.......“I did not know that the money we were depositing had fake notes. My family and I suffered a lot because of the case. I obtained anticipatory bail and spent about Rs 2 lakh in the legal battle that went on for about a year. The judgment was, however, in my favour,” Shinde told The Indian Express. “High quality FICN are being circulated. It is difficult for the common man to identify these notes,” said advocate Sushil Mancharkar. Banks have stopped complaining against genuine customers, and inform the police only about suspicious persons. They now either destroy fake notes or cancel and return them to customers.
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.
Thursday, July 12, 2012
Currency manipulators
........It is hence unfortunate that the December RBI circular prevents exporters/importers re-hedge the hedges, and banks have been asked not pass on the profits on cancelled contracts. Also, these companies have to take cash rate on such cancelled contracts. It is pity that SMEs are hit badly by such directives, whereas hedge funds, speculators, big corporates and banks are making huge, unjustified profits. It is time the RBI acts against the manipulators; else, the SMEs, which contribute more than 75 per cent of global trade, will have to close shop.
Little chance of rate cut on July 31: Parekh
...."Unless the Reserve Bank sees a trend that inflation is actually coming down, I don't see the Reserve Bank reducing interest rates,".........
Jayaram Bhat gets second term as MD and CEO of The Karnataka Bank Limited
.....MANGALORE: P Jayarama Bhat, managing director and chief executive officer of city-based The Karnataka Bank Limited, who will be completing his first term in office by July 13, will step into the second term of 3 years on Saturday. The Reserve Bank of India has conveyed its approval for re-appointment of Jayarama Bhat as the managing director and CEO of the bank for further period of three years as proposed by Bank's board of directors........
Rising interlinkage in financial system under RBI scanner
With insurance companies and mutual funds becoming the largest lenders to the banking system, the segments have become “vulnerable to the risk of contagion from the banking system”, according to the Reserve Bank of India...............
My View on "Misunderstood macro adjustment"
A well-balanced analysis of the present policy scenario. Here again RBI may not be able to make the right noices or bring about changes suggested here unless there is strong fiscal policy support. First, our economic advisors in Delhi must convince GOI the need to augment the forex reserves and generally strengthen the balance sheets of major national level institutions including RBI and al public sector organisations including PSBs. Cash-rich private organisations should be made to take supportive measures. The governemnt should resist the temptation to depend on public sector organisations including RBI and PSBs for 'window-dressing' budget. These institutions should be allowed to plough back profits for developmental initiatives and for augmenting reserves.
- M G Warrier
My View on "My View on "North shouldn’t block" - - M G Warrier
In their own selfish interest, those who are in charge of governance should reconcile to the fact that health of economy is dependent on a vibrant financial sector for which a central bank commanding respect from within the country and at international forums is a pre-requisite. For historic reasons RBI has been entrusted with several responsibilities which elsewhere are not part of central bank's role. RBI has been with GOI's support has been performing its role successfully. GOI should continue to ensure that RBI is not weakened. For the purpose it is essential to allow functional autonomy within the contours of the statute. While on the subject, the need for a strong balance sheet with adequate capital and reserves for RBI also has to be emphasised.
Wednesday, July 11, 2012
Getting India's economy moving again
....even as the Reserve Bank of India (RBI) nuances monetary policy to maintain the growth-inflation balance, manufacturing is likely to remain flat. The global contagion and the falling value of the rupee limit the RBI’s options to cut interest rates. As this newspaper has rightly pointed out, the solution to high inflation and low growth – stagflation – lies squarely with the government. RBI Governor D. Subbarao has, again rightly, identified the problem as supply-side – lack of reforms discouraging productive investment. Fiscal profligacy has fuelled inflation. Without fundamental economic reforms – cutting fuel subsidies, fast-forwarding infrastructure projects and reducing the fiscal deficit – no amount of monetary policy tinkering will tame inflation or spur GDP growth......
Cooperative bank gets RBI licence
“The Reserve Bank of India has granted a banking licence to the Gulbarga District Central Cooperative Bank,” president of the bank Annarao Patil told ..........
Banking: All about exams, cadres in CWE (IBPS)
IBPS or Institute of Banking Personnel Selection acquired independent status in 1984. The credit to the initiative goes to the Reserve Bank of India (RBI) and the Nationalized Banks. Dr Manmohan Singh, who was the Governor of RBI at the time, became the first Chairman of the Governing Board of IBPS.........
Fake note biz thrives as RBI, cops play blame game
JAIPUR: Thanks to the lack of coordination between the Reserve Bank of India (RBI) and special operation group (SOG) of Rajasthan police, the fake currency business is thriving in the state. Both the department are playing blame game but shying from taking the responsibility to check the menace. A state level security committee set up to curb the flow of counterfeit notes in the market is defunct. Neither the officials of RBI nor the SOG remembers when the last meeting was held. The committee was constituted to work jointly so that inputs and technical expertise can be shared and cases can be resolved promptly..........
Fake currency swamps Pune market
....As per details obtained by The Indian Express under the RTI Act from Pune city police, 166 complaints of fake currency (under section 489 of IPC) were registered between January 2008 and April 2012. Of these, 141 were by banks in the city. C V R Rajendran, executive director, Bank of Maharashtra said, “FICN of over Rs 12 lakh were found in our banks last year. The money cannot be recovered; the bank is at a loss.” In January, Narayan Peth branch of the HDFC Bank lodged a complaint at Vishrambaug police station against unknown persons for depositing FICN of around Rs 4 lakh before December 2011. There were 54 fake notes of Rs 1,000 denomination, 728 of Rs 500 denomination and 38 of Rs 50 denomination..........
Watch out for currency manipulators
.....According to Dr Basu, the intention of the paper is not to explain how currency manipulation is done. There are numerous ways to do that and there are players who are masters at the game. But regulators in most countries do not acknowledge the presence of manipulators nor do they understand the way the manipulator strategises. Deciphering these methods could help the regulators curb currency fluctuations without disturbing free functioning of market forces. The RBI also appears to be thinking along similar lines. It had recently imposed limits on overnight open positions and intra-day open positions held by dealers in inter-bank forex market. This is among the first acknowledgement by the central bank that speculation could be one of the reasons for currency volatility......
Ploughing a profitable strategy
The Reserve Bank of India (RBI)'s approval to Jain Irrigation for setting up a non-banking financial company (NBFC) could help the company address various issues relating to high working capital and debt...........
‘Failure to build consensus’
.....How do you assess the Reserve Bank of India’s (RBI) measures to ensure capital flows by easing rules pertaining to external commercial borrowings (ECBs) and allowing foreign institutional investors (FIIs) to invest in government securities?
These measures have to be carefully examined because while speaking on the Finance Bill in the Lok Sabha I had said that not only was the current account deficit going beyond sustainable limits but what was even more worrisome was the fact that 70 per cent of the CAD, as per data available with me, was being financed by short-term debt. Commenting on a similar situation way back in 1991, Dr I.G. Patel said that short-term debt is like sudden death because if they don’t roll over and insist on repayment, you have to repay. So short-term debt is even worse than FII money..........
Borrowing time
....the RBI measures are designed to boost the short-term foreign fund flow through the debt route, besides helping to stem the slide in the external value of the rupee, which has lost over 25 per cent in the past one year. The high current account deficit, which is the difference between all foreign inflows and outflows, has made imports expensive and pushed the value of the external rupee on a downhill path....
Financial sector players ask govt to perk growth
....This was the second meeting of Rangarajan in two days with key players or their representatives in the economy arena. On Monday, he had met officials from industry chambers, who among other things, pressed for easing of monetary policy by the Reserve Bank of India (RBI). However, Rangarajan had said RBI’s stance would depend on the behaviour of non-food manufacturing product inflation. On Monday, RBI expressed displeasure at banks not cutting interest rates despite the central bank lowering the repo rate, at which it lends money to other banks, by 50 basis points in April. The apex bank had also expressed concern at the slow pace of bank deposit growth. RBI, which opted not to change rates at the policy review last month, is scheduled to review the monetary policy on July 31.......
Seeking a magical repeat
......That still leaves the big task—getting the Indian economy back on a higher growth trajectory. Reserve Bank of India Governor D. Subbarao has already indicated that India can grow at only 7% without high inflation, around 1.5 percentage points than the trend rate before the global financial crisis....
Misunderstood macro adjustment
..... is a foregone conclusion that the RBI will need to increase its foreign reserves or India’s external liquidity ratios will worsen further. Such an outcome will raise more worries among sovereign credit rating agencies. However, the increase in foreign reserves will occur only when India begins posting overall BoP surpluses and the RBI intervenes to prevent rupee appreciation. India is not there as yet but the current adjustment to narrow the current account deficit via below-trend growth is a step in that direction........
My View on "North shouldn’t block"
Coordination and not confrontation is what is required between the Central govt and the Regulators particularly the Reserve Bank. All other regulators of the financial system should cooperate with the Reserve Bank and should be under the guidance and supervision of the Reserve Bank. Then only the so called Financial Stability can be achieved.
- Dr.T.V.Gopalakrishnan
PM knows best
Ths refers to the report “Time magazine dubs Manmohan ‘underachiever’” (July 8). It is Dr Manmohan Singh’s achievement that developed countries have started taking note of India, and are now getting panicky about India not following the LPG (liberalisation, privatisation and globalisation) prescription with the implicit obedience that they are used to from “pockets” like oil-rich countries or, for that matter, Singapore. No one knows better than Dr Singh that India cannot cut and paste policy initiatives tested in countries like Singapore or Switzerland (with less than 10 million population) or even the UK that has a developed infrastructure and 100 per cent literacy. The prime minister knows the problems of 1.2 billion people and if he is going slow on certain measures that will help the commercial interests of business and industry, but will make the poor poorer and the rich richer, you cannot put the entire blame on coalition compulsions. Incidentally, India’s GDP growth today is at a comfortable rate compared to the “developed” world.
- M G Warrier Thiruvananthapuram (BS)
A middle path to nowhere
...It is a complete paradox that today we are made to wonder about financial inclusion. The Singh legacy is particularly evident when it comes to policy (non-) response to the continuing saga of inflation. The response is one of ping-pong between Finance Ministry and the Reserve Bank of India (RBI). The Ministry thinks inflation control is primarily in the domain of RBI, by way of monetary tightening, while the RBI suggests that nothing can be done until the Ministry reins in fiscal deficit numbers......
No service tax on foreign remittances :Finmin
The government on Tuesday clarified that service tax cannot be levied on foreign currency remittances into India as the transaction is actually executed outside the country..........
RBI shatters Lavasa's debt recast hopes
Troubled real estate firm Lavasa's efforts to escape the stigma of bad debt suffered a jolt with the Reserve Bank of India rejecting a request to confer infrastructure status on its loans............
Irda opens the door to getting banks to focus on mis-selling
.....One reason for that has been the grand old man status of the Reserve Bank of India (RBI) that prevents younger and less powerful regulators from leaning on banks for violations linked to products that they regulate. The insurance regulator, it seems, has decided to bite the bullet. If the IndusInd case is a precursor, we should see the corporate agents named in the HDFC Standard Life case get penalized too.
But here is where the story gets interesting. Long-time RBI watchers say that banks will get help soon. Some quiet arm-twisting will happen and the Irda threat could melt away. It would be another lost opportunity if that were to happen. RBI should use the door that Irda has opened to push through more accountability at banks. Banks have emerged as large sellers of retail financial products........
Indian online travel agencies confident about customer security
.....The Reserve Bank of India (RBI) mandated an extra layer of authentication for online payment by credit and debit cards, 3D secure authentication, which requires a password provided by banks for online transactions, in August 2009.......
RBI's focus on inflation makes easing difficult: StanChart
.......Given the focus of inflation, which has clearly come out since the last policy, our expectations are reasonably well pared down now. The fact is liquidity has improved over the last few days. So it doesn't look therefore as if RBI will oblige us with either a rate cut or a CRR cut,".......
Banks not to witness shocks on account of bad loans: Chanda Kochhar
Dismissing concerns of rising bad loans, ICICI Bank Managing Director and CEO Chanda Kochhar today said that banking sector unlikely to witness any substantial shocks on account of NPAs and the focus in the current fiscal will be on restructuring of loans of mid-size companies.............
Bankers agree rate cut by RBI can't lower inflation, but still want it
Bankers agreed that inflationary conditions offered little room for lowering interest rates, but stuck to their demand for a rate cut, saying it was the only tool available to revive the "animal spirits" in the economy in the absence of policy action. In their customary pre-monetary policy meeting with Reserve Bank of India (RBI) Deputy Governor Subir Gokarn, bank chiefs also acknowledged that rate cut was not a panacea for the nation's economic ills...............
RBI, banks push each other to reduce rates
The Reserve Bank of India (RBI) on Monday asked banks to explain why across-the-board reductions in interest rates had not taken place despite the April 17 cut of 50 basis points in the key policy rate. On their part, banks asked RBI to cut both cash reserve ratio (CRR) and the repo rate by 25 basis points each so that liquidity can ease and lending rates can come down.............
Why bankers still harp on rate cut
.....after the last policy review, prior to which the clamour for a rate action got louder due to the dismal factory output data, RBI Governor reiterated his resolve to fight inflation, even at the cost of growth. Nothing much has happened to change the RBI’s stance since. On the contrary, there are indications that things are going to get more difficult towards the year-end due to scanty monsoon........
Rising interlinkage in financial system under RBI scanner
.....the failure of a bank with large borrowings from insurance and mutual funds segments may have significant implications for the entire system, the RBI says, hinting at a possible tightening of norms, especially on short-term borrowings. ........
No relaxation for textile debt recast
The Reserve Bank of India (RBI) will not allow any special dispensation for loans to be restructured by banks for the textile industry, as only 20 per cent of units in the sector are under stress. Industry representatives are to meet finance ministry officials on Friday to discuss the debt recast issue. In a recent meeting with bankers, top RBI officials said banks had to undertake a debt recast according to the norms that specify higher provisioning after restructuring of debt............
Bank licences: Focus on realty link
For corporates seeking bank licences, there is one key concern: how would the Reserve Bank of India interpret exposure to real estate activity? This was the highlight of corporate responses to draft guidelines announced by RBI earlier. The central bank on Tuesday published the responses to its draft guidelines stating that it would keep the suggestions and reactions in mind while framing the final guidelines.................
Redefining money guardians: Who should set up new banks
Bank aspirants in India Inc have asked for greater clarity on the central bank’s definition of promoters. In feedback to the Reserve Bank of India (RBI) in response to the draft norms on new banks, companies have also sought more clarity on various issues thereon, from corporate structure to priority sector targets. The draft norms were made public in August last year. These proposed several measures for considering applications to be issued a banking licence. Among these were the eligibility of promoters, the corporate structure, minimum capital requirement, corporate governance norms and business model, among others...........
New banking license: RBI gets feedback on draft guidelines
The Reserve Bank of India (RBI) on Tuesday put up comments/suggestions received from the related parties on the draft guidelines for new banking license in private sector, released on August, 2011. Those comments were received from general public, consultants, analysts, industrial / business houses, NBFCs and others. The regulator will consider the feedback before finalizing the guidelines............
Banking aspirants want to do away with holding co norm
.... The Reserve Bank Tuesday said many corporates interested in entering banking have called for doing away with the requirement of promoters wholly owning the proposed non-operative holding company (NOHC). "Doing so will diversify the shareholding structure of the NOHC and will improve corporate governance and avoid regulatory overlap," the RBI said in a release attributing the view to business houses, NBFCs and a federation.........
Post office bank proposal awaits RBI nod
The central government is awaiting the Reserve Bank of India (RBI)’s reply to the department’s proposal to float post office banks, according to Union minister of state for communication and information technology Sachin Pilot..........
Tuesday, July 10, 2012
North shouldn’t block
A former Reserve Bank of India Governor, while still in office, confided that he would never keep the government in the loop on most decisions of the central bank. But the then mandarins in the finance ministry never made it easy for him. They put pressure on him on a variety of issues since he invariably needed the ministry’s concurrence on policy matters. This particular governor got his way on most issues and, much to the chagrin of the officials, earned the reputation of preparing India for the financial crisis of 2008. In fact, he felt it was not necessary to meet even the finance secretary, the most senior official in the ministry, during his North Block visits. On some occasions, he would visit the capital just to meet the prime minister and would not even call on the finance minister. There were many critics who had a healthy disrespect for his domineering style, but nobody took him head on regarding his regulatory decisions. He overruled ministry interventions, backed by the quality of his decisions. Another capital market regulator or chairman of the Securities and Exchange Board of India (Sebi) would frustrate the finance secretary of the time by not answering calls or responding to text messages. Here again was a regulator who had turned around financial institutions, knew his domain well and refused to budge from decisions despite the government’s reservations. These are just two examples to show that regulators never had an easy relationship with the government ...........
Reddy`s Libor reckoner
Peers lavish praise on Abid Hussain
How did former Governor of Reserve Bank of India Y.V. Reddy locate his moorings in the IAS? On the day he joined the service as Assistant Collector of Visakhapatnam, his boss and district Collector Abid Hussain straightaway entrusted to him adjudication of a dispute in irrigation and left on an appointment. The order prepared by Mr. Reddy was later signed by Hussain. That was not all on day one. Hussain that night asked Dr. Reddy to accompany him to a dinner in an elite circle. But, the latter turned down the offer saying he was not comfortable in such places. Hussain then warned Dr. Reddy ‘being anti-rich is as bad as being anti-poor’...............
The importance of being PK Tayal
....The DCA having done it’s bit and ‘compounded’ or regularised the illegality, RBI decided to play the perfect babu—it didn’t proceed on the benami share angle or the siphoning off funds and allowed Tayal to take over the Bank of Rajasthan since there was no pending investigation/charge against him. A decision it must have rued later since, over the years, it appointed an additional director on the bank’s board, a CEO, and even ordered a special audit of the bank’s books, after which the bank got merged. Though RBI did the wise thing by containing whatever problem the audit report revealed—RBI never made the report public—in order to avoid any sort of panic in the banking sector, Tayal managed to walk away with 1 ICICI Bank share for every 4.72 shares he held in the Bank of Rajasthan, directly or indirectly......
Public sector banks on branch expansion spree
.......Recently, the Reserve Bank of India relaxed the norms for branch licensing and encouraged banks to open more branches in tier-2 centres (cities and towns with a population of between 50,000 and 1,00,000). Despite these efforts, the penetration of banking services in the country is still low. An average branch services around 13,000 customers, indicating the demand for services and the potential still available. Nearly 60 per cent of the population does not have access to banking services, according to RBI reports.
Fibre tokens end coin shortage in Bagalkot town
BAGALKOT: Call it illegal tender, but the parallel currency of fibre tokens in denominations up to Rs 5 has solved the big problem of small change at a town in Bagalkot district. Shortage of coins had forced shopkeepers in Mahalingapur to hand out a chocolate or a toffee in lieu of change in a purchase made. Customers had no other option, but to grumble and accept whatever that came their way. But the new solution could be looking at sudden death if the central bank orders a crackdown on the parallel currency.............
RBI to try plastic currency in 5 centres
Notes of Rs 10 denomination to be distributed through the central bank's five regional offices
Read..........
Clearing Corporation of India launches trade repository for OTC Forex Derivatives
Open market operations will depend on liquidity situation: RBI
....."Depending on the liquidity situation, RBI will come with OMOs... we have indicated on a sustainable basis plus or minus 1 per cent (deposits). If it is beyond that, then we will consider (OMOs)," RBI Deputy Governor H R Khan told reporters on the sidelines of a National Housing Bank (NHB)event.........
Macro-economic stability will ensure low-cost housing: RBI
RBI sets cap on debit card usage fee
Can PM do What Pranab Could Not?
....With Pranab Mukherjee out of the finance ministry, the Prime Minister will also need to leverage his equation with RBI Governor D. Subbarao to bring down interest rates, give an impetus to investment and reverse the slide in the growth story. Mukherjee had an uncomfortable relationship with the RBI Governor and, despite his constant nudging, the latter, in the past one year, consistently refused to lower interest rates. Just 10 days before he demitted office (June 26, 2012), Mukherjee dropped enough hints to suggest that he wanted a reduction in interest rates, but that did not happen in the quarterly review of the monetary policy on June 18. The RBI will have to reduce interest rates to rev up the economy. It will not be an easy decision to take, for, it risks inviting the charge that it was deliberately putting roadblocks in Mukherjee's economy revival plans..........
Jain Irrigation & partners to invest Rs 100 cr in new NBFC
Small Ideas, Big Revolutions.
Jain Irrigation Systems along with other partners will invest Rs 100 crore to roll out a new Non Banking Financial Company (NBFC) soon for providing loans to farmers, a top official said. Last week, Jain irrigation had announced it has got RBI's permission to start a NBFC 'Sustainable Agro-commercial Finance Ltd (SAFL)'..........Read............
Bankers seek pro-industry measures from RBI
.... "A rate cut is not a panacea for all the pains of the economy. At the current inflation rate, I don't see any room for the central bank to cut interest rate. While the RBI can do something to ease money supply, the government should do everything to ease supply-side bottlenecks," .....
High inflation may restrain RBI from cutting rates: Rangarajan
Banking on debt
The latest figures on India’s external account released by the Reserve Bank of India point to medium term changes that underlie the weakening of the rupee. But the government’s response may not be the most appropriate............
A robust system in turbulent times
....A closer monitoring of banks is also required because “distress dependencies” between banks has risen. RBI’s analysis of the branch network of Indian banks reveals that the systemic importance “of the most connected” banks has increased.........
Bankers ask RBI to ease liquidity
....Top bankers Monday urged the Reserve Bank of India (RBI) to ease liquidity in the banking system to help revive industrial growth. Executives of leading lenders including State Bank of India, ICICI Bank, HDFC Bank, Axis Bank and Punjab National Bank met RBI Deputy Governor Subir Gokarn and requested for easing the liquidity.....
Rock bottom rates
....To the extent high interest rates, by eating into the operating profits of companies, have dampened business sentiment and the overall inducement to invest, the RBI’s current monetary policy stance may actually prove counterproductive.......
Clamour for remedial steps
A circumspect banking community today asked the Reserve Bank of India to at least bring down the cash reserve ratio (CRR) if not the policy rate as a way to crank up credit growth and kick-start the economy...........
Banks face RBI heat on no rate cut
The Reserve Bank of India (RBI) has come down heavily on banks for not cutting interest rates, despite a reduction in the policy rate by as much as 50 basis points (bps) in April. In the pre-monetary policy meeting with bankers on Monday, the central bank wanted to know the reasons for the failure of policy transmission..............
Monday, July 9, 2012
RBI launches website to explain detection of fake currency
RBI pitches for cash-less carry
The day is not far when you pay your vegetable vendor, hair dresser and neighbourhood grocer with your credit card
The Reserve Bank of India (RBI) has prepared a road map to provide card swipe machines to more than one crore retail businesses in the next three years to promote electronic transactions for ushering in a less-cash society in the country.....
Scarcity of coins, notes of small denomination hits state economy
......At present Manipur is facing scarcity of coins and small denominations of Rs 5, Rs 2 and Rs 1.Besides, one finds it hard to see any new notes of Rs 10 in the state, thereby suggesting the possible scarcity of the same in the near future. While Manipur has been facing the problem for the last many years, there are plenty of such coins and small denomination currency notes in other states. In the absence of coins and small denomination currency notes, one is forced to buy matches, sweets or chewing gums at shops, even if they don't them since there is no change to return at the time of buy anything something whose price is below Rs 10 .....
RBI to release new Rs. 5 coin soon
To commemorate 150 years of the Comptroller and Auditor General of India, the Reserve Bank of India (RBI) has announced that it would shortly put into circulation a new series of coins of the Rs. 5 denomination with the new symbol for the Indian rupee inscribed on it............
Obituary
Cornelius D'Souza (Kenny), 65 years, retired RBI Officer, Bangalore passed away on July 7, 2012. Funeral cortege leaves residence A 101, Spartacus Apartments, 30th Cross, 4th T Block, Jayanagar, Bangalore 560 041 on Monday, 9th July 2012 at 2.30 p.m. to Christha Prabhalaya Church, Jayanagar. Funeral mass at 3 p.m. followed by burial at Hosur Road cemetery. Contact details : Dr. Simia Almeida - 09980560454.
RBI directive a setback for Islamic NBFCs
At a time when the National Commission for Minorities is pressing hard upon the Union Finance Ministry to explore ways to start interest-free banking in the country, the recent RBI directive has dampened its spirit..........
SBI MUSEUM: A peek into the evolution of Indian banking
....Spread over 7,500 sq feet, the museum chronicles the evolution of SBI from the days of the Bank of Calcutta in 1806. A treasure trove of interesting facts, the gallery details the evolution of India’s banking system which was initially driven by the shroffs (local moneylenders), to the emergence of commercial banks in the 18th century. Visitors can take a peek into the personal finances of legends Bengali Renaissance period legends such as Rabindranath Tagore; polymath and social reformer, Ishwar Chandra Vidyasagar and theosophist, Annie Besant. Believe it or not, the bank even returned a cheque issued by the then Governor-General, William Bentinck, for exceeding the credit limit by just four annas (25 paise).......
Kris Gopalakrishnan to head govt cloud computing panel
....While appreciating the benefits of cloud computing, the RBI Deputy Governor, Mr Anand Sinha, recently pointed out that it being a new technology, data integrity and confidentiality seem to be a major concern at this stage. “Further, if too many participants rely on a single service provider, it may lead to a risk of overconcentration inasmuch as the failure of the service provider will be catastrophic,” he said at Hyderabad.........
Disbursal of KCC loans: Private sector banks not included in RBI circular
.....The State Level Banker’s Committee (SLBC) keeps promising the State Government that the directives of the RBI and the Union Finance Ministry are being ‘strictly followed’ in Kerala while allotting shortterm, Kisan Credit Card (KCC) loans to farmers and the Service Area Approach (SAA) is integral to it. But a circular issued by the Union Finance Ministry to CEOs of all Public Sector Banks (PSBs) on May 30,2012, which is in the possession of Express, has not mentioned the SAA,which was withdrawn on December 8, 2004. Also,in the directive on the basis of a listed Reserve Bank of India circular, no mention is there on the inclusion of private sector banks for disbursal of KCC loans...........
High court directs status quo on bank's plea
....Bombay high court has issued notice to the Central government and directed a status quo to be maintained on a plea by Dhanashree Mahila Sahakari Bank at Miraj, Sangli district against the cancellation of its banking license by the Reserve Bank of India.......
Check banks
I completely agree with T N Ninan’s piece “Personal accountability” (Weekend Rumination, July 7). Banks are expected to concentrate on lending and borrowing, rather than focusing on third-party products. For the sake of meeting revenue targets, customers are being mis-sold and duped these days. The Securities and Exchange Board of India and the Reserve Bank of India (RBI) do nothing to prevent these unethical sales. RBI needs to seriously regulate banks’ non-banking activities like insurance, broking and mutual funds.
- Balaganesh, Chennai (BS)
Bankers to meet RBI's Gokarn, will urge RBI to cut rates
MUMBAI: CEOs of commercial bank will urge Reserve Bank of India (RBI) to cut rates to improve investment sentiments at the customary pre-policy credit policy meeting which is scheduled on Monday. The RBI will announce its first quarter review policy on July 31 amids slowdown in economic growth and concerns of rising inflation. In the last mid quarterly review held in June, t he RBI left interest rates and the cash reserve ratio for banks unchanged on fears of worsening inflation.............
Lazy banking or easy banking?
....In April, after RBI surprised the market with a half-a-percentage point cut in the policy rate, sending a strong signal to banks to cut loan and deposit rates, ICICI Bank Ltd, IDBI Bank Ltd and Punjab National Bank cut their base rates marginally; but most banks have been tweaking their loan rates for different business segments, leaving the base rate untouched. This makes the base rate irrelevant as this is the benchmark for all loan rates. RBI had forced banks to replace the erstwhile prime lending rate with the base rate as the prime rate became irrelevant with banks giving a bulk of the loans at below that rate. In some sense, the base rate is also going the same way.....
India Inc's deposits lose out amid better liquidity
....On the back of this improved liquidity, banks have stared refusing bulk deposits even at card rates — the interest rate offered to retail depositors. Some banks are not accepting bulk deposits of more than Rs 10 crore from one customer. Banks were paying around 9.5 per cent interest on three-month deposits until recently, but now that rate has come below nine per cent......
Tracking flux in forex assets
Fluctuation in the value of forex assets has a significant impact on India’s foreign exchange reserves. The country’s foreign exchange reserves fell by $10.4 billion to $294.3 billion during 2011-12, after rising by $25.8 billion in 2010-11 and $27.1 billion in 2009-10, according to RBI data. ........
Read - HBL
Read - HBL
Bank licences can be given on the basis of existing regulations, says C Rangarajan
....."I see that there is a scope for more banks to come in as they come with new ideas... I think if old regulations are inadequate, then they must be modified otherwise RBI can also consider using old regulations, on the basis of which it can give new licences,"......
RBI misled by inflationary expectations
.....As inflationary expectations are crucial in monetary policy formulation, it would serve the economy better if the RBI were to expand the scope of its expectation surveys to correctly ascertain the same. Till such time, it would be better if the central bank adopted the indirect method to ascertain inflationary expectations. In the upcoming policy review on July 31, the policy tilt should be to revive growth unless there is clear indication that easing would aggravate inflation.
RBI Governor Duvvuri Subbarao not to cut rates unless PM can contain fiscal deficit
....The stars may be appearing to align for Reserve Bank of India Governor Duvvuri Subbarao to cut interest rates by month-end, but it may not happen yet unless Manmohan Singh, who holds the finance portfolio, pulls a rabbit out of his hat by July 30 to contain fiscal deficit.......
Monetary policy and the growth syndrome
....It is to the credit of RBI Governor Subbarao that he successfully resisted these pressures to demonstrate that real life situations are for more complicated to be amenable to text- book solutions. Monetary policy making remains an art and not a science......
A plateful of memories
....Dr Basu spoke of his extremely comfortable relationship with Mr Pranab Mukherjee, a thoroughbred political person but one who also had a grasp of economics. He spoke of how he enjoyed the confidence of the Prime Minister. Did he know Dr Manmohan Singh from his Delhi School of Economics days? “No, I met him first when he was the Governor of RBI,” Dr Basu said.......
Clean the stables
...... He publicly chastised the Governor of the Reserve Bank of India, who was unsuccessfully trying to control inflation through monetary policy without the necessary fiscal measures by the government. Mukherjee expected the RBI to cut interest rates for stimulating growth. But he would do nothing to reduce the deficit. He appointed a super-committee with himself as its head to oversee the RBI, the securities and exchange board of India and the insurance regulatory and development authority, ostensibly to settle jurisdictional disputes between them.........
A robust system in turbulent times
....A closer monitoring of banks is also required because “distress dependencies” between banks has risen. RBI’s analysis of the branch network of Indian banks reveals that the systemic importance “of the most connected” banks has increased. The risk that the failure of a large bank could ripple through all parts of the financial system has increased because of growing inter-dependence of banks, insurance companies and mutual funds. The random failure of a bank, which has large borrowings from the insurance and mutual funds segments of the financial system, may have significant implications for the entire system,” says the report......
Till debt do us part
.....The simple point that now cuts across all lines is that excessive government borrowing sets into motion a chain of events that crowd out productive private investment directly in terms of fund availability or indirectly by pushing up the rate of interest. Indeed, in a rare sign of autonomy, RBI has virtually put reduction of fiscal deficit as a precondition for interest rate cuts.....
Student loans benefit 8673 in district
......Mayank Mehta, deputy general manager of Union Bank of India, K R Jayaprakash, lead district manager, K D Joseph, AGM, Reserve Bank of India, Venu S Menon, AGM, NABARD and officials from other banks attended the DLRC meeting.
Read........
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Building on definition
....So, various arms of the government came up with their own lists of what constituted infra. These included the Reserve Bank of India, or RBI (lending), RBI (external commercial borrowings), Insurance Regulatory and Development Authority (Irda), income tax department, Securities and Exchange Board of India (Sebi), Department of Economic Affairs, National Statistical Commission, Central Statistical Organisation, Empowered Sub-Committee of Committee on Infra (read Planning Commission), Economic Survey and India Infrastructure Finance Company. By 2010, there were at least 14 official lists floating around.....
Sunday, July 8, 2012
Underprivileged customers
India’s Journey on the road to Financial Inclusion
The July 2012 issue of eGov, the world’s premier magazine on e-Governance (http://egov.eletsonline.com/)
India’s New Development Agenda - Book review by P.P.Ramachandran
.....The authors of the Report lack a sense of Indian economic history” — a stern indictment indeed. Incidentally, the Committee did not include a member from RBI. ‘ Monetary and Credit Policies’ form the subject matter of part three and has ten essays. There is a critical analysis of policies in the post- reforms period and a stirring call on the part of RBI to evolve a blueprint of area- specific plans to facilitate banks and financial institutions to promote inclusive growth in the real sector. A number of essays analyse credit and monetary policies during 2007- 2009........
SHGs in Konark criticize Canara Bank's delaying tactics to approve loan
Women Self Help Groups representative of Konark NAC area criticize Canara Bank officials' delaying tactics to approve loan. This resentment come into the public during the ‘Canara Grameen Utsav’ which was organized today at Yatriniwas, Konark. The exhibition showcases glorious growth story of Canara Bank . It was inaugurated by Sri S Raman ,Chairman & MD of Canara Bank . S Saha , GM Canara Bank, Bhubaneswar, Sri K K Gupta Chief General Manager NABARD & Shri V Ramachandra Rao, Regional Director RBI were present in this occasion................
God Help Us: We now have three finance ministers
......According to BusinessLine, Rangarajan’s days are packed, with Reserve Bank of India (RBI) Governor Duvvuri Subbarao, and LIC Chairman DK Malhotra set to meet him next week. As a former RBI Governor himself, it is quite clear that Rangarajan’s voice will be heard louder on Mint Street than even Pranab Mukherjee’s. As a known monetary conservative, Rangarajan is sure to back Subbarao’s hawkish stand on inflation, which has meant RBI holding rates high despite the economic slowdown. But Rangarajan’s role will extend beyond guiding monetary policy........
.......For the time being, India has two sort-of FMs – Rangarajan and Ahluwalia. One is there because he is non-controversial, and the other because he is close to Manmohan Singh. And of course, we have the PM-cum-FM. Is three too much of a crowd?
Union Bank to set up 100 'talking' ATMs
Union Bank of India would install 100 ‘talking’ automated teller machines (ATMs) this financial year to enable the visually challenged to carry out ATM transactions. On Saturday, the public sector lender inaugurated its second talking ATM in Thane. The first such ATM was set up on June 6 at the Blind People’s Association campus in Ahmedabad The bank would open 50 such ATMs at Passport Seva Kendras across country........
Tips for safe online and mobile banking
Access to the Internet is now ubiquitous and so its popularity as a medium to make financial transactions is beyond doubt. Such popularity also means the online banking system is constantly prone to attacks........
Textile debt recast meet on July 13
....In a letter to the Union Ministry of Finance last month, the Reserve Bank of India (RBI) said that it had no objection to proposals such for two-year moratorium on term loans and conversion of working capital into working capital term loan. However, the apex bank felt that the asset classification benefit on second restructuring was not justified.......
Little progress on affordable housing ECBs
The big-bang Budget announcement of allowing external commercial borrowings (ECBs) for affordable housing has hardly seen any follow-up action. Government officials and industry stakeholders close to the development indicate the move is unlikely to be implemented anytime soon, as issues like hedging of foreign exchange risks are yet to be resolved. The Ministry of Finance, along with the Reserve Bank of India (RBI), would have to finalise the guidelines and issue a notification on ECB norms............
India outpaces developing world in inflation rankings
..........For policymakers, the worrying bit about the current bout of inflation is that it continues to stay above the comfort zone despite the fact that the Reserve Bank of India (RBI) has been easily the most aggressive Asian central bank..............
Interest-ing times
........In India, similarly, while an RBI rate cut—our columnist Surjit Bhalla estimates a 100 bps cut results in a 0.44 ppt hike in GDP growth—will help, there is no substitute for policy action by the government..............
India Inc has to live with dollar at Rs 50: Kaushik Basu
..... although rupee was depreciating too much, India's apex bank, the Reserve Bank of India, could not resort to sale of too much dollars to prevent a sharper fall in rupee as there was a tendency to panic if foreign exchange reserves dipped.......
OMO to continue to be driven by liquidity judgement: Gokarn
......OMOs are being driven by judgments about liquidity conditions and they will continue to be driven by judgments over liquidity conditions. Whatever is causing liquidity stress whether it is foreign exchange markets or something else, we are focused on maintaining liquidity conditions within the comfort zone that we stated and that will continue to be the benchmark against which we decide whether to do OMOs or not,”........
Decision to raise FIIs investment limit in government debt appears surprising
Former RBI Governor Y V Reddy said recently that some global financial conglomerates are more powerful than even central banks. It is a moot point as to whether these financial bodies are as influential in India's markets, but they are going to benefit for sure from a quick fix and myopic policy to attract capital flows in the near term............
Sticky rupee path
.....“The next few months are difficult. We expect it to remain around 50 and we have to live with that,” he added. Although the rupee was fluctuating “too much”, he said it was not possible to sell dollars to prevent a sharper fall as there was a “tendency of panic” if foreign exchange reserves shrink......
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