Apex apparel exporters body has written to Finance Minister P Chidambaram and asked him to persuade the RBI to issue necessary directions to banks regarding loan restructuring..........
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, August 8, 2012
Top PSBs keen on opening branches in Pakistan
........A clutch of top public sector banks are looking to open branches in Pakistan. These include Punjab National Bank (PNB), Bank of India (BoI) and State Bank of India. For banks such as PNB and BoI, it would be a sort of homecoming as their roots were in Pakistan, prior to partition. Leading in the race to once again establish presence in Pakistan is PNB, which started its journey in Lahore in 1894.........
Tuesday, August 7, 2012
Govt Will Work With RBI to Control Inflation: Chidambaram
Activating Debt Markets
MUMBAI, India - Reserve Bank of India (RBI) Deputy Governor H.R. Khan to chair a panel discussion on 'Activating Debt Markets' at the CAFRAL Programme on Treasury Management - 1100 on 11th August 2012.
The Sa-Dhan FICCI Financial Inclusion Conference 2012: Exclusions to the fore?
It is very easy to talk high flying concepts at conferences, however, much of the intended strategies are not implemented and that is something that conference organizers must take notice of with regard to financial inclusion and/or microfinance............
Vidarbha Taxpayers' Association urges RBI too direct banks to install fake currency detector machines
........."RBI should issue mandatory orders to this effect immediately. The common man fails to detect fake currency and all cannot procure FCDM, hence banks should also install one such FCDM for its account holders and general public in their premises," said Vidarbha Taxpayers' Association members in a memorandum sent to Prime Minister Manmohan Singh and RBI governor Dr Duwuri Subbarao........
RBI wants government to simplify foreign investment regim
The Reserve Bank of India has dashed off a proposal to the finance ministry to simplify the country's foreign investment regime, hoping that the new team at the North Block would expeditiously consider the suggestion gathering dust for years.............
Banks told to adjust base rates in tune with monetary conditions
Lending rate benchmarks (or base rates) of banks are expected to be responsive to monetary conditions, according to Anand Sinha, Deputy Governor, RBI.Speaking at the launch of IDBI Bank’s online portal for selling Certificate of Deposit, Sinha said the banking system is supposed to be responsive to monetary conditions, and to that extent the RBI would like banks to respond by adjusting their base rate (read: effect a cut)...........
RBI wants banks to cut base rates, not select lending rates
A Korean lesson for India
....he Reserve Bank of India (RBI) is unable to cut interest rates because, while the economy is slowing, inflation remains uncomfortably high and may even accelerate as insufficient monsoon rainfall pushes up food prices. Some months ago, Korea had a similar problem: inflation expectations were holding close to the top of the central bank’s two to four per cent target even though......
How to make the most of banking ombudsman system
......., “If you are not happy with the award, you will then need to approach the appellate authority. The deputy governor of RBI is the appellate authority.” Keep in mind, that even banks can approach the appellate authority against the award passed by the ombudsman. You usually get 30 days to get in touch with the appellate authority from the date of receipt of the award. The appellate authority can dismiss or allow your appeal to stand or even change the award amount.........
.........Of course, you will need patience to deal with the ombudsman system. But a lot of good changes have happened in the past, only because customer have lodged complaints with ombudsman and followed through.
Rate action unlikely in RBI policy meet on 17th September: Killol Pandya, Daiwa Mutual Fund
.....here is also seemingly a lack of fiscal steps to assist in the monetary actions which RBI has undertaken in the past. So, in that context, we welcome the situations where we are seeing liquidity improve significantly more than what we all thought it will improve. That is assisting the reduction in short-term yields in the 1- to 3-month segment. Therefore, it is a welcome situation.......
Rewarding profligacy
.....There is a need, perhaps, for a re-look at the conduct of RBI’s OMOs. In today’s context, they have effectively become a means for the Government to get the central bank to print money to finance its deficits. True, the RBI no longer subscribes to primary auctions of government stock. But by buying these in the secondary market from banks, often just before an auction is scheduled, it is indirectly achieving the same results. The primary fault for this, of course, lies with the Government.......
Chidambaram unveils roadmap to lift economy
...Unveiling a broad roadmap to regain the confidence of investors, the Minister, who took charge of finance portfolio last week, made a detailed statement in which he said that government will work with the RBI to moderate inflation in the medium term. ............
RBI Governor D Subbarao meets P Chidambaram, discusses economic situation
NEW DELHI: Reserve Bank Governor D Subbarao today met Finance Minister P Chidambaram and discussed the macro-economic situation. This was the first meeting between the RBI Governor and Chidambaram following his taking over the charge of the Finance Ministry last week. "Met the Finance Minister after he took charge. Reviewed macro-economic situation with Finance Minister," Subbarao told reporters after the meeting............
Why P Chidambaram, RBI governor D Subbarao meeting matters
Reserve Bank of India Governor D Subbarao met finance minister P Chidambaram on Monday. The relationship between the finance minister and the Governor is critical in the context of the situation in the economy. While it is called a ‘courtesy call’, the governor needs to highlight critical areas for the government to act on so that he can cut interest rates to stimulate growth.............
Looks like Chidambaram will ride roughshod over RBI on rates
........But if he meant that the RBI must cut rates and not wait for Chidambaram to start reining in his fiscal deficit (which he said nothing about containing), he is merely following in the footsteps of his predecessor, Pranab Mukherjee. He is setting up the economy for greater failure. The only interpretation one can put to this statement is that as FM he is going to force the RBI to cut rates, impacting both the central bank’s independence, with negative consequences for the economy. Duvvuri Subbarao is going to be under tremendous pressure from North Block to cut rates.........
Now, RBI blames govt of policy stasis
It is not just the Opposition that feels the government is in the grip of a policy paralysis. The Reserve Bank of India has said "concerns over policy stasis" must be addressed as "newer risks" to growth emerge from slowing global trade, domestic supply blocks and a slack monsoon. .........
End This Fudge
.........It is just over a week since an RBI-appointed Expert Group called for an early end to the present smoke and mirrors system of estimating (obfuscating?) non-performing assets (NPA) numbers, euphemistically termed ‘regulatory forbearance’. Yet, far from heeding the Group’s suggestion, the government is reportedly contemplating exactly the opposite........
Monsoon-led inflation cuts rate hopes at Goldman
India’s weakest monsoon since 2009 is poised to fuel the worst inflation among the largest emerging markets and leading banks from Goldman Sachs Group Inc. to Nomura Holdings Inc. to cut forecasts for interest-rate cuts. Goldman Sachs now predicts the Reserve Bank of India will lower its repurchase rate by 25 basis points to 7.75 per cent by year-end, after paring an earlier estimate for a 75 basis point decrease last week.........
Pvt banks reject FinMin's joint lending proposal
.......Bankers said the uniform asset classification proposal would lead to legal complications. Also, Reserve Bank of India (RBI) norms had to be changed to implement the proposal, they added. “If the loan has not become an NPA for a bank, the SARFAESI Act (the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) cannot be invoked,” said a senior executive from a public sector bank. The Act enables lenders to recover dues without court intervention. Banks and financial institutions can take possession of securities in case of a default and sell these to recover the loan. The finance ministry has asked IBA to hold discussions with RBI to amend regulations and enable uniform asset classification in case a borrower defaulted on loans from some members of the consortium.......
Why Indian CEO pay needs policing?
.....In January, 2012 the Reserve Bank of India (RBI) issued guidelines on compensation of bankers. RBI felt that employees were too often rewarded for increasing the short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organizations. Today, private sector and foreign banks operating in India need RBI’s approval for grant of remuneration to top executives. Variable pay of top bosses at banks has been restricted to 70% of fixed pay......
IRDA to finalise whistleblower policy soon: Hari Narayan
In light of the recent ICICI Lombard controversy, the insurance regulator said that it will soon finalise the whistleblower norms akin to what the Reserve Bank of India has........
Muthoot Finance to recruit 2,000 people this year
......Muthoot said that the industry was keenly awaiting the report of the KUB Rao committee of the RBI. The report was to be submitted by July 31, but since it has not yet happened, it is expected to come out any time now.
Monday, August 6, 2012
Reddy may be head of next finance panel
TOI
Mobile Banking Security Lab launched
Hyderabad, Aug 4: The Reserve Bank of India Governor, D. Subba Rao, on Friday inaugurated a mobile banking security lab set up by the Institute for Development and Research in Banking Technology. The institute, established by the RBI, supports the Indian banking industry through innovative technology initiatives and interventions.............
More updates, please
The Reserve Bank of India’s (RBI’s) website is one of the best among those of central banks in the world. It is up to date and makes it unnecessary to write to the Bank for data and information on most of the items of interest to the economic analyst. After the announcement of the quarterly policy review, the RBI holds two separate interactive sessions through conference calls: one with the researchers and another with the media. They are webcast and it is useful. It would, however, be of great help to the researchers if complete transcripts of the two sessions were also posted on the website. The identification of an RBI official who made a particular statement is also of interest. It becomes difficult to note down points in long hand while listening to the question and answer sessions. The transcripts in the archives will be useful to the future historians of the bank too.
- A Seshan, Mumbai (BS)
Covering up regulatory failure?
.......Why is financial literacy a buzzword today, like corporate governance was in 2001, after the previous global market crash? Why are enormous amounts of money and resources being spent in the name of spreading literacy? The reason is part herd mentality, and part naïve belief in knowledge and education as the panacea for financial problems.........
RBI to control cheque frauds
.....As part of preventive measures, the RBI has directed its passing authority to cross check the cheques having a value of Rs 5 lakh or more. The authority has to make a call to check issuing authority and has to seek his/her affirmation, said K R Das, RBI Regional Director for UP and Uttarakhand........
.....Contradicting the news appeared in some sections of the media regarding closure of Kanpur regional office of RBI, he said that there was no truth in the news. He said he had discussed the matter with the central office in Mumbai and there was no proposal for closure of Kanpur Regional Office........
ICIF discusses Interest-free Banking with RBI Deputy Governor
RBI's Subbarao: Indian Government May Have to Change Public Sector Banking Structure
........With 70% of banks in the country being state-owned, the RBI has often voiced its concern over the government's constraints in helping banks meet higher capital buffers. The Indian economy runs a yawning fiscal deficit, projected at 5.1% of gross domestic product in the year ending March 2013. Besides, there is competing demand for federal resources. "So, the alternatives available to the government are either to reduce their shareholding to below 50% and admit that they will change the public sector banking structure or restrict the expansion of the public sector banks," Mr. Subbarao said at an event in the eastern Indian city of Hyderabad..........
‘Banks must raise addl Rs 1.6 lakh cr to meet Basel III capital adequacy norms’
....Our estimate is that after accounting for (their) internal accruals and interest earnings, banks should raise an additional capital of between Rs 1,60,000 crore and Rs 1,75,000 crore,”.......
Of Economics, Policy & Development
.......The Epilogue by Dr. Reddy affirms that the value of this collection lies not only in providing a background of Patel’s thinking on various economic issues that confronted India during half a century of freedom but also evokes reflections on global economic contemporary theory and current challenges for policy makers. The book is compulsory reading for bankers, students of monetary policy, finance, trade and policies. It is a veritable economic history of India during the first fifty years after Independence.
Income Tax Department may do away with ITR-V
If you file returns online, you may not have to mail the Income Tax Returns Verification (ITR-V) form next year. The Income Tax (I-T) department is working on a proposal where individual taxpayers, who do not have a digital signature, need not have to sign the ITR-V to complete the process of e-filing returns......
Whose priority is it anyway?
....Later that year, the then finance minister Morarji Desai introduced it along with the establishment of a National Credit Council, which he chaired with the Governor of the Reserve Bank of India as its vice-chairman and declared that neglected sectors would be eligible for financing by banks on a “priority basis.” This has come to be known as “priority sector lending”. ....
Read............
Global slowdown and financial stability
....According to a World Gold Council study, only about 23% of total gold imports may be for " investment" and the rest for jewelry. The so- called investment is in a dead asset. At last the RBI admits " Diversion of household savings into gold has implications for the availability of funds for the financial sector and thereby for growth". It is high time the Government takes some drastic measures to moderate gold imports.........
Not too many Bills this time
.....At the same time, considering the Reserve Bank of India’s (RBI) close monitoring of changes in bank ownership, the process is likely to be calibrated and controlled. The RBI’s nod is a must for any share acquisition of five per cent and above in banks........
Gold loan firms see drop in recoveries
Reserve Bank of India (RBI)’s regulations have slowed down not only the growth of gold loan companies; but also, the recoveries which came down in the June quarter, against the March quarter.........
Can we get out of low growth-high inflation trap?
......The RBI’s discomfort with the current inflationary situation is evident as even non-food manufacturing inflation, treated as a gauge of demand pressure on inflation, remains high at 4.9 per cent and there is a risk of demand pressures resurfacing quickly. To reverse the high inflation-low growth cycle, fiscal consolidation must begin, with a shift in the expenditure mix from consumption to investment...........
Rising NPAs banks’ biggest worry
.....Although the banks till now are required to invest 24% of their deposits in government bonds (the new norm, 23%, takes effect from 11 August), many banks have invested around 30% of their deposits in bonds. This means they could have liquidated their excess SLR holdings even before the RBI announcement and used the money to give loans. They have not done so and probably will not do even after the SLR cut simply because government paper is a risk-free asset while loans can turn bad. Banks need to set aside money for bad loans and that affect their profitability. In fact, provisions for bad loans could more than offset higher income from loans.......
Policy paralysis, hardly a cliché now
......At a launch function of a book written by I. G. Patel, one of RBI’s foremost economic administrators as well as being one of his distinguished predecessors, Governor Subbarao forcefully defended the RBI’s recent monetary stance, focussed as it has been on inflation control. Dr. Patel Patel had said in one of his articles: “The supreme test of monetary policy lies in its ability to control the supply of money in such a way that growth is checked without retarding growth”. That, as Dr. Subbarao pointed out, was the quintessential growth versus inflation debate that was being played out even today. Knowledgeable commentators have interpreted to mean that monetary policy must emphasise price stability......
Fee row: Engineering colleges moot loan scheme
.....The central government, in collaboration with the Reserve Bank of India (RBI), has taken permission from about 18 nationalised banks to provide loans to students without the wherewithal to fund their education. The banks are expected to set up counters at the counselling venue to offer loans to students looking to avail of the fee reimbursement scheme......
We have all been ‘Bangalored’
........The Governor of the Reserve Bank of India, D. Subbarao, says Indians are using far too much cash for settling their bills for his liking. Well, in recent times, I am guilty of contributing a bit more than I used to earlier.........
Rate cut could be good news this festive season
RBI's decision to slash the SLR rate by 100 basis points has pleasantly surprised many. Banks had witnessed tight liquidity position in last few months, but the current move by RBI would ease the pressure, to some extent........
RECALIBRATING THE INDIAN ECONOMY
.....This is the first formal sign that a recalibration of the economy is underway; in short, the government is signalling that the party is over for now. Maybe it is just a coincidence; but the move has come after a change of guard in North Block. Though the eternal optimists—especially those who have shamelessly sought to talk up the economy knowing fully well that the facts suggest otherwise—will baulk, this dose of pragmatism is welcome.......
More fiscal trouble ahead
It is not usual for a central bank to be doing nothing at a time when growth is slipping faster than expected. The first quarter review of the monetary policy by Reserve Bank of India (RBI) on 31 July, as widely expected, was virtually a non-event. And if recent fiscal trends are anything to go by, it is likely to remain this way in the foreseeable future. What will further complicate the making of monetary policy is that prices are now .......
Not good to be too risk averse
....In view of the proactive steps taken by RBI, it is necessary that we also should give benefits to some of the productive sectors. It will help the banks reduce the cost of funds. If your lending growth rate is 17 per cent, then your deposit growth rate need not be 25 per cent. Why should you unnecessarily add to your costs? When money is coming into the system, I can supplement it from RBI. Why not reduce the deposit rate? ......
Easing liquidity to nullify policy letdown
......The outlook for liquidity in August is benign. RBI pays dividend to the government in August and this will find its way to the system. The budgeted dividend expected from the RBI is around `23,000 crore. Credit is unlikely to pick up in August as the busy season starts in October. The central bank’s intervention in the currency forward markets, which is around $10 billion, comes up for maturity starting September 2012. It’s confident that liquidity will not be heavily affected as the forward contracts come up for maturity in a staggered manner. September is when liquidity is likely to face some stress on advance tax outflows and maturity of RBI swaps. However......
Without reform, GDP growth will fall below 6 pc: Planning Commission committee
.........a study of professional forecasters done by RBI revealed that growth would slip to 6.5 per cent for the fiscal against RBI's projection of 7.3 per cent. The RBI in its recent monetary policy has refrained from reducing key policy rates despite concerns of economic slowdown and demands from industry.
‘CMS did not even know driver’s name’
......“We are going to take action against CMS for not following RBI guidelines,” said commissioner of police BG Jyothi Prakash Mirji. After the RT Nagar incident, police asked CMS to follow RBI guidelines and warned that the company will be booked for negligence if it repeats the lapse.........
Saturday, August 4, 2012
Subbarao bats for a 'less-cash' country
Need to shift from cash to electronic payment: Subbarao
Hyderabad, Aug 3 (IANS) Reserve Bank of India Governor D. Subbarao Friday stressed the need for transforming India into a less cash-handling society like other emerging economies through innovation in payment systems. "We have largely remained a cash society when compared with other emerging markets like Brazil, Mexico and Russia. The value of bank notes and coins in circulation in India is 12 per cent of GDP which is high," Subbarao said while speaking at the Institute for Development and Research in Banking Technology (IDRBT) here.........
Penetration of ATMs, card usage very low: RBI
Penetration of ATMs in the country is still very low compared to other emerging markets even as the number of automated teller machines is increasing by nearly 25 per cent every year, the Reserve Bank said today. "Although there has been a steady year-on-year 25 per cent growth in the number of ATMs in the country, their penetration as measured by the number of ATMs per million population is still very low when compared to other emerging markets," RBI Governor D Subbarao said in his keynote address at at the IDRBT Banking Technology Awards Function..........
Choice is between EMV and Aadhaar: RBI Governor
Reserve Bank of India Governor D. Subba Rao has underlined the need for taking a decision on the choice between migrating to EMV (Europay-MasterCard-Visa) with chip and pin and an Aadhaar-based biometric authentication. The chip and pin is an established and tested technology, but is relatively expensive. The Aadhaar based option is cheaper, but the robustness of the technology is as yet unproven. “If indeed we are finally able to marry Aadhaar into the cards, we will be achieving same level of security available in chip and pin model at a much lower cost,” he said............
Subbarao wants cash economy to go binary
......Tracing the historic transition of paper-based payment and settlement systems to electronic modes like RTGS, NECS and NEFT, the Governor said the central bank will continue to ensure that all such systems are not only safe, efficient, interoperable, authorised and accessible, but also further financial inclusion and compliance with international standards.
RBI Governor to inaugurate risk managers’ meet
Reserve Bank Governor D. Subbarao will set the tone for the conference of the Professional Risk Managers International Association, Hyderabad (PRMIA). Several top honchos of banks including M. Narendra of Indian Overseas Bank; B. Prabhakar, Andhra Bank; Ajai Kumar, Corporation Bank; K. Venkatraman, Karur Vysya Bank; and V. Joseph, South Indian Bank, will participate in the proceedings........
Knowledge helpline for SBI staff launched
Hyderabad, Aug. 3.: Reserve Bank Governor D. Subbarao launched a ‘knowledge helpline’ for the staff of State Bank of India. The Web-based service, will be useful to the employees to get their doubts clarified about banking and in turn be more helpful to the customer in their service. The RBI Governor, who also inaugurated the “Swarn Udyan” and the renovated hostel blocks was the chief guest at the golden jubilee celebrations of the State Bank Staff College here on Friday........
15 मिनट में नहीं करेंगे SMS, तो भूल जाएं चेक से पैसा आप
....आरबीआई के अधिकारियों का कहना है कि चेक क्लियर करने वाले पक्ष को चेक जारी करने वाले व्यक्ति या कंपनी से फोन पर बात कर उस चेके के बारे में पूरी जानकारी लेने की सलाह भी दी गई है। बैंक इस प्रक्रिया में लगने वाले समय को बचाने के लिए जल्द ही एसएमएस अलर्ट की सुविधा भी शुरू करने जा रहा है। एसएमएस सुविधा के तहत, चेक जारी करने वाले पक्ष को उनके चेक को भुनाए जाने से पहले बैंक की ओर से एसएमएस से सारी जानकारी भेजी जाएगी। एसएमएस मिलने के 15 मिनट के अंदर सामने वाले से जवाब न आने पर चेक का भुगतान नहीं किया जाएगा ।......
RBI union leader arrested, some workers to strike on Monday
MUMBAI: The MRA Marg police on Friday arrested the Bharatiya Kamgar Sena (BKS) chief Suryakant Mahadik and 25 members, allegedly for staging a protest at the Reserve Bank of India headquarters 's main premises on Mint Road on Friday. They were arrested and later released on bail surety and personal bond. As a mark of protest, a section of the RBI employees will go on strike on Monday, the a statement from All India Bank Employees Association (AIBEA) said in a statement ..........
Peter breathed his last.............
P.D. Netto ( Peter Damian Netto) retired Assistant. Chief Accountant (now AGM) D.G.B.A breathed his last at the age of 87 in Mumbai yesterday after an illness bravely borne for over four months. Peter, as he was known to his friends and colleagues, joined Bombay office in 1947. He then worked in the Inspection Department for a major part of his long innings with the RBI and came to be known as its Encyclopaedia with stints in ECD and Nagpur office. Peter took keen interest in table tennis that he played after office hours in the banking hall in the swinging sixties. Peter will be remembered by colleagues of his vintage as a gentleman to the core ever ready to help any person/s in office or outside endearing himself excellently with young and old alike. He was a strict vegetarian and a devout Christian. He lost his wife a little over a year ago. He is survived by four children, three sons and adaughter, all well settled in Australia and USA respectively.
We pray His noble soul may rest in peace in Heaven.
- K.D.Savkur (via e-mail)
‘RBI framework may hit urban cooperative banks’
..........H.K. Patil, president, National Federation of Urban Cooperative Banks, on Friday termed the circular issued by Reserve Bank of India (RBI) on “New Supervisory Action Framework” to urban cooperative banks as “a threat to cooperative movement”. Delivering the keynote address at a seminar organised by the Karnataka State Cooperative Urban Banks, he said that the circular would weaken the cooperative movement instead of strengthening that. Clauses such as fixing the credit deposit ratio at 70 per cent, restricting the number of big depositors to 20 and asking them against investing not more than the total deposits and forcing the cooperative banks to invest in government securities were being viewed as hurdles in the growth of the cooperative banks, he said............
RBI to simplify rating parameter for UCBs: Karupusamy
Bangalore, Aug 3: Reserve Bank of India (RBI) is proposing to simplify rating parameter for Urban Cooperative Banks, RBI Executive Director S Karuppasamy said today. 'However, it will not be made public' he said while speaking after inaugurating a Seminar on 'New Supervisory Action Framework & CAMELS for UCB's' organised jointly by RBI, National Federation of Urban Cooperative Banks and Credit Societies Ltd.,, New Delhi and Karnataka State Cooperative Urban Banks Federation Ltd.......
Teaching the basics of finance
........ Financial education will have a positive, multiplier effect as ordinary citizens get to know the nuances of savings and investment. In turn, there will be a welcome deepening of the financial markets. While the RBI’s draft paper is comprehensive, what is missing is a recognition of the existing skills shortage in the financial sector and the steps to be taken to overcome this basic problem. For the financial sector, the biggest challenge is to train and retain manpower for not only its more traditional functions but also to further highly desirable social goals such as financial education.
RBI IN A BIND
Reserve Bank of India has been in a fix for quite some time now. Big question before the bank is—How to encourage growth without reducing interest rates. Inflation, a technical word used for hike in prices of commodities remains a challenge totally uncared of by the government. Fiscal packages going to ‘cooperating states’ affect the whole budgeting process. Economists have now begun to debate—whether the formality of annual budget is at all necessary. Outgoing Chief Economic Advisor K Basu while praising the RBI efforts, doesn’t hide the fact that corruption is the biggest impediment in track of the country’s growth..........
A policy rate Catch 22
.......... Duvvuri Subbarao, the Governor of the Reserve Bank of India (RBI) is facing a Catch 22 situation currently and some catch it is. He needs to decide whether to encourage economic growth or to control inflation. Theoretically Subbarao can encourage economic growth by cutting the interest rates. But that is likely to fuel inflation as people and companies will borrow and spend more, leading to a rise in prices. He can control inflation by keeping the interest rates high. But that kills economic growth as businesses don’t borrow money to expand and people go slow on taking loans for purchasing cars, motorcycles, homes and consumer durables. This hurts businesses and slows down economic growth............
Flush with funds, banks set to rain frills on loans
Banks may not be in a hurry to slash your loan rates yet, as the Reserve Bank of India is yet unyielding on policy rates, but they are set to launch new schemes that will offer discounts on retails products such as home and auto loans.......
Counter-cyclicality and income smoothing in Indian banks
......Consistency in earnings growth may not necessarily be an outcome of smoothing. Unfortunately, the term income smoothing has an unduly negative connotation. Perhaps this feeling was bolstered by the only and fleeting reference to it that the Reserve Bank of India (RBI) made when they effectively banned the use of floating (”unallocated”) provisions in 2005, suggesting that banks were using them to manage earnings. But it need not be that way.........
'India faces crisis of values, institutions and policies'
.......Former Governor of Reserve Bank of India (RBI) and emeritus professor at the Univesity of Hyderabad Dr Y Venugopal Reddy, who as chief guest delivered a talk on "Indian Economy: Strengths and Challenges", opined that growth with inequality is of no use.Talking about the book which he has edited along with Deena Khatkhate, Reddy said that Dr I G Patel had a unique distinction. "Academically, he was well recognized. He was part of the highest policy making body and after retirement, for 20 long years, he was able to say things that he felt. It is time now that the country knows this," he said.
Hoping for positive effects
.....The argument for-and-against reduction of interest, especially to pushing up the housing sector growth, continues even now. What are the requirements of a possible reduction in interest rates? What stops the RBI from cutting down the benchmark rates? What will be the essentials of a positive growth of the housing sector? These and related issues need some in depth examination........
In defence of RBI
........In recent years, the RBI has done just the opposite of what both theory and empirical evidence would suggest. It has consistently devalued from a position of weakness rather than from a position of strength. Former RBI deputy governor, Rakesh Mohan, has forcefully made the same point in a recent interview. So don’t believe me, but at least believe a distinguished former RBI official. Though former governors Bimal Jalan and Y.V. Reddy have not yet opined on the issue, my guess is that they would agree with Mohan. And if you don’t believe all of these distinguished economists and policymakers, just look at what China has done for the last 30 years..........
Inflation ignored
In the recent quarterly review of the monetary policy, the reasons cited by the RBI for the one per cent reduction in the SLR are not convincing. So far, nothing has been done by the policy-makers to tackle the widening supply-demand balance. In fact, most of the banks are comfortable as far as liquidity is concerned. The reasons for decrease in credit growth vis-a-vis investment growth are entirely different. It is not true that banks are holding back on credit expansion; rather, prospective borrowers are not interested in availing of credit at the present high interest rates. Though the interest rates on deposits are high now, it is felt that investment in gold and real estate is far more profitable than depositing in banks. One is unable to understand why the Government is playing a subdued role in containing inflation by not releasing the supply-side bottlenecks.
- T .S. N. Rao (HBL)
RBI sets new norms for non-banking financial companies
The Reserve Bank of India said on Friday registered non-banking financial companies (NBFCs) intending to convert to non-banking financial company-micro finance institutions (NBFC-MFI) will have to maintain net owned funds at 30 million rupees ($537,200)by March 31, 2013 and 50 million rupees by end-March 2014........
Norms for AP microlenders eased
....“...the provisioning made towards AP portfolio shall be notionally reckoned as part of NOF (net owned funds) and there shall be progressive reduction in such recognition of the provisions for AP portfolio equally over a period of five years,”.......
Pak welcomes India's decision on FDI
....."It would be a landmark development if the Reserve Bank of India removes Pakistan-specific clauses and allows Indian businessmen to invest in Pakistan,"................
Pak central bank allows 2 lenders to open branches in India
Following India's move to allow investments from the neighbouring country, Pakistan's central bank has allowed two banks to open branches in India as part of efforts to normalise economic and trade relations between the two countries. State Bank of Pakistan (SBP) Governor Yasin Anwar told the media that the National Bank of Pakistan and the United Bank Ltd had been given the "green signal" to operate in India....
‘RBI will act if growth slips rapidly’
....“We will look at both inflation and growth. Certainly, if the growth slips as rapidly... we would take that into account but I do not think we want to lock ourselves into specific numbers or specific corridors in which we will act,” ..............
RBI can’t be expected to take up the govt’s slack
Expecting the Reserve Bank of India (RBI) to pick up the slack created by the government’s policy paralysis, on the one hand, and fiscal profligacy, on the other, is quite naïve. To understand this argument, consider the following scenario. A boat is being rowed on a river by a team of two rowers—one on each side. The boat moves ahead smoothly at a brisk pace when the two rowers act in tandem ..........
Friday, August 3, 2012
Rangarajan sees growth topping RBI’s 6.5% projection
A cover for action
........Whether it is commodity price volatility or exchange rate movements, they have preferred a policy of frozen inaction to a proactive one of hedging against such risks. As the Reserve Bank of India (RBI) Executive Director, G Padmanabhan noted only the other day, higher volatility in the rupee’s exchange rate is the ‘new normal’ in the current uncertain global environment.....
RBI asks banks to assist clients in gaining financial literacy
Bank branches need to have a more proactive role in the affairs of their micro and small enterprise (MSE) clients by providing them with financial literacy and consultancy support, according to the Reserve Bank of India. Towards this end, banks could either separately set up special cells at their branches, or vertically integrate this function in the Financial Literacy Centres (FLCs) set up by them, as per their comparative advantage. The RBI said banks should submit an Action Taken report by August 24 on financial literacy and consultancy support...........
Do’s and don’ts on plastic cards likely for banks
Thiruvananthapuram, Aug 1: Office of the banking ombudsman for Kerala and Lakshadweep may suggest a do’s and don’ts list to banks issuing credit/debit/ATM cards to customers. But this office has no right to put out a circular in this regard, Joseph F. R., Banking Ombudsman for Kerala, Lakshadweep and Mahe, told newspersons here............
Ease and convenience but at a cost
Cashless transactions are catching up fast in India. The total number of debit and credit cards in the country has increased roughly at a compounded annual growth rate of 20% in the last two fiscals, according to data compiled by Visa from data released by the Reserve Bank of India (RBI)................
SBI announces 7440 vacancies for clerical posts in associate banks
There is a good news for the aspiring candidates who have missed the State Bank of India clerk exam held in May-June 2012 as the bank had announced recruitment notification for clerical jobs in its associate banks. The eligible candidates can apply for 7400 vacancies in the five associate banks of SBI, the largest public sector bank of the country.............
Par Panel to summon RBI Governor over poor growth
.....Significantly while it is the first time that the panel has decided to summon the RBI Governor to discuss the state of the Indian economy, the move seems to be in line with international practices where central bank heads are answerable to Government panels.The panel which is headed by senior BJP leader and former Finance Minister Yashwant Sinha, sources said, has been quite concerned about the poor economic growth over the last few months and in order to get behind the actual reasons for the disappointing performance, has decided to summon Subbarao for a discussion on the matter on August 6............
RBI Governor summoned
.....If Subbarao agrees to appear before the committee, it will be for the first time that the RBI becomes answerable to the Parliament. Finance ministry officials feel it would have been better if the committee invited the governor for consultations instead of summoning him like a bureaucrat in the government..........
‘Indian regulatory norms insulate it from crisis situations’
While countries across the world, as well as India, are all undergoing a downturn, India is immune from the side effects because of good banking and regulatory norms drawn up by the RBI, said V. Gopalan, Director, Janhar Management Consultancy Pvt Ltd........
On FinMin push, govt banks eye gold loan business
.....PSBs’ thrust in this segment also comes after the finance ministry nudged them to enter this lucrative segment and at a time when the central bank has been expressing some discomfort over NBFCs becoming aggressive here. The Reserve Bank of India (RBI) has taken away priority sector status given to banks for their loans to NBFCs for on-lending against gold jewellery.......
Kaushik Basu farewell note: More woes
On a day when the Reserve Bank of India left policy rates unchanged due to persistent inflationary pressures and failure of the government to rein in fiscal deficit, the outgoing chief economic advisor, Kaushik Basu, said Indian economic woes are far from over with growth likely falling below 6 per cent in the first two quarters of current year...........
SC declines US firm’s plea on RBI norms
In a tax dispute arising out of global business transactions, the Supreme Court has declined to entertain a petition of US company Columbia Sportswear raising various questions on the RBI guidelines for assessment of tax liabilities of foreign entities on their business operations in India......
Regional rural banks allowed to start branches in Tier 2 cities without RBI nod
....."In order to enhance the penetration of banking services in Tier 2 centres, it has been decided to allow RRBs to open branches without having the need to take permission from Reserve Bank of India in each case," the apex bank said in a notification......
Unclaimed deposits in 85 banks account for Rs. 2,481 crore
....Replying to a query made by the RTI applicant Subhash Chandra Agrawal of Delhi as to whether any steps were being taken to transfer such unclaimed deposits to Central funds, the Central Public Information Officer (CPIO) of the RBI said the Banking Laws (Amendment) Bill, 2011, had been introduced in the Parliament and a new Section 26A regarding establishment of Depositor Education and Awareness Fund was proposed.......
RBI penalizes Ernakulam District Co-op Bank
The Reserve Bank of India (RBI) has imposed a penalty of Rs. 5 lakh on Ernakulam District Co-operative Bank Ltd, Ernakulam (Kerala) for violation of rules.............
RBI, foreign banks clash on priority lending norm
.....Foreign banks are not willing to accept the new norm, which will only come into effect in August 2018, as they say profitability will be eroded. Under RBI rules, any bank that fails to fulfil the priority loan norm is required to keep money with the National Bank for Agriculture and Rural Development (Nabard) for rural infrastructure development. Earnings on this are much lower than what a bank will get from giving loans.......
IOB needs Rs 1,500-cr capital infusion to meet Basel-III norms
.....The government has asked public sector banks (PSBs) to send their capital requirements under the recently notified Basel-III norms of the Reserve Bank of India. Most PSBs have done so........
Most consumers feel bank loan rates are high
The Reserve Bank of India’s decision to leave key policy rates unchanged in its latest quarterly review is likely to leave not just industry but also consumers disappointed. The RBI’s latest Consumer Confidence Survey for the June quarter indicates that nearly three-fourths (74.8 per cent) of Indian consumers feel that current interest rates on bank loans are high, while 77.2 per cent say their deposits do not attract enough interest............
Losing the battle
.....The central bank does not seem to be focusing on its main aim of “controlled expansion”; it has instead maintained its avowed focus on “controlling inflation”. Unfortunately, things are not happening the way the RBI desires. One is not sure whether the policy stand the RBI governor has taken in the recent monetary policy review will help control inflation. But it will certainly dampen sentiment. If addressing the causes of inflation is beyond the scope of monetary policy, as argued by the RBI governor, why isn’t anything being done to induce the sources of economic growth — the primary being the cheapening of the investment cost for productive economic activities?......
RBI Plays Cruel To Be Kind
...........The RBI has raised concerns about the global economic factors, categorically stating that despite a slowing economy, the outlook for commodity prices is uncertain. The bank has also raised concerns about increased subsidy burdens on account of a truant monsoon. ..........
Why the RBI preferred an SLR cut
........The RBI did not have to wait for two and a half years to realise that repo is not really the solution to inflation. The RBI had targeted repo because the interest rate that the banks charge remains above the inflation rate. The real rate of interest — as the difference between the two is called — has to be positive to ensure that people do not give up their savings habit and debtors are not subsidised by creditors. There was a more relevant reason why the RBI did not cut the repo rate.............
Why small could be big for Chidambaram
.....The RBI, currently headed by Duvvuri Subbarao who has had a distinguished stint in the finance ministry before taking charge at the central bank, has already made it clear that its hands are largely tied as far as reducing interest rates to spur growth is concerned. It has reduced rates 50 bps in April and cut the statutory liquidity ratio (SLR) by 100 basis points (one percentage point) on 31 July to allow some banks to lend to productive sectors. But beyond that, monetary policy can achieve precious little. The ball is now clearly in New Delhi’s court. And Chidambaram will have to be the principal player.......
Thursday, August 2, 2012
Shyamala Gopinath appointed CCIL chief
Mumbai, Aug 1: Shyamala Gopinath, former RBI Deputy Governor, has been appointed as the chairperson of Clearing Corporation of India Ltd (CCIL). And R. Sridharan, former Managing Director of SBI, has been appointed as the Managing Director of CCIL. The Corporation provides exclusive clearing and settlement for transactions in the money, government securities and foreign exchange markets.
HBL
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