........“I must hasten to add that sacrificing growth is only in the short-term. In the medium-term, there is no trade-off between growth and inflation,” the RBI Governor said. “There is a threshold level of inflation. Below the threshold, may be, there is a trade-off between growth and inflation. But above the threshold, there is definitely no trade-off between growth and inflation,” he said. However, the RBI governor said his views on inflation should not be read as a preview to the decisions to be taken in the quarterly monetary policy review on July 31.............
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Wednesday, July 18, 2012
Subbarao compares spiralling haircut costs and inflation
(The Telegraph)
Reserve Bank Governor Duvuuri Subbarao today cited his receding hairline and the high rates for his hair cut to make a point on inflation. He said he used to pay Rs 25 for a haircut 20 years ago which went up to Rs 50 even as his hair thinned. However, in recent times, though the hair growth has been almost nil, he is paying Rs 150 for a haircut. "Now when I have virtually no hair left, I pay Rs 150 for a haircut," the career bureaucrat-turned-central banker said to a laughter ................
Core inflation may not be true indicator: Subbarao
Reserve Bank of India (RBI) Governor D. Subbarao on Tuesday added a new dimension to the ongoing debate on what is the ideal measure of inflation that the Indian central bank should track while framing policy decisions, saying core inflation might not be a true indicator of price movement in Indian conditions.........................
Can policymakers stomach another bout of food inflation?
.....India's wholesale and consumer price inflation levels are way above the Reserve Bank of India's comfort lines, central bank Governor Duvvuri Subbarao said on Monday. India's wholesale price index (WPI), the main inflation gauge, rose to a lower-than-expected annual 7.25% in June, its slowest rate since January, helped by moderation in fuel prices. The RBI's threshold level for inflation is around 5%, he said.......
Make Zero CAD cornerstone of policy making: Reddy
New Delhi: With the current account deficit (CAD) overshooting 4 percent of GDP mark in 2011-12, former RBI Governor Y V Reddy Tuesday said India's medium-term economic growth strategy should be aimed to achieve zero CAD. "Zero current account deficit in medium term should be the cornerstone of the policy making," he said at the lecture of IPF, a partnership between NCAER and Washington based Brookings Institution..........
The meaning of liquidity
What is the difference between leverage and high leverage? Ask Y V Reddy, former Reserve Bank of India (RBI) Governor, who was at his wittiest best at the Indian Overseas Bank’s platinum jubilee commemorative lecture. “Basically, leverage means others’ money and high leverage means that you are playing more with others’ money,” he said. And what does liquidity mean? “Liquidity has many meanings ... we have aggregate liquidity, then we have CRR [cash reserve ratio] and OMO [open market operations]. And, of course, in Hyderabad after 7 p m, liquidity means beer and whisky. That’s why we have important conferences at 5 o’clock,” he added.
BS
Reform is not laundry list; focus on micros must: YV Reddy
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| Neither growth nor inflation should drive interest rate policy. The correct rate is one that promotes savings. |
Political aims too matter, RBI governor to economic advisors
D Subbarao has urged economic advisors to consider the government's political objectives while suggesting measures, turning around the old-school theory of giving unbiased apolitical advice...........
Subbarao moots producer price index to measure inflation
The Reserve Bank of India on Tuesday mooted a producer price index (PPI) that would be able to measure inflation more accurately. According to Reserve Bank of India Governor D. Subbarao, the present ways of measuring inflation do not take into account cost escalations of...........
Statistics and Statistical Analysis in RBI’s Work: Dr. D Subbarao
Address by Dr. D. Subbarao, Governor, Reserve Bank of India at the Sixth Annual Statistics Day Conference, Reserve Bank of India, Mumbai, July 17, 2012
......I want to reiterate that the Reserve Bank is deeply conscious of positioning itself as a knowledge institution. We place great store by the timeliness and accuracy of data and in the skill sets for analysing and interpreting that data. Oftentimes, the complex problems of the real world test the adequacy and the integrity of our data sets as also our ability to analyse and interpret them. We make best efforts to improve our data collection and analysis and to be mindful of the conceptual and measurement errors. We are not the best practice, but will spare no effort to reach the best practice, if not set the best practice itself. .........
Why slowdown? RBI at sea; will probe
......"I have asked our economic research department to do a detailed study on the time-series relationship between real interest rate and investment activity. We expect to put out that report in the public domain in the next couple of months,"........
Bankers express concern over decline in CD ratio
......Mr Vijaykumar A., Manager, RBI, Bangalore, said that declining trend in CD ratio is a worrisome factor. Bankers have not achieved CD ratio of 60 per cent, which is the benchmark prescribed by the RBI. Banks with less than 60 per cent CD ratio should accelerate lending. Disbursements in tertiary sector such as segments like housing and education needs improvement, he said.......
Mad chase for GDP growth
..... large percentage of what our retailers offer is imported; including fruits and festival goodies. During the 1995 -2005 decade, according to the RBI report, blue-collared jobs in the organised sector in India declined! During the same decade, China created 72 million new factory jobs in their manufacturing sector, mainly for their unemployed rural youth. The problem is not the lack of enterprise amongst our people, but the complete mismanagement in handling the manufacturing sector.......
India growth story clip dips to 7.5%, says RBI
....."Assessing India's potential growth rate, consistent with our objective of low and stable inflation, remains a challenge. In its annual report for 2009-10, the Reserve Bank had reported that the potential output of the Indian economy may have dropped from 8.5 % pre-crisis to 8% post-crisis,".......
Micromanage now, regret later
The Reserve Bank of India (RBI) Governor has publicly cautioned the government against micromanaging public sector banks directly, explaining that the correct route through which the government as majority owner should work is the board, on which it has its nominees. Then, for good measure, he has added that this would be in line with good governance, in which the government could set an example! A limit of sorts was crossed recently when the government, or the department of financial services, first issued a letter to banks to limit their acceptance of certificates of deposit and bulk deposits and, on confronting a volley of protest from bank chiefs, held the instructions in abeyance. It is useful to trace the history of micromanagement ...............
Maharashtra to provide loans to farmers through state co-op bank
Since the RBI has passed strictures against the district co-operative banks, the state government decided to provide loan to farmers through state co-operative bank................
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Are the entry barriers for companies to set up banks too high?
........Last week, the Reserve Bank of India (RBI) issued the gist of comments from various constituents and stakeholders as a prelude to announcing a new framework for new banking licences. One of the comments was on the entry capital. Whereas RBI’s discussion papers suggest a threshold of Rs 500 crore, some stakeholders say the limit should be raised to Rs 1,000 crore. There is a high order of prudence and analysis that seems to have gone into this suggestion. ........
SBI to stop appointing individual business facilitators
...............The bank has asked individual facilitators to either upgrade into a business correspondent or associate themselves with institutions — like NGOs — to bring credibility in operations. SBI now suggests business facilitators to follow the business correspondent model in setting up customer service points and conducting banking operations through point-of-sale terminals, mobile phones or other such smart devices. In order to ensure greater financial inclusion, the Reserve Bank of India had in 2006 instructed banks to use the services of business correspondents and business facilitators. Business correspondents carry out much wider function, including that of disbursal of small value credit, collection of small value deposits, sale of third party products and receipt and delivery of small value remittances. SBI currently has a network of 30,000 such correspondents across the country.
Establish standards for MFI independent directors as first step to ensure good corporate governance
The RBI and the Union Finance Ministry must provide clear guidelines on the appointment, roles, compensation and evaluation of independent directors for microfinance companies, critical for effective and ethical operations
As the Reserve Bank of India (RBI) and the Union Ministry of Finance (MoF) work hard on building a clear regulatory architecture for microfinance, they would do well to remember that an important cog in the whole scheme of things is to ensure good corporate governance on the ground. There can be no compromise on that as much of the Andhra Pradesh and Indian microfinance crisis of 2010 can be traced to poor............
IUCB launches speedy loan recovery mission
Imphal, July 16 2012:In compliance with the directive of Reserve Bank of India (RBI), Imphal Urban Co-operative Bank (IUCB) has started its Speedy and Efficient Loan Recovery Mission from today........
Tuesday, July 17, 2012
Do not micromanage PSU banks, former RBI chief YV Reddy tells government
.........Reddy, whose conservative policies are widely regarded as having insulated India's financial system from the global economic meltdown of 2008, appeared to endorse the views of his successor Duvvuri Subbarao, who last week said the finance ministry should demonstrate exemplary corporate governance by exercising its ownership rights through bank boards.........
......Reddy also disagreed with one of his predecessors, C Rangarajan, who now heads the PMEAC, on the preconditions for issuing new bank licences.......
‘RBI serves the nation, not the Govt’
The Reserve Bank of India’s Governor has a responsibility to speak up. As a public servant, he owes his loyalty to the country and the Constitution — and not just to a government in transit, the Governor, Dr D. Subbarao, said. He was quoting the late I.G. Patel, a former RBI Governor, while speaking at the launch of a collection of the latter’s essays — Of Economics, Politics and Development...............
Govt and RBI are not adversaries: Subbarao
....We are not adversaries and we share a common goal. And I think some disagreement is natural,” he said. “There are disagreements within the government and there are disagreements between the government, regulators and public policy institutions. In fact, I would worry if there is complete agreement.” ............
RBI official highlights problematic international regulations
G Padmanabhan, an Executive Director of the Reserve Bank of India, delivered a speech on July 13 in which he assessed the effects of global banking regulations on the Indian economy. Speaking at the Bankers Club in Raipur, Padmanabhan said that co-ordinated international regulations could create positive externalities for India, but might need to be changed to account for the needs of the domestic economy. "For instance, guidance on the conduct of the counter-cyclical capital buffer for India may require some adjustment," he said, explaining that the credit-to-GDP ratio was potentially problematic for credit growth in India.............
Former RBI governor YV Reddy rules out stagflation for now
Dismissing fears of stagflation, Former Reserve Bank Governor Y V Reddy today said India is still one of the fastest growing large economies." "Where is the issue of stagflation? Though inflation is a concern but that does not mean that we are de-growing... still we are one of the fastest growing large economies," Reddy, who is credited with formulating policies that absorbed the shock emanating from 2008 global financial crisis, told........
CBSE agrees to introduce financial education in school curriculum
The Central Board of Secondary Education or CBSE is likely to take the lead in introducing financial education in its post primary level curriculum after taking a leaf out of Reserve Bank of India's financial literacy goal. RBI recognises that basic knowledge about monetary aspects play a key role in financial inclusion and inclusive growth. Imparting financial education among the masses at the early stage of a life cycle can make a real difference in a country where many do not get the opportunity to study beyond school level. "This is truer in case of girl students. One must keep it in mind that for such students, this could be the last opportunity in life to get formal inputs on financial education," RBI said in a draft guidelines on financial education released on Monday..................
SEBI, RBI for financially aware and empowered India
Financial sector regulators, including RBI and Sebi, today proposed a nationwide survey for assessing financial inclusion and literacy in the country and educate 500 million adults, besides providing financial education to school children. The draft 'National Strategy for Financial Education' seeks to "create a financially aware and empowered India" and convert savers into investors. It pitches for a five-year action plan for financial literacy with initial focus on four sectors - banking, securities market, insurance and retirement planning..........
Timely warning from RBI
.......Since the government isn’t particularly concerned about corporate governance when it comes to itself, RBI must be more assertive. Governor Subbarao’s message is loud and clear but if the government chooses not to hear, RBI must step in to protect the interests of banks. Meanwhile, Mittal would do well to limit his views to the boardroom.
Obituary
Mr. K. Gopinath Menon, Ex. NABARD/RBI passed away on 15.07.2012. Mobile: 98411-43577 / 94443-15937.
Hindu
Hindu
Deepak Parekh to head Financing Infrastructure panel
The committee was set up in November 2010 under the chairmanship of Rakesh Mohan, former Deputy Governor of RBI
The government has appointed eminent banker Deepak Parekh as the new Chairman of the high-level committee on Financing Infrastructure.The committee was set up in November 2010 under the chairmanship of Rakesh Mohan, former Deputy Governor of Reserve Bank of India. The committee was mandated to review existing policies and suggest necessary changes in the investment framework in the high-priority infrastructure sector............
Mobile-Enabled Savings via the Business Correspondent Model in India
........In India, microfinance institutions aren’t permitted to intermediate deposits, and regulators are encouraging the business correspondent model to further financial inclusion. The Reserve Bank of India (RBI) permitted banks to use the services of intermediaries who act as business correspondents (or agent) to provide banking services.We saw an opportunity to test the potential of the business correspondent approach as a means of scaling mobile savings services for the poor, working with our long-time partner, Cashpor, an MFI operating in two of India’s poorest states – Bihar and Uttar Pradesh.........
RBI imposes Rs 5 lakh penalty on Karad Urban Co-op Bank
........According to RBI guidelines, urban co-operative banks are required to obtain prior permission from it for shifting to a different locality or municipal ward. The bank has been penalised for shifting its location in Sangli, Maharashtra without RBI permission, the circular said............
Why Subbarao will be watching the skies and a lot more
....But chances are, RBI governor Duvvuri Subbarao won’t oblige. After he stood firm and refused to cut rates at RBI’s 18 June mid-quarter policy review, sections of India Inc came up with predictable howls of protest. However, given Subbarao’s earlier statements explaining his stand, it’s difficult to envisage RBI will consider monetary easing just yet. And there’s good reason for not doing so.......
Post-WPI, Subbu will play more Baba Sehgal than Ilaiyaraaja
.....For Duvvuri Subbarao to make melody like Ilaiyaraaja a lot of things which are not under his control need to come together. Ilaiyaraaja has control over the people he works with. He can tell his musicians what to play. He can ask his singers to sing in a certain way. He can ask his lyric writer to write a certain kind of song. And so on. Subbarao does not have the same control over the other players in the economy. So, in the meanwhile, it is safe to say that try he might as much to make melody like Ilaiyaraaja, chances are he is more likely to come up with a song Baba Sehgal once made. It was called “Main Bhi Madonna”. Those who have heard the song will know that melody has never been “murdered” more.
Growth trouble
.....There is trouble ahead for the Indian economy. On Monday, the International Monetary Fund (IMF) pared its growth forecast for the Indian economy this year to 6.1% from 6.8% earlier. On the same day, the governor of the Reserve Bank of India (RBI), D. Subbarao, said inflation continued to be above the central bank’s comfort zone. This is a clear hint that interest rates may not be brought down as quickly as the government and businesses want.........
A 50 bps rate cut now better than 150 bps in Oct
The Reserve Bank of India (RBI) should use the lower-than-expected June inflation numbers to cut the repo rate by 50 basis points (bps) in its July 31 policy review. If the central bank waits for further confirmation of inflation trending down and growth coming off, it would be forced to cut rates by wider margins in its policy reviews in September and October. .......
India’s twin-track inflation
.....Such a twin-track inflation problem creates complicated policy dilemmas. The Reserve Bank of India tracks core inflation—which excludes volatile food and fuel prices—very closely. It has been receding, mainly because the Indian economy is now growing below its potential. The trend in core inflation strengthens the case for lower interest rates.....
Upside risks to inflation persist
....“We expect all policy rates to remain unchanged on July 31. Eventually, rates have to come down. But for this scenario to play out, India’s inflation has to sustainably decline at or below 6.5 per cent.”.....
India inflation way above RBI's comfort level: Duvvuri Subbarao
.........."We are unelected...but we take decisions that affect the entire country. So, we must be very sensitive to rendering accountability for our actions and the results of those actions,".............
Liquidity in RBI comfort zone ahead of policy review
.........Banks are yet to effectively pass on the rate cut of 50 basis points announced by RBI in April. Bankers were of the view that reduction in policy rates did not help much, as liquidity was tight and high cost of funds limited their scope for reducing lending rates. The central bank is scheduled to announce the first quarter monetary policy review on July 31. RBI had opted to hold rates in the mid-quarter policy review in June, citing upside risks to inflation.....
More EM central banks join the easing crew
.........Worries about a growth collapse are clearly gathering pace. So how much room do central banks have to cut rates? Compared with Europe or the United States, certainly a lot. And with the exception of Indonesia and Philippines, interest rates in most countries are well above 2009 crisis lows. But Deutsche Bank analysts, who applied a variation of the Taylor rule (a monetary policy parameter stipulating how much nominal interest rates can be changed relative to inflation or output), conclude that in Asia, only Vietnam and Thailand have much room to cut rates. Malaysia and China have less scope to do so and the others not at all (Their model did not work well for India).........
Indian Banks On Security Alert!
.....However, the good news is that the Reserve Bank of India has proactively directed banks to beef up their information security and risk management posture, outlining a number of checks in several categories to protect users’ information and money from cyber threats. Upadhya believes that it depends on how decision makers in the banking ecosystem can leverage technology to its fullest and ensure a secure enterprise.
June inflation at 5-month low: India Inc clamours for rate cut, RBI unlikely to oblige
India's headline inflation fell to a five-month low in June, increasing the clamour for a cut in policy rates but the Reserve Bank of India governor D Subbarao quickly dashed hopes, saying it was still "way above the threshold"............
New clients are a matter of interest for lenders
..........However, bankers say that if the RBI reduces rates in the monetary policy scheduled on July 31, they will pass on the benefit to the customers. “Unless RBI reduces rates banks will not be able to bring lending rates down. We will wait for RBI action," said S Raman, CMD, Canara Bank.
PM’s job plan fails to take off in J&K
........The Expert Group – headed by former RBI Governor, C Rangarajan – had also suggested to run special training programmes for university and professional college students in collaboration with industry sector under the “Udaan Scheme”.........
SARFAESI Act and its impact
.....It would have been appropriate, say, for the RBI to have studied/ audited the financials and methods of operations of the ARCs and the reasons for the existing trust deficit between banks and ARCs before the ministry issued this direction. Besides, the definition of authorised officer given in the SARFAESI Act does not include ARC, though it can be an agent.........
Killing Me Softly With His Song...
.....That the central bank was well cognisant about the fact was evident in the 2002 speech made by former RBI governor Y V Reddy. “The availability and easy access to different forms of financial savings on an extensive scale, particularly for women, to protect the traditional stree dhan (jewellery given to brides) will prove to be the most viable policy option to encourage non-gold form of savings,” said Reddy. Today, much of the central bank’s action is aimed at just doing that. Besides forcing banks to increase their rural penetration, the central bank has looked to curb lending against gold by capping interest rates and jacking up the capital requirement for gold-lending non-banking finance companies. Besides, it is also toying with the idea of banning banks from selling gold coins. But the market seems to be turning a blind eye to the fact. The truth is, gold is no longer a ‘safe haven’. It’s just another alternative asset class that has turned speculative in nature......
Anand Sharma pitches for interest rate cut to boost growth, exports
With inflation easing marginally to 7.25 per cent in June, Commerce and Industry Minister Anand Sharma today pitched for cut in interest rate by RBI in its month-end policy review to boost both growth and exports. "The cost of the credit has to be low so that the Indian industry remains competitive in the global context,"............
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Stealing is as easy as A, T, M
......the police will write a letter to banks across the city, asking them to enforce RBI safety guidelines, which state that a unique PIN should be generated for every transaction. Although the RBI's guideline came quite some time ago, many banks are yet to implement them........
Monday, July 16, 2012
Well Spoken, Guv
In the Indian context where regulators are appointed by the government, it is not often that regulators speak their mind. Especially if it is to tell their political bosses off ! The Reserve Bank of India (RBI) Governor's show of spunk in telling the finance ministry not to micromanage banks must, therefore, be applauded. The RBI, unlike many other central banks, is not autonomous in law. Over a period of time, thanks to a succession of competent governors, it has won a certain degree of de-facto independence for itself. Nonetheless, governors, with some exceptions, have been wary of calling a spade a spade........
The 'Vivekananda formula'
.... There was a time when even the Reserve Bank of India (RBI) had an informal quota for an IAS officer nominee for the post of a deputy governor. That practice has been discontinued in the last couple of decades. And this perhaps could happen also because the central bank paid more attention to build a strong cadre of its own officials. As a result, today RBI has its own cadre of officers who have been nurtured to grow within the organisation, reducing its dependence on outside talent for filling key vacancies........
RBI website displays nothing
Browse the RBI website and look for the email IDs of its several departments. You will find none displayed. Try communicating online. The website's " contact us" slot does not accept most of the punctuation marks, in the text printed. And when the message is submitted, you are failed repeatedly, because of some " error occurred", and are asked to " try again," till you throw up your hands. Evidently, RBI's public service seems to lie in discouraging the public from contacting it. Why is it so? It is the culture of our government departments, organisations, and undertakings.
- V V Vijayan, Chembur (FPJ)
'Days of big bang reforms are over'
C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, has been a dependable aide of Manmohan Singh for several years. He was RBI Governor when Singh announced two rounds of rupee depreciation in July 1991. Now, with the PM taking charge of the finance ministry, Rangarajan is once again busy devising the revival of Asia's third largest economy. He sounds optimistic about growth prospects this year and says the government is taking steps to revive investor sentiment and growth...........
Loan rangers should be cautious
According to the RBI’s Master Circular, the consumer has to get all information regarding the loan in writing and in a local language. This information should include the terms and conditions governing the loan
..... I would suggest that you go through the “Master Circular on fair practices code” released by the Reserve Bank of India in the first week of July. It will help you understand and protect your rights better and also deal better with those giving you those loans. The Master Circular, which is a compilation of all the instructions issued by the regulator (RBI) to non-banking financial companies till date (June 30, 2012), tells you what your entitlements are vis-à-vis the loan agreement.......
आरबीआई के डिप्टी गवर्नर सहित 17 को राहत नहीं
जयपुर. हाईकोर्ट ने आरबीआई के डिप्टी गवर्नर एच.आर. खान, राजस्थान बैंक के चेयरमैन रहे पीके तायल व एमडी डॉ. के.एम. भट्टाचार्य सहित राजस्थान बैंक के निदेशकों को राहत से इनकार कर दिया। हाईकोर्ट ने इनके खिलाफ अधीनस्थ कोर्ट की कार्रवाई को चुनौती देने वाली याचिकाओं व रोक लगाने के प्रार्थना पत्रों को निरस्त कर दिया। अधीनस्थ अदालत को निर्देश दिया कि वह प्रार्थियों की आपत्तियां सुनने के बाद मामले में आगामी कार्रवाई करे। न्यायाधीश महेशचन्द्र शर्मा ने यह आदेश एच.आर. खान व राजस्थान बैंक की याचिकाओं पर दिया।...............
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TOO FEW WOMEN AT TOP OF PSU BANKS?
......India’s government-owned banks have something to cheer about. For the first time, the public sector banks, which account for about 70% of the banking assets in the country, will have three women chief executive officers (CEOs). In its 43-year history, the state-run banking industry has had only 43 women chiefs.........
Read - Mint
Read - Mint
Licence To Bank
......Some aspirants (RBI has not named them) have pleaded that “the requirement of the bank having 25 per cent of branches in unbanked rural centres is too onerous; therefore, the requirement could be revised to 15 per cent to ensure a level playing field between existing and new banks”. In June, Deputy Governor K.C. Chakrabarty had noted that banks should “be actively encouraged to set targets for themselves to capture untapped business in rural areas covering approximately two-thirds of the country’s population” in its 600,000 villages. Many suggestions come from big industrial houses — (and nowhere in the draft guidelines did the RBI even refer to them!) — and non-banking finance companies with interests in real estate. Even the idea of a wholly-owned non-operative holding company (NOHC) has been sought to be diluted. The objective of the NOHC was to fence regulated financial services from other activities of the promoter group — commercial, industrial and financial activities not regulated by financial sector regulators. The chorus is that the requirement that the NOHC be wholly owned by promoters be “revisited, and diversified shareholding at the NOHC-level be permitted”.......
Banks told to hold exclusive board meetings on policy, strategy issues every quarter
.....The reform measures come in the backdrop of the Reserve Bank of India recently asking the Government to show ‘exemplary behaviour of corporate governance and exercise its ownership rights through the board’......
Gold: A protection from inappropriate policies - S.S.Tarapore
........ On interest rate increases and tightening of liquidity, India Inc. has been forcefully lobbying for easing of monetary policy and it would be creditable if the RBI can resist these pressures. While earnest attempts are being made to undertake a fiscal correction, political economy considerations appear to thwart effective action.........
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Banks can’t freeze accounts if Know Your Customer papers not submitted
.......The court also noted that the Reserve Bank of India also specifically provides for opening of accounts by low income group people who are unable to provide KYC documents. Banks are required to open accounts for such persons on the basis of an introduction from an account holder who has complied with all the KYC procedures and whose account is with the bank for at least six months with satisfactory transactions. The low income group account holders, whose accounts are opened in this manner, have a restriction that the total balance in their accounts cannot exceed Rs 50,000, and the total credit deposits cannot exceed Rs1 lakh per year. The court observed that in the present case, the account had been opened long back, yet the account had been illegally frozen. The court warned that if a bank freezes an account for non-compliance of KYC documents, appropriate action could be initiated against it either by the Reserve Bank or the Banking Ombudsman, so are required to safeguard the interests of all account holders......
HC notice to Centre over NPA defination in SRFAESI Act
...."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.".....
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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