...."The section 2 (O) of the Securitisation Act 2002,is unconstitutional as it is arbitrary and unreasonable. It refers to RBI guidelines, which has a definition which is completely in contrast to the one stated in the Act," the petition read. "The section relies on what is sub standard, loss making and doubtful account to understand the term NPA, while the RBI guideline relies on NPA to explain what is Sub Standard, loss making and doubtful account. Thus the whole definition is arbitrary and unreasonable," it added. The petitioner further said, "The definition as stated in section 2 (O) empowers the bank to declare any account as NPA as per its whims and fancies. The delegation of power on the bank to declare a account NPA as per the definition which relies on RBI Guidelines which are ambiguous and contradictory to the definition stated in Securitization Act. Thus the section 2 (O) is required to be declared unconstitutional.".....
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.
Monday, July 16, 2012
NPAs in farm credit
This is regarding the observation of the RBI Governor about rising NPAs in the farm credit portfolio (Business Line, July 13). He has rightly observed that the unrealistic targets by the government on farm credit have led to manipulation of statistics by banks and multi-fold increase in NPAs...........
Risks to financial stability rising - T. V. Gopalakrishnan
.....The risk to financial stability is a fact and the concern of the RBI is real. The volatility in various markets is only a reflection of the failure of the economy which is not in the hands of the RBI alone. The fall in deposit rates, increase in non-performing loans, and the contagion risk due to interconnectedness between banks and other institutions have to be seen in the context of the weakening fundamentals of the economy. A close observation of the financial system gives one the impression that the RBI is gradually losing its grip on the financial system, excluding, to some extent, on the banking system. Insurance companies, mutual funds, and joint stock companies which carry out various types of monetary transactions have implications on the capital, money and forex markets........
Has Nabard crippled Cooperative banks?
........Dr.D.Subba Rao,Governor, Reserve Bank of India said “I am delighted to be a part of NABARD’s celebrations of its completion of thirty years. This is a special occasion for NABARD, of course; but also a special occasion for the Reserve Bank, for NABARD was incubated in the Reserve Bank before it rolled out as an independent development financial institution in 1982.The bondage between our two institutions has not only remained strong but is getting stronger. We share a common goal – of furthering……………………” What about bondage between them and rural cooperatives? Let us initiate appropriate preventive steps so as to ensure that the above stronger bondage between RBI and NABARD does not drastically and adversely affect the functioning of Rural cooperative credit delivery system......
Flawed? It is time we move to a rejigged Mibor
.........The high-decibel controversy over London Interbank Offered Rate (Libor) manipulation is a case in point. As a regulator known for prudence, bordering on what some would call paranoia, the Reserve Bank of India (RBI) has always been taken cues from developments abroad. But in the aftermath of reports that Libor, the benchmark rate that determines the interest rate on financial transactions worth an estimated $360 trillion, globally, there has been an inexplicable silence from the central bank. To be sure, there is not much the RBI can do regarding the alleged misdeeds of British banks in deliberately under-reporting Libor except hope that there is a clean-up, and soon......
RBI for debt recast of textile units on a case-by-case basis
Rejecting across the board restructuring of loans for the cash-starved textile sector, the Reserve Bank has asked banks to consider debt recast for the industry on a case-by-case basis. Banks have been advised to look at debt recast on a case-by-case basis and special window will be provided for restructuring, official sources said...........
Reversing growth recession
The economy is in the throes of a crisis, which, though not akin to 1991, has proved to be intractable so far. The series of measures announced by the Reserve Bank of India just before Pranab Mukherjee laid down office as the Finance Minister were aimed at encouraging forex inflows, and thereby reverse the downtrend in the value of the rupee vis-à-vis the dollar and other currencies. Soon enough, it was felt that other measures were needed to revive the economy....................
Flawed suggestions
.........As more recent developments have demonstrated, the worst fears of the RBI and a few others have come true. FII flows can change directions and move out of India and other emerging economies as quickly as they came in. Making available even a small portion of the reserves for ‘noble’ causes such as infrastructure financing, as was done, is inherently bad economics. But then there is no accountability for giving bad advice and implementation. Given the tight current account position recently, the RBI has had to dip into reserves, for two quarters in a row..........
Faint glimmers of hope
.....The Reserve Bank of India’s (RBI) next credit policy review will probably not raise rates. The weak IIP and lower crude prices mitigate against further rate increases. But the central bank might not lower rates by much either, if it does so at all. In any case, a rate cut by RBI will not be enough to put the animal spirits back in the economy. If Dr Singh is going to do this, he will have to take fast and decisive policy action. His political window of opportunity may be quite small.......
Let’s not go electronic, please
....Aside from all this, for consumers or investors to take to electronic transactions, they must benefit from it. As the RBI Deputy Governor, Dr K. C. Chakraborty, pointed out in a recent speech, a technology-based inclusion model will work in India only if customers see value in the shift.....
Safety net: debit card PINs surge
Bank customers in India are getting more aware to make their ATM transaction safe by changing their PIN(Personal Identification Number) frequently to ensure their hard earned money is safe. According to the National Payments Corporation of India (NPCI) data, there is a surge of 50% in the number of customers changing their PIN in the last six months. In January, around 98,000 bank customers changed their PIN that increased to 150,000 at the end of June 2012........
Richest Pakistani Mian Mohammad Mansha eyes banking foray in India
........"We are very keen on opening branches in India and have applied to our central bank for clearances," Mansha said over the phone. "As soon as the State Bank of Pakistan okays our application, it would refer it to the Reserve Bank of India for approval."........
Mobile banking transactions rise five-fold in Jan-May
............The RBI has identified mobile banking as a key tool to achieve the goal of financial inclusion. With a large unbanked population spread across the country, a brick-and-mortar approach to providing banking services is not feasible. In this regard, offering banking services through mobiles — with 929 million subscribers — is seen as a viable option for coverage of the entire population under the banking system.
CPMG office team defeats RBI team in inaugural match of SBI football tournament
Bhopal : The Chief Post Masters General (CPMG) office team defeated the RBI in the inaugural match of the SBI football tournament by 3-0 on Saturday. The State Bank of India (SBI) is always ready for development of its players and whatever efforts are required in this field will be made by the bank said deputy managing director SK Mishra during the inauguration programme.........
Is Citi planning Facebook banking?
Global banking giant Citi has turned to the social media to gauge the public mood on offering banking transactions through Facebook -- a service already being offered by Indian banking giant ICICI Bank.
US-based Citigroup attracted the attention of hundreds of people within minutes of it posting messages on social networking platforms Twitter and Facebook last night about banking services on Facebook............
Puri says SB rates to remain at 4%; no impact so far on mop-up
Terming as "insignificant" for his bank the impact of the Reserve Bank decision to deregulate savings accounts rates last year, HDFC Bank managing director and chief executive Aditya Puri has said depositors should be content with 4 percent the majority of banks are offering them................
Sunday, July 15, 2012
Banking Union answer to EU debt woes? Experts discuss
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| Major banks from the big countries that have not received any recapitalization will be treated quite gently by the ECB |
Professor Charles Goodhart former member of the Bank of England's Monetary Policy Committee and Shayamla Gopinath, former Deputy Governor of the RBI share their views on how long will it take to form a banking union and whether European governments will willingly give up their authority over their domestic banks............
Continue reading and watch the video.............
Does the alarming increase in corporate debt restructuring signal a financial crisis for India?
....The incentive for banks to be optimistic is understandable. Apply default rates to the total amount of corporate debt included in the CDR referrals, and gross NPAs of the banking system (currently 2.9 per cent) may go up by about Rs 70,000 crore. That would take the gross NPA ratio to total assets of the banking system to almost 8 per cent. Provisioning requirements and the impact on bank balance sheets could well blow a big hole in them.
Not everybody agrees, however. “Our banking system’s NPA ratios are much better than those in several developed economies,” says Deepak Singhal, Chief General Manager at the RBI’s Department of Banking Operations and Development. But he admits the new Basel III requirements could put a lot of stress on banks’ capital needs. “It could come from the government, capital markets and internal accruals, or a combination of all three.”...........
Let's farm along with nature, not against it
...........Scientist M S Swaminathan in his report "the MS Swaminathan Task Force Report on agricultural biotechnology" highlights that areas of biodiversity like the Western Ghats should be protected from GM crops. Unfortunately, the government has turned a blind eye to these recommendations and decided to introduce GM crops in India forcefully, by pushing through the Biotechnology Regulatory Authority of India (BRAI) Bill, which proposes a single window clearance system manned mainly by biotechnologists to approve of GM crops...................
Where is the watchdog?
With the Indian rupee falling down at an all time low and there is no guarantee that it will not fall further. As a watchdog, the RBI should act fast to arrest this dangerous downward slide....................
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बैंकों से सालभर में मिले डेढ़ लाख के नकली नोट
रायपुर ! राजधानी के विभिन्न बैंकों से पुलिस को डेढ़ लाख रुपए के नकली नोट मिले हैं, जिसे अज्ञात आरोपी द्वारा जमा किया गया था। इन नोटों को आरबीआई परीक्षण के लिए भेजा गया था, जहां नोटों के नकली होने की पुष्टि हो गई है।...............
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Islamic banking proposal being considered
....."We told the RBI officials that even European and Western countries have introduced the system. They are providing a level playing field. A few banks like HSBC and Citibank have started Islamic banking cells in Gulf countries. India should not be left behind,".......
To Readjust The Bar
It’s a legal wrangle over legal practice. The Supreme Court interim order last week, on a petition filed by the Bar Council of India, on the contentious subject of allowing foreign law firms into the country, has rung in the final round of a battle that has raged for the past 18 years. The apex court adjudged that ‘practice of law’ involved both litigation and ‘desk work’ and instructed the Reserve Bank of India not to issue any clearance to any foreign law firm, laying the ground rules for a hearing later this year...........
Airlines stressing out bank assets
......Banks have burnt their fingers by lending to this sector, which is under immense pressure due to rising fuel costs, mismanagement and predatory pricing. According to the Financial Stability Report released recently by the RBI, 10 banks (predominantly public sector banks) accounted for around 86 per cent of the credit to the airline sector......
Breaking the Indian gold bug
A senior policy maker has suggested that the authorities are now looking at the cause rather than symptoms of the growing problem
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Saturday, July 14, 2012
Subbarao opens two more fronts in battle with finmin
Reserve Bank Governor Duvvuri Subbarao does not lack for issues to take the finance ministry head on............
...........But, clearly, he is preparing to use the remaining 14 months left in his tenure (which ends in September 2013) to highlight all the areas where he thinks the government is messing up.
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...........But, clearly, he is preparing to use the remaining 14 months left in his tenure (which ends in September 2013) to highlight all the areas where he thinks the government is messing up.
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Need to evolve strong farm loan recovery mechanism, says Andhra Bank CMD
Information on financial products for citizens
........A.S.Rao, Regional Director, RBI, Hyderabad, said that the State Bank group has opened branches in all 12 lead districts out of 23 districts in AP. He explained the objectives of FLCCs and steps initiated for the implementation of financial inclusion plans and advised urban and metro customers to avail free advisory or counseling services from FLCC ..................
Cooperative banks: Nabard’s pettiness exposed
..........Nabard, primarily conceived to act as a catalyst for rural development, celebrated its 30th Foundation day in Mumbai on Thursday without any participation from the cooperative banks. It invited almost all the commercial banks but chose to sideline the cooperative banks that happen to be one of its main subjects. Only exception was the Maharashtra State Cooperative Bank but it chose not to send any representative. Interestingly, the speakers including the Governor of Reserve Bank of India dwelt mostly on the subject of cooperatives exposing Nabard’s pettiness in the matter.............
Faking RBI
....This kind of payment notification and that too from a regulator like RBI is unbelievable for a commoner like me. Without participating in any kind of lottery, you are informed about being winner of a huge amount running in crores of rupees! This is a big puzzle. So many questions crop up. Am I the lone recipient of this kind of payment notification, that too from the RBI? I don’t think so, because I have read about kinds of cyber frauds and it’s one among them. Normally, people after receiving such fund transfer notifications respond instantly by sending fund transfer fee, courier charges etc and then subject themselves to an unending wait for receiving the original ‘winning’ amount......
RBI may raise new banks' minimum capital need to Rs 10bn
The Reserve Bank of India may increase the minimum capital requirement for new banks to Rs 10 billion from the currently proposed Rs 5 billion, said a senior official with direct knowledge of the development.............
Will the dream team deliver?
........Whatever its past errors might have been, today, the RBI is right in insisting that a clear and substantial cut in the fiscal deficit must accompany the lowering of interest rates. If interest rates are lowered first and investment revives, it may not only blunt the willingness of the Congress to undertake fiscal reform, but trigger demands by the radicals for a fresh spending spree on “inclusive development” that Manmohan may not be able to prevent..................
Govt should not control banks from outside: RBI
......“The government ownership mechanism, which is not through the boards but outside the boards is not good governance. One thing for the government could be to show exemplary behaviour of corporate governance and exercise their ownership rights through the board. I think that would be good for all the financial institutions, including Nabard,” the RBI governor said in response to a question from the audience at the 30th foundation day function of Nabard in Mumbai...................
Rural customers find dealing with banks vexatious: RBI
There is a growing vexation among low-value customers not just in the agriculture sector but also in the context of financial inclusion when it comes to dealing with formal lending institutions, said the Reserve Bank of India Governor, Dr D. Subbarao..........
RBI rationalizes online funds transfer charges
Funds Transfer Amount (in Rs) | Charges (in Rs) |
Upto 10,000 | Not more than 2.5 |
10,001- one lakh | 5 |
1 2 lakh | 15 |
Above 2 lakh | 25 |
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Gold standard
This refers to the article “Resurrection of gold standard” (Business Line, July 13). Even if the Nobel Laureate Robert Mundell’s prediction that “Gold will be part of the structure of the international monetary system in the 21st Century” is unlikely to come true within the predicted timeframe, India has every reason to unearth and put to productive use, the country’s gold stock — hidden in households, religious institutions, moneylenders’ lockers and with people who conceal their wealth for various reasons. According to media reports, observing that gold imports are contributing substantially to India's current account deficit, an RBI panel is looking into the aspects of devising some alternative routes, such as bringing out the gold that exists. The panel is also likely to examine whether domestic stock of gold can be brought into the mainstream by devising appropriate financial instruments. This is a step in the right direction. People’s emotional attachment to gold in metal form will come down only if the government is able to infuse confidence about the effectiveness of ‘paper gold’ as a store of value with easy liquidity. Awareness should also be created about the loss involved in abuse of gold for show-off purposes such as gold-plating of roofs, statues and flag-masts or in re-making of ornaments.
- M.G. Warrier Mumbai (HBL)
My View on "Babus should guide banks via boards: RBI Governor ...":
The reminder of the Gentleman Governor to the representatives of the Finance Ministry to act through the Boards of banks on which they are represented is timely. He had advanced the argument on the ground of good corporate governance.RBI should also inform the Finance Ministry that with considerable private participation in the equity of public sector banks,Government would have to reexamine their earlier role as owners and not also tread on the toes of the RBI in the performance of the regulatory/supervisory functions.Governor would have to protect the RBI from overzealous and bureaucrats in the Finance Ministry as otherwise it would not be able to take full responsibility for its regulatory and supervisory functions vis-a-vis banks under the Banking Regulation Act.
- A.Chandramouliswaran
This plain speaking by Governor RBI to the Babus in Finmin has not come a day sooner than required. It was long overdue particularly since the induction of Mr. Mittal to the Ministry. His frequent dispatches to CMD of PSBs were nothing short of uncalled for interference in day to day functioning of PSBs whether it may be promotion policy, transfer or posting policy etc. etc. which essentially should be left to the CMDs and their HR Managers. Babus should bear in mind that these PSBs, most of which are now listed entities, should no longer be treated as their sole fiefdom. Now with the change of guards in Finmin, it is hoped that the PM who is also holding the Finmin charge would advise these Babus to refrain from micromanaging the PSBs and as suggested by Gov.RBI would set an exemplary Corporate Governance practices. We wish the Gov. RBI with the same zeal and zest should shield RBI from the unwarraned interference of Finmin Babus in administrative functions of RBI whether it was revision of pay scales or updation of pension etc.
- M.L.Mahajan, Ex-GM, HRMD
ATM Fraud: Tech tricks
.........the loophole has been plugged with the National Payments Corporation of India (NPCI) asking banks to disable the cash retraction facility by 31 March 2012. This still leaves a few questions unanswered. First, was there any attempt by the RBI to check if the ‘gang’ that masterminded the fraud was connected to the few specialised companies that supplied or serviced ATM machines?.......
SC notice to Bihar on plea against entry tax on Railway
.....It had written the letter to the RBI in pursuance of the recovery orders of January 10, 2012 and February 2, 2012 of the Joint Commissioner, Department of Commercial Taxes, Bihar Government, directing the Railways to pay the Entry tax for the assessment years of 2010-11 and 2011-12.
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Read.......
Friday, July 13, 2012
'Farm loans being diverted for non-agri purposes'
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| The RBI Governor, Dr. D. Subbarao delivering a lecture on “Agriculture Credit – Accomplishment and Challenges” on the occasion of 30th anniversary of NABARD, in Mumbai on July 12, 2012 |
30th year celebration of NABARD at Maharashtra Regional Office, Pune
Lighting the lamp Police Commissioner Gulabrao Pol alongwith Smt Meena Hemchandra, Chief General Manager & Principal, CAB, RBI, Pune
RBI for robust farm insurance to achieve 4% agriculture growth
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| Dr D. Subbarao (right), Governor, RBI, along with Dr Prakash Bakshi, Chairman, Nabard, releasing a coffee table book on 30 years of Nabard in Mumbai on Thursday |
An institution in himself Dr. Bhat calls it a day.............
The sad news of Dr. V.P.Bhat passing away in Bangalore last Sunday 8th would come as a shock to many a RBIte of yesteryear who is still alive and kicking; Dr. Bhat was an institution in himself in so far as his medical advice and diagnosis of the RBIites was concerned. Conservative in prescribing tablets / medicines, he avoided over medicating his patients. A strict vegetarian and disciplinarian, Dr. Bhat joined the Bank as a BMO in 1956 and retired in 1986. He was a no nonsense person who called a spade a spade irrespective of the status/position that the patient enjoyed in the RBI. So much was he respected that even after going into retirement in 1986, he was reappointed by the Bank in 1988 to be its Chief Medical Officer (CMO) - a position which held till 1992. He had just tuned 87 on 4th July this year. He is survived by his wife Lalita, and two children - a daughter and a son both settled abroad. We pray his noble soul may rest in peace in Heaven.
- Kishore Savkur
We are sorry to hear of the news. Yes, he was a no nonsense person and was not overawed by any high ranking official in RBI. He had done some plain speaking, in a meeting specially convened at his instance, to all senior officers (right up to the Governor) that they should not perform onward/ return journey to/from N.Delhi by air on the same day as this is not good from the health point of view. Doctors who suggest moderation in eating and other life style changes of patients when warranted are themselves not disciplined in their personal lives. Dr. Bhat was an exception as observed by you. His diagnostic skills were good considering that he had not acquired any medical degree beyond his MBBS. It was, therefore, no surprise that he was with the Bank for a record number of years.
- A. Chandramouliswaran
Down memory lane - Tribute to MS
Shri M Subramaniam, (MS) who passed away in Chennai last Saturday retired from the RBI as the Chief Officer, DCM Central Office Mumbai. He had joined the Bank as a Probationary Assistant (as direct recruits were then known) in 1957 after completing his Masters in Mathematics from Calcutta University, He was associated with the Exchange Control Department for a number of years and was considered to be an expert in Exchange Control matters. He was a member of the first Committee appointed by the Central Government to set up two Bank Note Printing Presses which, in mid nineties, came to be taken over by the RBI and christened as BRBNMPL presses in Mysore and Salboni. MS was a nominee director on the Board of Bank of Baroda and was later on appointed as its Adviser on retirement. MS was proficient in many Indian languages -Bengali being his forte."
- Kishore Savkur
- Kishore Savkur
Shri K.D.Savkur has written about the early days of Shri M.Subramaniam (MS) in RBI, Calcutta, and later on the important role played by MS in the setting up of the Currency Note Presses about which I was not familiar. Even though I had not worked in the calcutta Office, I have heard from many from that office that he was revered, nay, worshipped in that Office for his intellectual prowess. Those were the days for which an officer was admired for his caliber. I came to know about Shri Subramaniam when we were together for a brief period in the Central ECD though I had not directly worked under him in the Department. I had, however, the opportunity to work as a Currency Officer, Bangalore, when he was the Chief Officer, DCM, and cannot forget his inspiring leadership which not only facilitated but also encouraged me to undertake some tasks in Bangalore Currency Department which gave me great job satisfaction. I have heard that MS asked for being posted to head DCM even though the Department was new to him (a rare request indeed when many officers moved heaven and earth to steer clear of the Currency wings of RBI!!) as a challenge and then proved to be one of the chiefs of that department who had left an indelible mark. There is, therefore, not the slightest exaggeration in what Shri V.K.Sharma, E.D, had to say of MS. MS was truly a role model for the officers in terms of his significant contribution to the Bank. Is it not then strange that he did not receive from the RBI the recognition which he richly deserved? On the last day of his service, he left office for his home without any one accompanying him out of the building like on any other day. He had declined a farewell from the Bank as he did not want to be hypocritical!! He was denied the recognition which plagiarists received from the Bank. The Bank did not also use his expertise in any capacity after retirement. MS was one of the two officers of the Bank from whom I had learnt a lot the other one being Shri T.K.Padmanabhan who, to the grievous loss of RBI, had retired prematurely many years before the age of superannuation. I met MS on a few occasions in his home in Anna Nagar in Chennai along with two of my retired colleagues and his brain was as razor sharp as it was while in service even though he was regretting that he was forgetting many things. May his noble soul rest in peace.
- A. Chandramouliswaran
- A. Chandramouliswaran
I am extremely sorry to read today in VITALINFO about the sad demise of M Subramaniam. We were quite close till he retired and I always admired him for his knowledge and integrity. We were together for banking training in Germany for more than a year in 1959-60. If possible, please convey to his bereaved family my heartfelt condolences. I pray that his soul rests in peace.
- P B Kulkarni [Pune]
Govt should restrict role in banks: RBI
The Reserve bank today expressed concern over the government "occasionally exercising" its ownership rights in banks and financial institutions through channels outside of their boards, and asked it to show exemplary corporate governance.................
RBI asks ministry not to micromanage banks
| TURF WAR |
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The ministry’s diktats
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Babus should guide banks via boards: RBI Governor Duvvuri Subbarao
MUMBAI: The Reserve Bank of India Governor Duvvuri Subbarao signalled to bureaucrats in the finance ministry that they would serve banks better by pushing their decisions through the board of directors than other means, alluding to secretary (financial affairs) DK Mittal's frequent letters to bank chairmen on administrative issues..........
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RBI to give one lakh coins
BAGALKOT: Following a report in The Times of India dated Juy 7 (Token ends coin shortage in Bagalkot town), the Reserve Bank of India will supply coins to Mahalingapur town in the district ...........
Counterfeit notes of Rs 2L seized in 2011
Chandigarh : .......... senior RBI official told TOI, "It is very difficult to ascertain who deposit the fake currency with the bank because money was received from different parts of India, especially from the different branches situated throughout northern India." The RBI official maintained, "We can't destroy the seized fake currency notes without informing area police and we also sought help from cops to detect the source of these notes.".........
RBI panel looking into alternative to gold imports
RBI may hold on policy stance amid high inflation: Experts
Reserve Bank is unlikely to soften its monetary stance in its policy review later this month due to high inflation even though sluggishness in industrial output growth for May calls for cut in policy rates, say experts............
RBI won't do anything dramatic in July policy: Pronab Sen
..... “The headline inflation will continue to be driven by food prices, probably in 7-7.5% range somewhere, so at the moment I don’t expect to see RBI doing anything dramatic,” ........
Stable for now
The RBI’s latest Financial Stability Report (FSR), like its four predecessors, attempts to share the results of the central bank’s macro prudential surveillance with the markets. The objective is not only to bridge the knowledge gap in a crucial area but to encourage debate and create awareness of the vulnerabilities of the financial system..................
Creative financing paves the way out of poverty for India's poor
.......Amid extensive media coverage, the Indian government began to closely monitor the sector. Last year, the Reserve Bank of India (RBI), the central banking institution of the country, capped the interest rate to 26 per cent for micro loans up to 50,000 rupees. Previously, some MFIs would charge as much as 36 per cent. A bill on empowering RBI to fully monitor and regulate the sector is now being debated in parliament.......
Raghuram Rajan, Ajay Chibber in race to become the next chief economic advisor
....A three-member search committee headed by Prime Minister Manmohan Singh's key economic aide C Rangarajan, a former RBI Governor, is understood to have chosen Chibber and Rajan after considering the claims of 18 applicants........
RBI asks banks to follow guidelines for MSME sector
.....RBI Deputy Governor Anand Sinha today said the central bank had issued instructions to all banks for ensuring timely flow of credit to the MSME sector, particularly the more employment-intensive units. "We urged banks and other institutions to implement the guidelines in letter and spirit," Sinha said .....
Banks need not to submit NRI deposits data in physical form
"........ it has now been decided that the banks, dealing in foreign exchange (excluding regional rural banks and cooperative banks) can stop sending hard copies to Department of Statistics and Information Management (DSIM) henceforth," RBI said in a circular today. "Cooperative banks and regional rural banks (RRBs) may, however, continue submission of both hard and soft copies ... to the regional offices of the Foreign Exchange Department," RBI said........
ATMs a costly affair for banks
.........."However, a reduction in interchange does not mean profitability for third party providers will go down. The introduction of the white label scheme by the RBI will ensure there are more machines in the market, ensuring profitability,”.........
East Delhi civic body to rent out space
.....“The EDMC has a number of buildings and premises which are strategically in residential or institutional or commercial areas. Many of these are suitable for installation of ATM machines by various recognised banks and other agencies recognised by RBI on payment of monthly rent,”......
Thursday, July 12, 2012
Former RBI Official Slams Rupee Policy
........In a rare instance of a former Reserve Bank of India official criticizing the bank, Rakesh Mohan said in an interview Wednesday that the lack of RBI intervention until the rupee's recent plunge are at the root of the country's current exchange-rate problems and, until recently, an acute shortage of cash in the domestic banking system. "We have had a policy of a managed float but without an exchange rate target" in the past, he said. "The rupee should reflect fundamentals and not the vagaries of capital flows.".....
Role Model RBI officer no more.........
Shri M. Subramaniam, former Chief Officer, Department of Currency Management, left for his heavenly abode on Saturday i.e. on 7th July, 2012.
Shri V.K.Sharma, Executive Director when contacted overphone, described Shri Subramaniam as a role model officer of RBI. Down memory lane, Shri Sharma said:-
“Mr. M. Subramaniam was, in every sense, truly a genius and a role model RBI officer – a peerless epitome and paragon of unmatched and unremitting calibre, intellect, professionalism, courage and conviction! He was the last word in the Indian foreign exchange knowledge and regulations space and strode it like a colossus!!”
Axiomatic Monetary Credibility
....The gold standard example is particularly illuminating because it shows how credible policies in certain areas lead to "incredible" policies in others. Because the gold peg was credibly sustained, price stability could not be credible. Shocks to the price level could not be controlled because there was no longer a specific mechanism to control prices. By similar logic, India's attempts to stop the devaluation of the rupee are not credible because there's no infinite forex intervention that can stop the rupee's slide without also contracting monetary policy. Given that the Reserve Bank of India has shown no signs it wishes to tighten monetary policy, the forex intervention is not credible because the mechanism is not infinite......
RBI instructs banks to check notes
Jaipur : ....The RBI has issued instructions to ensure that there is no re-circulation of forged currency notes received by them. At the instance of RBI, banks have designated a nodal officer in every district who would be responsible for filing the FIR and advising the details to the RBI and other relevant agencies. It has also become mandatory for the banks to install note-counting machines and mechanised processing capability for the branches having a daily receipt of Rs 50 lakh and above. To remain one step ahead of the fraudsters, RBI is improving its coordination with the police, CBI, RAW and taking proactive steps to address the menace in the state. There are periodical enhancements in the security features of Indian bank notes........
Big fish of fake currency racket slip through police net, small fry held
.......“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.
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........
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