likely to see a drop in the current financial year following the recent Reserve Bank guidelines, according to the rating agency Irca........
Dhanlaxmi gets RBI's nod on MD recruit, revival in process
The Reserve Bank of India (RBI) has confirmed the appointment of P G Jayakumar, the new managing director of the privately held Dhanlaxmi Bank wherein its board had dislodged the existing management due to poor financial performance. This looks to have scorched all speculations of a possible acquisition of the troubled bank by any bigger bank,..................
Wednesday, May 23, 2012
JK Bank, RBI team visits Tullamulla
....Speaking at length about the seriousness of RBI regarding the programme of Financial Inclusion DGM, RBI Ramesh Chand briefed the gathering about the benefits of Smart Cards/Kissan Credit cards.
“We will conduct a Financial Awareness camp here in coordination with J&K Bank in July, where top officials of both the Banks will be present,” he announced......
“We will conduct a Financial Awareness camp here in coordination with J&K Bank in July, where top officials of both the Banks will be present,” he announced......
RBI revises commission for banks for handling govt finances
After a gap of seven years, the Reserve Bank today announced revised rates of commission payable to banks for handling government transactions effective from July, 2012. "In a dynamic banking scenario, several factors/ developments influence the cost/ mechanism of agency business arrangement. Taking all these factors into consideration...It has now been decided to prescribe a revised agency commission rate structure,"...................
Opening of No Frills Accounts for Rural Customers
......As per the extant Branch Authorization Policy of Reserve Bank of India (RBI), general permission has been granted to domestic SCBs (other than Regional Rural Banks) to open branches, in centres with a population up to 99,999 and in all centres of the North-Eastern States and Sikkim, subject to reporting. In order to further expand the banking network, RBI has advised that while preparing their Annual Branch Expansion Plan, the banks should allocate at least 25 per cent of the branches proposed to be opened during a year in unbanked rural centres with population upto 9999. Further, under the “Swabhimaan” financial inclusion campaign, banking facilities have been provided to over 74,000 villages having population ........................
FirstRand Bank offers 7.25% interest on savings accounts
......"The deregulation of the savings rate by RBI late last year has benefited the Indian consumers and we would like to ensure our customers benefit by offering a savings rate at 7.25 per cent........
RBI cancels licence of Coop Bank in Latur district
....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...............
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! ..........
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