........Other conditions put down by RBI include a robust methodology to discover the market price of spectrum and a margin to take care of downward fluctuations in prices and a credible valuation methodology to value spectrum reflecting the true realisable value of the airwaves. Further, in case of default by a borrower, the bank should have the unfettered right to sell, transfer, assign exchange or dispose of the spectrum, without any restraining condition, the ministry has said. Also, in case of cancellation or revocation or voluntary surrender of telecom licence before the realisation of full dues, the right on spectrum should be with the lenders, it has added.................
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, June 13, 2012
Finance ministry preparing new policy road map for banking sector
......The North Block has already begun discussion with the central bank on the framework that will prescribe profit, capital adequacy, size and any other condition it deems fit for such banks to graduate into full-fledged banks. "We have written to the RBI asking for a clear roadmap for the smaller banks that want to expand," a senior finance minister official told ET...............
Free all e-banking transactions from charges
.....Addressing the chief executives of public sector banks and financial institutions here on Tuesday, the Finance Minister appreciated the recent decision taken by Oriental Bank of Commerce to waive all charges for Net-based real time gross settlement (RTGS) /national electronic fund transfer (NEFT) transactions up to Rs 1 lakh. He said, “I am confident that all the public sector banks would follow this excellent initiative. I would also urge upon the Reserve Bank of India to proactively work on this front and to see that all electronic banking transactions are possible without any charges being levied.”......
Banks told to cut NPAs
..............“I urge you to deploy various tools at your command for containing and rolling back NPAs in accordance with the guidelines of the Reserve Bank of India,” .................
Read........
Read........
Public sector banks - 2: Brazen quixotic and thoughtless directives from Delhi
....Notwithstanding the fact of substantial private shareholding in PSBs and the managerial autonomy granted to them in 2005, the central government’s power to give direction to banks in regard to matters of public interest, after consultation with the RBI derived from the Banking Companies (Acquisition and Transfer of undertaking) Act 1970—in short Bank Nationalisation Act 1970—remains intact.The nature of consultation with the RBI is not clear nor is it clear whether the government could overrule RBI’s advice in matters where the RBI is professionally competent. Be that as it may, in the recent past, the ministry of finance, Department of Financial Services (DFS) has issued a number of directions, advisories and directives to PSBs........
The RBI needs to act
............There is also a strong case that the RBI should be ready to act in anticipation of a possible catastrophic event emerging from Europe. The implications of a disorderly exit by Greece from the euro for the banking and credit system are far from clear. If credit were to dry up across the international financial system, as it did following the collapse of Lehman Brothers in 2008, the RBI should be ready to cut rates sharply. After Greece’s next round of national elections, the future path of the euro will become clearer; but they are scheduled for Sunday, and the results may not be known in time for Monday’s credit policy. The RBI is, thus, faced with a dilemma.............
FE View: Up to poor RBI now
..........They are stuck because of what, in short hand, is called 'policy paralysis' – the government's inability to give corporates land, to get coal allocation, environment clearance, and so on. How an interest rate cut by RBI can fix this is anybody's guess. Don't hold your breath
RBI cutting rates not the right solution now: HSBC
.....In my view, it wouldn’t be the right solution to the growth problem because that has to come from supply side reforms, from broader structural reforms. But you could argue that there is somewhat more pressure on the RBI to deliver a rate cut. So, I would say that the possibilities of a rate cut are quite high this time around......................
Read..........
Read..........
Banks' CRR cut demand gets government support
...........Interestingly, SBI’s demand for CRR cut was also supported by the government, owner of the public sector banks. “Banks are saying the best way is to cut CRR. This is also appropriate from the point of view of Basel-III. Banks can pass on the benefits to customers. As owner of public sector banks we can say banks would welcome a one percentage point cut in CRR, but ultimately the decision will be taken by the Reserve Bank of India. Unless interest rates are lower, there is difficulty in having higher growth rate. Today higher interest rate is feeding into inflation,” Financial Services Secretary D K Mittal said.................
Why RBI should lower policy rates
.....The data tell us that while the economy has slowed down, prices continue to be sticky. The RBI did say in the past that it would not mind sacrificing a bit of growth to bring inflation under control. But the growth numbers for 2011-12 would surely have been a source of discomfort to RBI. In a recent interview, the RBI Governor, Dr D. Subbarao, pointed out that given the inflation dynamics in the economy, 7 per cent may be the potential growth rate. The implicit argument is that 7 per cent growth would bring down inflation to more acceptable levels. This approach, of effectively curbing growth, delayed the rate-easing cycle by almost two quarters, before its fallacy became evident......
Cut lending rates for recovery
......We hope the Reserve Bank of India (RBI) will continue to ease to support growth on June 18. Given April 17’s 50-basis point cut, it may be too much to expect another repo rate reduction, especially as RBI had warned that the room for further easing was limited. No matter. It is just as critical that RBI Governor D Subbarao cut the cash reserve ratio to normalise money growth. After all, until liquidity improves, banks will find it difficult to cut lending rates even if the RBI cuts policy rates. Unless lending rates come down, growth will surely fall short of our modest 6.5 per cent this year, forget the RBI’s 7.3 per cent. What about inflation? We do expect it to pierce.................
S&P's unfair comparison
This refers to the report “India may be the first fallen BRIC angel: S&P” (June 12). There may be some substance to the warning signals contained in the rating agency’s report. But the agency has done a disservice to players in financial markets – who still factor in the views of Standard & Poor’s (S&P) in their decision-making process – by openly airing partisan political considerations of its rich masters in a report that should have been a professional assessment of financial stability aspects. In terms of country representation or share in world GDP, Bric (Brazil, Russia, India and China) economies form a small group and India should not be too bothered about the kind of comparisons S&P has made. The rating agency could do well to infuse some standard in its assessments that should apply uniformly to similarly placed nations. It is better to compare comparables. Finally, India should have its own rating agency of international repute. Finance ministry releases alone will not be enough to counter “judgments” like the one being passed by the extended arms of external interests.
M G Warrier Mumbai
...and dubious timing
The timing of S&P’s report makes one doubt the rating agency’s “objective”. The issues of dual power centres in the government and political roadblocks to “so-called” reforms are not new — we have been facing these for almost eight years. There is no apparent or immediate trigger for the rating agency to come out with such a report.
N Ramamurthy Chennai (BS)
The story of India’s falling forex reserves
Echoing former Reserve Bank of India (RBI) governor C. Rangarajan, Ashima Goyal, a member of the central bank’s technical advisory committee, has called upon RBI to use foreign currency reserves to support the rupee................
No-frills accounts rise over two-fold in last two years
.........The RBI has launched the financial inclusion programme to provide financial services to people in unbanked areas. RBI's approach to financial inclusion is aimed at connecting people with the mainstream financial institutions like banks, the apex bank said. "Goal of financial inclusion is better served through mainstream banking institutions as only they have the ability to offer the suite of products required to bring in effective or meaningful financial inclusion," RBI said..................
Credit cards need better regulation
....Who will come to the rescue of the aam aadmi? A bank cannot be allowed to suck the blood of the common man in the form of interest. It will not be out of place to mention here the RBI directive on interest rates. It stipulates as follows: “Though interest rates have been deregulated, charging of interest beyond a certain level is seen to be usurious and can neither be sustainable nor be conforming to normal banking practice. Boards of banks have, therefore, been advised to lay out appropriate internal principles and procedures so that usurious interest, including processing and other charges are not levied by them on loans and advances.”.....
RBI asks banks to allot unique customer IDs
............The RBI said that increasing complexity and volume of financial transactions require that customers do not have multiple identities within a bank, across the banking system and across the financial system. To overcome this, it is important to pool information pertaining to different account holders in a centralised database.
Gold loan firms to form self-regulatory body
Gold loan companies, which have been under the regulatory scanner for alleged malpractices, are coming together to form a self-regulatory organisation (SRO) to adopt fair-trade practices, and also to represent their case better with the Reserve Bank of India (RBI).......
JK Bank surpasses target in priority sector lending
.........The meeting under the chairmanship of DDC, Kupwara, reviewed achievements under Annual District Credit Plan 2011-12. MLA Lolab, Abdul Haq Khan, MLA Langate, S A Rashid and representatives of Reserve Bank of India and NABARD were present in the meeting.........
RBI's holding of gilts rising
.......Ever wondered how the government borrowing programme sails through so easily? Well, the RBI lends a helping hand. The RBI's holdings in gilts, or government bonds, have risen by almost two percentage points to 14.4 per cent in the six months ended March 31, 2012. The holdings have trebled from lows of 4.8 per cent as of March 2008......
CBI court permits Ketan Parekh to go abroad again
A special CBI court in Ahmedabad on Tuesday granted tainted stock market trader Ketan Parekh, prime accused in multi-crore securities scam, permission to visit United Kingdom (UK) for two months. The permission was granted by additional chief judicial magistrate H S Khutwad based on a application by Parekh who is also main accused in the Rs 1,200 crore scam in the Madhavpura Mercentile Cooperative Bank (MMCB) here, which has led to closure of the bank. The RBI had recently canceled the banking licence of the MMCB, nearly 11 years after the multi-crore scam came to light.........
Job alert: SBI to hire 9,500 employees
The country's largest bank SBI has said it plans to hire 9,500 employees this fiscal and its main thrust will be on retail banking in the coming years.....
Tuesday, June 12, 2012
Broad view of small pictures
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| REGIONAL ECONOMY OF INDIA — Growth and Finance: Edited by Deepak Mohanty |
.....The Reserve Bank of India (RBI) may be proud of its achievements in establishing the Department of Statistics and Information Management (DSIM). In a speech delivered at the Annual Statistics Conference at Chandigarh in March this year, Dr. Mohanty explained the role of the DSIM within the RBI and how “The statistician in the Reserve Bank performs a multifarious role.” It encompasses collection, compilation, analysis and dissemination of information relating to monetary, banking, corporate and external sectors. The RBI's web-enabled Database on Indian Economy (DBIE) is a gold mine for researchers both within the country and abroad. While the research undertaken in the departments of the RBI located in Mint Street are well known through publications, Reports, Occasional Papers, etc., not much is known about the work done in the regional branches. This book is an attempt to disseminate research done by some of them......
Read - The Hindu
Firms take business correspondent route to gain banking expertise
......Back in August 2010, RBI had first mooted the idea of allowing corporates to act as BCs in a discussion paper, counting on their ability to employ “larger resources, higher organizational strength and financial backing” as a boost for the bank agent model. Moreover, big companies would be wary of reputational risk and hence efficiently monitor their agents, the regulator had noted. A month later, on 28 September 2010, RBI allowed their entry. Both experts and stakeholders caution that the challenges are substantial..........
UP directs banks to be alert on fake currency
.....The minister also accepted that cases of fake notes from bank ATMs have also come to the light and added that suggestions have been given to the RBI for not allowing money into ATMs manually and deploy guards there after their character verification..............
Govt agenda to dictate PSU banks' board meets
Finmin asks nominee directors to highlight key issues of financial inclusion, rationalisation of branches and priority sector lending
Government nominees on the boards of public sector banks, financial institutions and insurance companies might now dominate the agenda at their meets. Concerned that the boards give a slip to the government’s areas of interests, the finance ministry has instructed all its nominees to prepare a list of key issues that should be discussed before moving on to the agenda set by the company.................
Rising NPAs
This refers to “Rising bank bad loans, slowing credit growth” (Business Line, June 10). Recently, the RBI Deputy Governor, Mr K.C. Chakrabarty, said that the interest rates are “not too high” to affect “corporate” growth. He was more concerned with the rising bank bad debts. Even the new private sector banks had relatively high gross NPAs at 2.18 per cent in March. The SBI and nationalised banks still have higher NPAs as a percentage of gross advances. Good credit appraisal, not lowering policy rates, helps reduce NPAs. There is considerable scope for tightening appraisals and intensifying due diligence. NPAs rise when big loans extended to large industries remain in arrears. There is near unanimity that liquidity in the system is not an operational hitch in “transmission mechanism”. The banking system suffers from its loans to sectors such as aviation and infrastructure, and their return will be a long-term story. With slowing growth, the RBI believes that despite inflationary pressures, there is “room to lower rates” to induce growth, when actually the lending and recovery mechanisms need strengthening.
- K. U. Mada Mumbai
Sail through common exam for public sector banks
.....Banks are one of the biggest recruiting agencies in the country and there is a great response for the managerial jobs for the fact that they are open to candidates from almost all the streams. Instead of attending the tests of all the banks individually earlier, the aspirants now have to take the Common Written Examination conducted by the Institute of Banking Personnel Selection (IBPS) for entry into 19 public sector banks. The next IBPS exam is just a few days away, and will be conducted on June 17.........
Bank loans for vocational courses soon
In a landmark of sorts, the Indian Banking Association (IBA) has decided to extend the ambit of its Model Educational Loan Scheme to include vocational education and training. This means that all banks, which are associated with IBA, as well as a other banks that RBI may include, will now also offer education loans for students in the vocational sector..................
Microsoft helps BoI meet RBI compliance directives
Bangalore, June 11: Bank of India (BoI) has partnered Microsoft to deploy Microsoft Active Directory Rights Management Services (AD RMS). The company in a release said that the project will help it to safeguard corporate digital information and enables safe and secure banking operations. Microsoft AD RMS is currently available for 100 users of BoI and will be extended to about 15,000 users in the next phase of deployment. “By being in-line with the RBI data security guidelines, it ensures safety and security of corporate data,’’ said Mr Sameer Ratolikar, Chief Information Security Officer, Bank of India.
HBL
Timothy Geithner to visit India later this month for economic talks
Aiming to further expand the bilateral economic engagement, US Treasury Secretary Timothy Geithner would travel to New Delhi and Mumbai later this month for the third annual meet of the US-India Economic and Financial Partnership. Geithner would be in New Delhi on June 27 and would travel to Mumbai on June 28. In Mumbai, he would meet the Reserve Bank of India (RBI) Governor, Duvvuri Subbarao, and the business leaders from a variety of industries.......................
No credit for small farmers
The M.V. Nair Committee has defined agriculture too broadly, making it easier for banks to avoid riskier lending to the small and marginal farmers.
Despite having only a 15 per cent share in GDP, agriculture still employs more than 60 per cent of India's rural population. The Centre continuously boasts of doubling credit to this sector and providing interest relief of two per cent for prompt payments, and the like. But a look at the Reserve Bank of India statistics on direct credit for farmers during the past five years reveals that there is a fall in actual money going to farmers..................
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"My View on "RBI's KC Chakrabarty counters Gokarn ...":
The comments of Mr.Warrier are excellent. Deputy Governors should be clearly told by the Governor that they should express views in public only on matters pertaining to the departments handled by them. This would avoid contrary views being expressed by the Bank through their Deputy Governors. Government officials like Economic Affairs Secretary and Economic Adviser to the Finance Minister have also been expressing views on interest rates which is the domain of the RBI. Finance Minister should advise them to stop expressing their views on matters which should come from the Governor. It is no use in Government saying that RBI is an autonomous institution and then allowing its officials to cause embarrassment to the Governor. Of course, Governor has been pursuing policy as he considers best and has least been affected by the views of the Government officials.
Kudos to the Governor.
Kudos to the Governor.
A. Chandramouliswaran, Former Executive Director
Financial inclusion net to cover more people to curb leakages, generate savings
....The Reserve Bank of India advised all banks to set up low-cost outlets or ultra small branches to act as a bridge between bank branches and business correspondents. These low-cost branches will provide support to 8-10 BC units and have minimum infrastructure like pass book printer, cash retention facility and terminals equipped with modern banking technology. .....
Govt keen to revive co-op banks whose licenses RBI has cancelled: Shivpal
Cooperative Minister Shivpal Singh Yadav told the Assembly today that the government was in touch with the Reserve Bank of India and NABARD to ensure the functioning of 25 cooperative banks whose banking licenses had been cancelled by the RBI......................
Bank fraud: Notice issued to close accounts
A day after Noida police busted a gang that cheated several banks of crores by obtaining loans through fake documents, notices have been served on banks to close the 130 accounts that were opened by the gang over a period of time. The police also have asked RBI to issue an advisory. The police said soon bank officials responsible for issuing loans and verification will be investigated....................
RBI may have to sacrifice growth to tame inflation: KC Chakrabarty
Between growth and inflation, which one do you think deserves priority right now currently?
For the monetary authority, the central bank, inflation will always remain the most important factor. But that does not mean we cannot grow, we can. The Reserve Bank follows a system, which you called a multiple indicator, so you look into various indicators that combine the monetary policy together. But then inflation and implying stability will continue be the most important factors. We are saying one thing from a long time that we cannot have high growth with high inflation. If we want high growth, there is a need to bring the inflation down and temporarily, we have to sacrifice the growth to bring down the inflation. But we should not hesitate, ultimately growth will pick up and we will be not able to have high growth without a moderate or low inflation.............
India a victim of loss of confidence and not opportunities: Rajkumar Dhoot
....“Therefore in such testing times responsibility of the apex bank RBI becomes all the more important to address growing concerns on the falling investment and liquidity faced by the system as the government borrowings shoot up,” .........
Financial sector regulators to take stock of economy
......The meeting, which will be held in Hyderabad, is also expected to analyse the reasons behind the depreciating Indian currency. The FSDC sub-committee is scheduled to meet just ahead of the Reserve Bank of India’s mid-quarterly monetary policy review on June 18. The RBI is widely expected to cut key rates by at least 0.25 per cent to ease liquidity and stimulate lending..........
RBI may stand pat now, cut 50 bps in July
The Reserve Bank of India (RBI) is unlikely to cut policy rates this month. Chances are, it could slash 50 basis points (bps) in July than by a smaller measure in June because by then, it will have more certainty on data – be it on growth, inflation, monsoon or the global economy.......................
RBI rate cut alone seen unlikely to spur cheaper loans
A rate cut by the Indian central bank next week will not be enough to spur banks to lower lending rates immediately, bankers said on Monday. Instead, Indian banks, saddled with high-cost, long-term deposits and narrowing profit margins, are hoping for a cut in the cash reserve ratio, which would boost liquidity and in turn lower the cost of funds, and would allow them to ease deposit and lending rates...............
Macro-economic situation calls for a pro-growth monetary policy
.....Given this situation, one can expect a 25 basis point cut in policy rates (repo and reverse repo) and a 50 basis point cut in the Cash Reserve Ratio (CRR) in the RBI's Mid-Quarter Review. The reduction of policy rates, however, is only one part of the story. For growth to pick up, it has to be urgently accompanied by strong policy actions by the Government, including movement in the second generation reform process.......................
Don't blame RBI for poor GDP, govt action vital: Munjal
Q: Does industry feel that the Reserve Bank of India has crimped growth?
A: Actually, it's not the Reserve Bank alone. The economy is in the present situation partially because of extreme monetary tightening and partially because the government is unable to take fiscal initiative. In the current situation, oil prices have softened over time and inflation has not gone up. So there is headroom, according to a Reserve Bank deputy governor, to improve liquidity in the banking system and to lower interest rates at the same time. But it has been suggested that government also take fiscal decisions.............
RBI: Hard choices, easy options
.........The situation facing the Reserve Bank of India (RBI) as it formulates its mid-quarter review of monetary policy is depressing. The growth rate for the last quarter of 2011-12 was 5.3 per cent, the lowest in many years. What is disheartening is that it continued a trend that started in ...............
RBI to meet export bodies on June 21
The Reserve Bank of India will meet representatives of export associations, industry bodies and banks on June 21 to discuss issues such as exchange rate volatility, export credit and also procedural issues affecting India's exports. This meeting will come close on the heels of the announcement of the annual supplement to the Foreign Trade Policy. India's merchandise exports grew 20 per cent in dollar terms during 2011-12 to $302 billion...........
Banks to take call on fixed deposit rates after policy review
Mid-size public sector banks would wait till the mid-term policy review by the Reserve Bank of India before taking a call on reducing interest rates on fixed deposits, top officials said today.....................
Banks want timeline set for firms to exit debt recast mechanism
......Bankers say the Reserve Bank of India could enhance the provisioning requirement for restructured accounts classified as standard advances to 5 per cent from 2 per cent. The enhanced provisioning requirement, whereby more capital will need to be set aside to cover possible defaults, will ensure that banks show urgency in the restructuring and exit of companies from the CDR process..........
Realtors rain EMI sweeteners
Home loan customers now have a reason to smile even before the Reserve Bank of India’s much-awaited credit policy review on June 18, where the central bank is widely expected to slash rates. In a bid to increase sales without lowering prices, real estate developers in Mumbai and the National Capital Region (NCR) are offering to pay customers’ EMIs till possession..............
Monday, June 11, 2012
SBI breaches RBI norms on RIL exposure for 4th year in 2011-12
State-run banking giant SBI has said it temporarily exceeded RBI-prescribed credit exposure limit for the fourth year in a row in 2011-12 with regard to loans given to Mukesh Ambani-led Reliance Industries..........
Cutting the Gordian knot
Contradictory statements from RBI officials hurt market sentiments
........... Early last week, RBI deputy governor Subir Gokarn rekindled the hope when he said that the central bank has some elbow room to reduce policy rates following a moderation in core inflation and drop in global oil prices. Liquidity in the banking system is in “comfort zone” as of now, said Gokarn, citing a recent drop in banks’ daily borrowings from RBI and steady, overnight cash rate. According to Gokarn, lower-than-expected economic growth will have some bearing on the central bank’s projection of GDP growth for 2012-13. The stock markets moved up, factoring in a 25-basis points rate cut. By the end of last week, things again turned upside down. KC Chakrabarty, RBI deputy governor, on Friday said inflation was the first priority for the central bank and that policy rates were not that high to restrict growth significantly, watering down the case for an interest rate cut. The stock markets witnessed some quick profit booking as confusion lingered in the market. Chakrabarty doesn’t believe that a drop in policy rates, even if it were as high as 200 basis points, would significantly help India Inc in reducing lending rates. He argued that adequate capacity is available right now to ramp up India’s manufacturing growth back to 8-9 per cent, from the present 2-3 per cent levels, before one could expect any massive investment in new capacities. Policymakers should refrain from sending out confusing signals........................
Avoiding the quicksand
.......................The deepening global crisis has even forced Beijing to act with alacrity. The Chinese Central Bank surprised the world with a 25 basis point cut in interest rate. This is the first time since the global financial crisis in 2008 that China has cut the interest rate. The China move has led Federal Reserve Chairman Ben Bernanke to declare that it would do whatever to protect the U.S. financial system and the economy. It is against this backdrop that the ensuing policy review of Reserve Bank of India on June 18 has raised a huge expectation. It's time the monetary and fiscal authorities spoke a common language and get the country to stay away from the the quicksand.
Let the regulators decide, please
Chief of the Securities and Exchange Board of India UK Sinha rarely speaks out of turn. Irrepressible KC Chakrabarty, deputy governor of the Reserve Bank of India, almost never gives up an opportunity to do so. On Friday, both landed up on the front pages of newspapers for very similar reasons, however. They had both rapped the governments’ handling of the economy. Both criticised the finance ministry for its take on the economy. The criticisms come at a time when the finance minister is just a nod (pun intended) away from moving over to the Rashtrapati Bhavan. Both Sinha and Chakrabarty have sort of made it clear then that there is no one who is now steering the economy from Raisina Hill. So, on June 18, to ask the RBI Governor to nod to a vacant seat and take a call on the rates in what will essentially be a political decision is unfair (Chakrabarty). Later, to expect a new finance minister to cobble up support with the allies and the BJP to pass all those economic bills the government has promised to pass through Parliament (Sinha) also looks very tough.....................
My View on "RBI's KC Chakrabarty counters Gokarn on possibility of rate cut"
The game those who are responsible for policy formulation are playing takes one back to the age-old transactional analysis, with PAC. Kaushik Basu and team can take the 'Parent' position, RBI the 'Adult' slot and Aam Admi the 'Child' position. Between the 'critical parent' and 'the crying child' RBI Governor gets jammed.To add to his embarrassment, his own team members come to open and share their wisdom(Gokarn) and ignorance with public.Top people within the organisation should better use internal forums to share their views and avoid airing divergent views in public on the eve of Governor's deliberations preceding policy announcements.
M G Warrier
Of heads, elbows and rooms
...........The day after the Union finance minister categorically, and quite correctly, ruled out any scope for fiscal stimulus, the Reserve Bank of India (RBI) suddenly discovered elbow room for cutting interest rates to push growth. This is the new anatomy of the Indian economy: since there is no headroom for fiscal stimulus, there has to be elbow room for monetary policy action. The compulsions are clear. Both these policy “guidance”—one negative and one affirmative—came as soon as the data showed that growth had slumped to its lowest level in nine years’ threatening to pull the gross domestic product (GDP) growth to below the comforting number of 6%..........
Central banks, govts have no choice but to act
.....I think we are at a stage where central banks, governments, including India by the way, have absolutely no choice but to act. Actually, to be honest I called 5.5% last week, which people at that time thought that maybe this guy has sort of lost it a little bit... What that actually means is that RBI, which is caught between a rock and a hard place, will act and it will sort of err on the side of ensuring that growth doesn’t completely go off the cliff, and in a sense it will be a mini crisis for India where Delhi will have to act as well........
Some unpleasant forex arithmetic
.....The Reserve Bank of India’s (RBI’s) market intervention strategy and the efficacy of its administrative measures to support the rupee have to be seen from this perspective. In a period when portfolio flows are weak, RBI has to fill this gap by offering dollars from its stock of reserves. The success of “intervention”, thus, depends on what percentage of this $2.5 billion deficit RBI absorbs by supplying dollars. There are again a couple of things about RBI’s intervention strategy that are becoming clearer as the rupee comes under successive rounds of depreciation pressure. First, RBI is unwilling to do much when there is risk aversion all around. This was quite apparent ........
‘Banks not proactive in tracing customers of unclaimed accounts’
In a scathing criticism to the banks, the Reserve Bank of India has said that despite its instructions, banks have not been pro-active in tracing customers linked with unclaimed deposits/inoperative accounts. The central bank said the need to identify the owners of these unclaimed deposits/inoperative accounts is closely linked to KYC due diligence.............
e-fraudsters may use fake RBI letters to dupe you
......The con letter appears to be coming from the Foreign Exchange Transfer Department of RBI where it informs the recipient that he or she has been 'compensated with a sum of £500,000'. The letter is signed by chief general manager-in-charge Salim Gangadharan. It goes a step further and claims that the £500,000 is a legal fund from the UK to the less privileged in India - pensioners, scam victims, orphans, the sick, needy and the poor - and that the application has been pending since 2007.................
Scammers take clue from RBI directive
Scammers seem to be adapting to changes fast, as a spam e-mail offering unclaimed funds in Indian banks has been landing in the in-boxes of scores of email users these days. The RBI recently directed the banks to take steps to disburse the about Rs 1,700 crore that were remaining unclaimed in various bank accounts in the country. Taking the cue, an e-mail with the sender mentioned as Funds Remittance Department of RBI, New Delhi, “informs” that the recipient was entitled to unclaimed fund of $500,000.............
MUCBF appeals CKP coop Bank depositors not to withdraw funds to avoid RBI action
............However, if the depositors continue to withdraw, the bank may face liquidity crunch and in that case, the RBI could impose moratorium and put a cap on further withdrawals. He also said that the Federation had never taken up the case of any co-op bank against which the RBI had taken action but in case of CKP Bank the issue was different and hence the Federation was supporting it, he said. The bank itself had also come up with an advertisement recently saying that its position was sound and the depositors' money was secured........................
42 cooperative banks under RBI scrutiny for rule violation
The Reserve Bank of India has put 42 cooperative banks under a revival programme that involves a thorough scrutiny after the lenders failed to meet critical parameters on minimum capital and net worth.
RBI has barred the lenders from accepting fresh deposits from the public after they missed the 31 March deadline to satisfy the norms. The programme, known as the monitorable action plan (MAP), is a last-ditch effort by the central bank to revive the businesses of distressed banks. The banks have till 30 September to revive their businesses and improve capital adequacy............
Banks push FD schemes ahead of possible interest rate cut by RBI
With expectations of an interest rate cut gaining momentum ahead of the Reserve Bank of India’s (RBI) mid-quarter monetary policy review scheduled for June 18, banks are going all out to promote their deposit schemes and dangling the carrot of higher rates before a possibility of interest rates falling.........
All eyes and hopes rest on RBI
.......However, RBI faces a difficult choice. Which macroeconomic variable does it look at? Double-digit inflation or rapidly decelerating growth—which has already begun to derail the unprecedented momentum that the economy had acquired in the last decade? Undoubtedly, a disciplined Union government could have made all the difference if it had done more than being a mere paper tiger when it came to tackling the fiscal deficit—or gross borrowings of the government. Regardless of which way RBI calls, there are serious consequences for the economy. In more ways than one, it will be the toughest choice faced by RBI governor D. Subbarao; this says something for a man who took charge in the midst of the Lehman crisis that triggered the 2008 global economic crisis. All eyes on RBI then..................
Competition watchdog may look at all sectors
........The DFS and the DoT had sought exemption, saying the sector regulators (the Reserve Bank of India and the Telecom Regulatory Authority of India) had sufficient expertise to deal with cartelisation, monopolistic behaviour or unfair competition. The DFS had argued under the Banking Laws (Amendment) Bill, 2011, Parliament’s standing committee on finance had approved the exemption of bank mergers from the purview of the Competition Act..................
No significant improvement in FY13
.The build-up in the banking sector was attributed to assumptions on the Street the Reserve Bank of India (RBI) will cut repo rates by 50 basis points and the cash reserve ratio by 50 basis points on June 18........
No-frills accounts rise over two-fold in last 2 years
............The Reserve Bank (RBI) has launched the financial inclusion programme to provide financial services to people in unbanked areas. RBI's approach to financial inclusion is aimed at connecting people with the mainstream financial institutions like banks, the apex bank said. "Goal of financial inclusion is better served through mainstream banking institutions as only they have the ability to offer the suite of products required to bring in effective or meaningful financial inclusion," RBI said. The number of business correspondents (BCs), who carry out banking operations on behalf of banks, increased to 96,828 from 33,042, it said..........
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NHB not to up capital requirement for HFCs
.........A committee chaired by former Reserve Bank Deputy Governor Usha Thorat had recently recommended for increasing the minimum capital requirements to 15 percent from the present 12 per cent for non-banking finance companies (NBFCs). In defence of the move not to increase the capital requirements, Verma said HFCs, which include players like HDFC, LIC Housing Finance, Dewan Housing, have a clearly defined business model which has low risks, as compared to NBFCs. "In NBFCs, the portfolios can be widely varying and there can be very quick changes or dynamics in their balance sheets. That is not something which can happen to HFCs,".......................
Repco Bank looks at RBI policy to operate as commercial bank
Chennai-based Repco Bank, a co-operative bank under the Union Ministry of Home, is waiting for the Reserve Bank of India (RBI) to come up with licensing policy, to join the group of commercial banks in the country. The bank is expecting an infusion of around Rs 100 crore in the next three years, to double its business from the present Rs 7,061 crore to Rs 15,000 crore by 2014-15, said a senior executive from the bank............
Sunday, June 10, 2012
Missing Elements
This is a festschrift. The book does not use the word, though. It uses the more pedestrian ‘Essays in Honour of C. Rangarajan’. Festschrift is used in the Prime Minister’s foreword, though, where the PM talks about Rangarajan’s contributions at the Planning Commission, the Reserve Bank of India, 12th Finance Commission and the Economic Advisory Council. Rangarajan needs no introduction. That said, if you plan a festschrift, you need a very good introduction on the person’s contributions to intellectual debate and policy formulation. You also probably have a bibliography of his academic writings. These elements are missing in this volume. A festschrift should also try to capture perspectives from the various spheres and entities the scholar has influenced or associated with. In this case, it should have tried to capture the Planning Commission, Finance Commission and the Economic Advisory Council angles too. But there is not much on that front.
There is an impressive cast — S.S. Tarapore, K. Kanagasabapathy, Balamurali Radhakrishnan, Raghbendra Jha, Joseph Massey, D. Subbarao, Y.V. Reddy, Swayam Prava Mishra, Shyamala Gopinath, Ravi Parthasarathy, Madhu Kannan, Kartikeya Desai and Nitin Desai, K.G. Karmakar, K.C. Chakrabarty, Udaibir Das, Ravi Narain, Ashima Goyal and Kirit Parikh...............
There is an impressive cast — S.S. Tarapore, K. Kanagasabapathy, Balamurali Radhakrishnan, Raghbendra Jha, Joseph Massey, D. Subbarao, Y.V. Reddy, Swayam Prava Mishra, Shyamala Gopinath, Ravi Parthasarathy, Madhu Kannan, Kartikeya Desai and Nitin Desai, K.G. Karmakar, K.C. Chakrabarty, Udaibir Das, Ravi Narain, Ashima Goyal and Kirit Parikh...............
8% tough on global mkt crisis, high deficit: Rakesh Mohan
The RBI's Inflation Dilemma
As economic growth falls, the Reserve Bank of India (RBI) once again faces a decision whether to cut interest rates to spur growth. This would be an easy decision were it not for the fact that inflation has been consistently rising since the start of the year. This is a difficult decision because of the trade offs involved. Cut interest rates to boost growth at the risk that inflation balloons. Or leave interest rates the same and risk that growth continues to tumble. Our assumption with that line of thinking is that inflation is significantly affected by the RBI's interest rate decisions. However, if we look at the causes of inflation, we'd see that most of it is completely out of the RBI's control. And actually, the RBI's decisions will have little impact on inflation.
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When electronic transactions fail…
..........Money transfers through RTGS (Real-Time Gross Settlement) and NEFT (National Electronic Funds Transfer) have become quite popular. But as the latest Annual Report of the Banking Ombudsman points out, complaints regarding non-credit, delayed credit and delayed return of funds in failed transactions are on the rise. The report recounts one such case where the complainant approached the ombudsman alleging inordinate delay on the part of the bank in transferring funds under RTGS.................
Ways to kickstart economic activity
........With our country's GDP growth rate slowing down in the last two quarters, people believe that the RBI is likely to adopt a “quantitative easing” policy to get the economy back on track. What does “quantitative easing” mean? It means that RBI is directly or indirectly making more money available in the economy to boost spending, which in turn boosts economic activity. How does this work?..................
Rising bank bad loans, slowing credit growth
The Finance Ministry is worried that banks' bad loans will go up, especially if credit growth slows down.
The gross non-performing assets of public sector banks have exceeded three per cent for fiscal 2011-12. NPA management will be one of the key issues at a meeting the Finance Minister has called with chiefs of public sector bank and financial institutions on June 12. The agenda note for the meeting says: “As informed by the Reserve Bank of India, at system level, new accretion to NPAs has been much more than the reduction on existing NPAs due to lower level of upgradation and recoveries. Also, despite write-offs, gross NPAs have continued to rise significantly.”............
Go long on rate sensitives till credit policy
.......... Until the policy is announced therefore, it may be worth taking long positions in specific rate-sensitive stocks, or the Bank Nifty. Of course, if the rate cut does satisfy the market, the long position can be maintained. Again, hedging is the prudent way to handle this sort of portfolio, which is dependent on policy action. The other potential hurdle that the RBI faces is incalculable external situations. If the Eurozone goes bust, there will be huge outflows from rupee assets to safe havens like the US Dollar, and maybe the Swiss franc and the yen, as well. If there’s sign of a Euro revival, there may be some outflows anyway into beaten down hard currency assets in the EU. Some currency volatility is guaranteed............
Bias to remain positive
Markets recorded significant gains in the week ended Friday on hope the Reserve Bank of India (RBI) would cut rates in the coming policy review on June 18. From an early week low of 15,749, the Sensex rallied to a high of 16,768, before ending at 16,719, a significant gain of 4.7 per cent. In the process, it also reversed its three-week losing streak. Going ahead, markets are likely to remain fairly volatile, owing to global uncertainties and the coming RBI policy review..............
Reselling the India story: road shows kick off in the Gulf
..... lot of people are ill-informed about India's potential. We want to tell investors, look, it is a robust economy with high savings, demand and investment opportunities," R. Gopalan, economic affairs secretary, told reporters earlier this week. During the June 10-15 road shows, a delegation of officials from the finance ministry, the Reserve Bank of India, the Security and Exchange Board of India and stock exchanges would seek investment through corporate bonds and debt funds, especially in the country's infrastructure sector...........
We want to have close ties with Indian banks: Abdulkarim Ahmed Bucheery
Which Bahrain banks are looking to enter India?
Many of our banks, especially from the Islamic banking sector, are interested in India. All these banks would bring capital, which is very much needed in India. Unfortunately, slow RBI (Reserve Bank of India) process and complicated requirements do deter them from doing so. We had to wait for two years to get the licence for our third branch, whereas when an Indian bank comes to Bahrain, a licence is usually granted within three months. But RBI has been very cooperative and understanding.
Many of our banks, especially from the Islamic banking sector, are interested in India. All these banks would bring capital, which is very much needed in India. Unfortunately, slow RBI (Reserve Bank of India) process and complicated requirements do deter them from doing so. We had to wait for two years to get the licence for our third branch, whereas when an Indian bank comes to Bahrain, a licence is usually granted within three months. But RBI has been very cooperative and understanding.
Is the delay only because of the slow processes or due to other concerns as well?
I think the slow processes basically result from RBI's inability to issue licences for branches. Metropolitan cities in India are overbanked, and RBI would like to direct some banks to villages and rural areas where there are no banking facilities. Banks coming to India for the first time don't want to go to far-off places; they want to be in metropolitan cities
I think the slow processes basically result from RBI's inability to issue licences for branches. Metropolitan cities in India are overbanked, and RBI would like to direct some banks to villages and rural areas where there are no banking facilities. Banks coming to India for the first time don't want to go to far-off places; they want to be in metropolitan cities
Banking on the Muslims: Interest payments rejected under Islamic law could be used to help the poor of India
Thousands of crores lying unaccounted in banks across the country and belonging to Muslims could be used for the uplift of the poor section of the community, provided the Reserve Bank of India (RBI) gives the go-ahead. A move to such an effect has been put forward to the Union finance ministry by the National Commission for Minorities (NCM) chairman Wajahat Habibullah. Habibullah's idea is based on the Islamic tenet which considers giving and receiving interest against the cause of the religion. This has resulted in a huge amount of money lying unaccounted in banks, which the NCM hopes could be somehow made use of for the benefit of Muslims in India. And one of them is opening the doors to 'interest-free' banking in India for the community.............
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Saturday, June 9, 2012
RBI's KC Chakrabarty counters Gokarn on possibility of rate cut
MUMBAI: Reserve Bank of India Deputy Governor KC Chakrabarty on Friday said interest rates in India were not too high to impact growth, throwing cold water on hopes of central bank action to revive a sputtering economy. This comes only days after fellow Deputy Governor Subir Gokarn raised expectations of a rate cut by saying moderate core inflation and softening global crude prices offered the central bank room to lower policy rates..............
Sensitisation programme on currency notes
A programme was organised by the Lead District Office and the Bankers' Club here for probationary officers/ newly recruited officers of various banks in the district to sensitise them on currency notes. Officials from the Reserve Bank of India spoke on various features of the currency notes, detection of fake notes, clean note policy, and note exchange policy, among others, a release here on Friday said. V.Ashokan, Deputy General Manager of Syndicate Bank, inaugurated a seminar. He said bankers had big role to play in implementing the decisions of the government and the RBI. E.K. Revikumar, Manager, RBI, engaged the sessions. A.A. Kumar, RBI Assistant General Manager, V.S. Jayaram, Lead District Chief Manager, C.V. Jayachandran, secretary, Bankers Club, and N.Mohanan spoke.
HBL
Impact of policy rate hikes on GDP growth being ‘overplayed'
.....“I don't think that our interest rates are that high, or the policy rates are so high that they should significantly affect growth. Growth is affected due to a variety of reasons and this (policy rate) is just one of them,” ......
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Low GDP growth not due to high interest rates: RBI Deputy Governor
Mumbai, June 8: The Reserve Bank Deputy Governor, Mr K.C. Chakrabarty, today sought to stave off criticism that the nine-year low GDP growth was primarily due to the 20-month high interest rate regime, saying it was driven by a host of other factors. “I don’t think that the interest rates are that high, or our policy rates are that high that should significantly affect growth. Growth is being affected for a variety of reasons. We are overplaying the interest rate aspect (for low growth). It may be one of the reasons,” Mr Chakrabarty told the Skoch summit here......
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No rate cut: RBI should help the rupee, not politicians
...........Subbarao should hold his horses. He should instead look to Big Ben and Moderate Mario for cues, not North Block. US Fed Chairman Ben Bernanke, despite signs of a slowing US economy, declined to send smoke signals that would suggest that another round of quantitative easing (QE3) or some other form of monetary stimulus is round the corner...........
Why India Should Not Follow China in Cutting Rates
.......Inflation risks are still high. The Reserve Bank of India can risk raising inflation (further) by cutting rates, when prices are (already) at an elevated level,” Taimur Baig, Chief Economist, Global Markets Research at Deutsche Bank wrote in a note titled 'RBI Should Not Be Cutting Rates on June 18, But Would It Anyway?' ..................
Credit policy: Will RBI bite the bullet on June 18?
A rate cut from RBI seems to be the demand of the hour. The industry wants it, the government wants it and market players want it. The ball is now in RBI's court..............................
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Chinese checkers
The 25 basis points rate cut by People’s Bank of China (from 6.56% to 6.31%), a first since the 2008 global economic crisis, is the most clear signal that India too—as the other engine of global growth—needs to get back into this role. Despite the comments by KC Chakrabarty, deputy governor of RBI, rates are hurting..............
RBI must cut rates to stimulate growth: Basu
............ In his personal opinion, the Reserve Bank of India should cut policy rates to support growth. India should take advantage of the depreciating rupee to boost exports, Dr Basu said. “We should take advantage of the depreciating rupee. Much of this depreciation is because of external factors and many other world currencies have also depreciated.” .....................
Not possible to grow at 7.5%, domestic factors slowing growth: Montek
.....That level is not comfortable, Ahluwalia said, adding that the central bank needs to do a “balancing act”. “Monetary policy needs to be forward looking, (there is) too much emphasis is being laid on the short term rate,” he said. “Lowering the rate would be a good signal, but there are a number of other factors.” The RBI is scheduled to hold its mid-quarterly policy review on June 18, and................ Read.........
RBI is way behind the curve
China just reduced interest rates by 25 basis points, the first reduction since 2008. Australia has reduced its interest rates twice in the last month by a cumulative 75 basis points. These decisions have been applauded by all, governments, investors and analysts. RBI reduced interest rates by 50 basis points near the end of April and most analysts (especially those belonging to foreign banks) were severely critical of the RBI decision. Why this asymmetrical treatment? Sometimes I half-believe in conspiracy theories interested in keeping Indian growth down so that Indian governments will be less arrogant!..................
Has RBI just ruled out a rate cut?
........A rate cut would have been possible if inflation was lower. The RBI, so far, hasn’t been able to reign in inflation because of structural rigidities in improving the supply side. It cut repo rates by 0.50 basis points to 8%, in April, a surprise move which caught many investors, savers and the financial community off guard. In fact, the RBI panicked as inflation was actually rising when the central bank had left rates intact for a period of time, after continuously hiking rates, for more than a year, to reign in inflation. Hence...........................
India needs radical change here and now !
.....We, in India, were able to withstand the crisis situations initially because of an insulated rupee and fairly strong fundamentals thanks to an astute Reserve Bank of India (RBI) Governor who refused to institute full convertibility of the rupee. Our bludgeoning domestic middle-class market absorbing all that is produced or imported, booming stock market and good monsoons went into the phases of Shining India of high growth rate.............
RBI raises number of NRI remittances
The Reserve Bank of India, on Friday, permitted non-resident Indians (NRIs) to send remittances more frequently, a step to boost foreign currency inflows and check rupee fall. Resident Indians are now allowed to receive as many as 30 remittances from NRI friends and relatives during a year as against 12 earlier, according to a latest RBI circular. Analysts said the RBI decision would help raise foreign exchange reserves.........
RBI move
Mumbai, June 8: The RBI today allowed resident Indians to receive as many as 30 remittances from NRI friends and relatives during a year against 12 earlier. The apex bank also said it would pump Rs 12,000 crore into the market on June 12 by buying government securities to ease the liquidity situation.
The Telegraph
The Telegraph
Customers seek lower limit on credit cards
...."People are using cards for basic purposes such as air tickets and utilites payment. Also, there are more place where cards are accepted," said Narahari. RBI data shows that at present there are over 90,000 ATMs and 6.5 lakh PoS terminals in the country.
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‘Remit IT dues in advance'
Chennai, June 8: The Reserve Bank of India has advised income-tax assesses to remit their income-tax dues in advance to avoid last- minute rush and long wait in queues. The rush for remitting dues at the bank is generally heavy towards the end of June and it becomes difficult for the RBI to cope with the pressures of receipts, despite providing additional counters, said the RBI in a press release. Apart from the RBI, select branches of nationalised, public and private sector banks in Tamil Nadu are authorised to accept payment of income-tax dues in cash or by cheque.
HBL
RBI to banks on unique ID codes
Banks must assign unique customer identification codes to their new as well as existing clients by May 31, 2013, the Reserve Bank of India said in a notification on Friday. The unique identification code will help in stronger enforcement of know-your-customer norms, and aid banks in identifying customers, tracking the facilities availed, etc.
BS
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