Of Financial Inclusion and Financial Literacy

The backdrop of giving this headline is because this column today tries to analyze some facts regarding the Financial Inclusion, the latest thrust by the Reserve Bank of India (RBI) on promoting Financial Literacy and its various aspects. Over the last few years, the Reserve Bank of India (RBI) as well as the Government of India has attached significant importance to the idea of Financial Inclusion.........

..........We, therefore, welcome this initiative taken by the country's apex bank and hope that this will go a long way in promoting financial inclusion as well as bringing about improvement in the quality of the lives of the poor and the downtrodden and bring in progress for the nation as well. We hope that this is realized by the authorities responsible for making the process a success and that the initiative is pursued in right earnest.  

Read - The Sentinel Assam

Do not play politics with currency notes

The RBI should not even entertain the thought of featuring personalities other than Mahatma Gandhi on the rupee. It’ll be playing with fire

Dear Mr D Subbarao: While we wish you the best in piloting a vibrant monetary policy for the country at this critical juncture, we would also seek your mediation in handling the vexatious issue of who should feature on our currency notes..........

Read - The Pioneer

IDBI Bank launches IDBI Samriddhi online portal

.....The portal is launched by Anand Sinha, deputy governor, Reserve Bank of India at an event held at IDBI Bank's head office at Mumbai. "Banks need to fully leverage on the potential of technology," says Anand Sinha, deputy governor, Reserve Bank of India who commended the initiative. He further added that technology provides great opportunities for increasing transparency, enhancing efficiency and also in reaching out to a wider investor base......

Read - ET 

No case for removing margin cap on MFIs: Chakrabarty

....“The cap on margins is a must. We have had to introduce the cap because the industry had not behaved responsibly,” K.C.Chakrabarty, RBI Deputy Governor, said at a financial inclusion conference organised by Sa-Dhan and FICCI.........

Read...........

Indian banks can weather drought impact: RBI

New Delhi, Aug 7:  The Reserve Bank of India today said Indian lenders are resilient enough to weather the pressure on farm loans caused by drought-like situation because of deficient monsoon. “Whenever there is drought, there is a pressure (on farm loans). But we have sufficient rehabilitation measures so that banks can weather it out,” RBI Deputy Governor K.C. Chakrabarty told reporters on the sidelines of function here.Indian banking system, he added, “has enough resilience (and) will be able to face the stress”............

 

Read..........

Top PSB appointments may face FinMin review

.....The recommendations of the appointment board, headed by the governor of the Reserve Bank of India, were sent to then finance minister Pranab Mukherjee. However, the file was sent back to the appointment committee, after stiff opposition from some bank chairmen, who raised the matter with the top echelons of the finance ministry. The board, however, stuck to its stand of no lateral movement......

Read - BS

State Bank of Travancore on recruitment drive

.....Candidates, will have to appear for a written test to be conducted on October 7 and 14. Candidates can visit www.statebankofindia.com, or www.sbi.co.in under the 'Recruitment link' for online registration, last date for which is August 13, an SBT release said.

Read - BS

Programme on Treasury Management by CAFRAL

Venue: Hotel Taj Lands End Bandra (West) 

Objective: This programme is specifically designed at the Heads of Treasuries, of banks and their senior level team, who are responsible for management of funds and investments in their banks. The objective is to give an overview of the major issues that those heading/ managing treasury operations would need to address in the context of the evolving macro-economic and regulatory environment.

 August 10, 2012

11.45 am to 1.00 pm Developing and regulating money, forex and debt markets G Mahalingam CGM-in-Charge, FMD, RBI August 11, 2012 03.30 pm to 05.30 pm Panel discussion - Activating debt markets H R Khan DG, RBI P Krishnamurthy Formerly CGM, RBI C E S Azariah CEO FIMMDA Ananth Narayan, Head Treasury, SCB Director, CAFRAL

The expectations downshift

.... Recall that the consensus forecast was for a dramatic fall in inflation, which, in turn, would facilitate aggressive easing by the Reserve Bank of India (RBI). Expectations about rate cuts have undergone a dramatic shift, especially after the recent guidance by the RBI. The concerns are understandable given that Brent crude oil price has surged since bottoming in June. Also, the government is pussyfooting on the anticipated fuel price adjustment and the overdue fiscal correction. Finally, the impact of the poor monsoon will be much more relevant to inflation than growth.......

Read - BS

Walk the (pep) talk

......Take, for instance, the goal of moderating inflation over the medium term while striving to reduce interest rates almost immediately. So far, the onus has been on the RBI although recently, all evidence points to inflation being driven up by high food prices and other supply side factors over which monetary policy has very little effect. The RBI has often been left to fight the inflation battle singlehandedly and without the support of fiscal policy. As expected, P. Chidambaram has put fiscal consolidation high on the agenda and promised a road map within the next few weeks.......

Read - The Hindu

Finance minister clears Rajan's name for CEA

.......A selection committee, headed by Prime Minister’s Economic Advisory Council Chairman C Rangarajan, had shortlisted Rajan’s name after examining applications of as many as 18 applicants. Rajan, an honorary economic advisor to Prime Minister Manmohan Singh, had not applied for the position, but was picked up by the panel itself........

Read - BS

Govt to put in place fiscal action plan in 6 weeks

.....“The effort is to first give a kind of confidence to the RBI that the Government is taking steps for fiscal correction. This may bring a change in RBI thinking on interest rate.”.......

Read...........

Chidambaram to meet public sector bank chiefs on August 18

....This meeting is significant as it comes in the backdrop of the banking industry facing a crisis-like situation on several fronts, including rising bad loans and human resource problems.........

Read...........

To boost economy, RBI must work in tandem with Govt

.........The most relevant question today is not whether the Government is disrespecting the RBI’s autonomy or if the RBI should be allowed to take its own considered assessment of the macroeconomic situation — global or domestic — and act as it alone deems fit, in isolation. There are other important questions such as the efficacy of the RBI’s policy stance so far. For example, the rate rising cycle was steep and fast and in a sense inflation has been stubborn and not really responded to the policy actions. And to believe that a more aggressive rate cutting would fuel inflation immensely seems to be farfetched. The RBI cannot stand aloof.........

Read.........

Mr Chidambaram, don’t screw savers to help yourself!

....It is clear that Chidambaram’s brief is to revive growth and what the PM called “animal spirits” in the economy. But the FM is baring his fangs only to the RBI. He is purring like a cat to foreign investors, as evidenced in the announcement on reviewing the retrospective tax.......

Read.......

Mr FM, think economy-friendly, not market-friendly policies

........Market-friendly policies are politically acceptable while economy-friendly policies are politically difficult to digest. The question is does the FM have the political backing to take economy-friendly policies? A diesel price hike will not only help bring down the fiscal deficit but will also give the RBI headroom to use monetary policy to ease falling growth pressures. However, given the rising inflation expectations due to weak monsoons, there will be a huge political hue and cry over diesel price hikes..........

Read.........

P Chidambaram may have to mend fences with RBI

....Sealing a growing rift between RBI and the government may well top finance minister P Chidambaram's agenda, with the central bank saying declining public investment and a rising revenue deficit slowed growth more than high interest rates........

Read - TOI

Plan commission to use Tendulkar approach for measuring poverty

......“Unless the Rangarajan panel recommends a new methodology for measuring poverty, in which case poverty percentages would be computed based on both the methodologies, the government would follow the methodology suggested by the Tendulkar committee,” ..........

Read - Mint

RBI relaxes KCC repayment norms to help farmers fight drought

.....While modifying the KCC guidelines, RBI has removed the clause pertaining to mandatory repayment of loans by card holders within a year and gave freedom to banks to fix the repayment period. The decision will benefit over 10 crore KCC holders. "The repayment period may be fixed by banks as per the anticipated harvesting and marketing period for the crops for which a loan has been granted," the RBI notification said........

Read - ET

State Bank wants benchmark prime lending rate scrapped

....The demand for the sunset clause is being made again by banks at a time when the central bank is reviewing the loan pricing mechanism. A committee under RBI Deputy Governor Anand Sinha is looking into the issue of transparency in loan pricing and also studying the efficacy of base rate with respect to transmission of monetary policy.......

Read BS

CCI confident it will get to police all sectors

.....Regulators like the Reserve Bank of India (RBI) and the Telecom Regulatory Authority of India (Trai) have been opposing the idea of CCI having a say in determining mergers and acquisitions in banking and telecom, but Chawla expressed his confidence that no sector will be kept out of the purview of the commission’s mandate of ensuring fairplay........

Read.........

Indian banking's paradigm shift: Funding ways change

For more than a decade, there was just one mantra on every Indian banker's lips — CASA. It delivered loads of profits for private sector banks, and it even became part of the lexicon at state-run banks over the years. It has become so ubiquitous that banners in branches in rural India scream 'Deposit Mobilisation Programme — CASA' when the client who walks in may hardly know what CASA stands for. But suddenly the power of that mantra seems to be waning.............

Read - ET

Priority Sector Lending and the Power of Small

.......Over the past two years, banks and RBI have been engaged in some difficult discussions around assets disqualified by RBI on various grounds. The new guidelines address these ambiguities and also broaden the framework through inclusion of PACS/FSS/LAMPS as distribution channels, expanding eligible 'indirect loans' and service enterprise definitions. There is also greater clarity in terms of the regulatory focus on direct agricultural lending and use of NBFCs or MFIs as originators......

Read - ET

Apparel exporters write to P Chidambaram on loan restructuring

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..........

Read - ET 

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.........

Read..........

Govt Will Work With RBI to Control Inflation: Chidambaram

 

Ready to take "calibrated" risks, Finance Minister P Chidambaram today said the Government will work with RBI to control both inflation and interest rates to stimulate investment and ease burden on consumers. Underscoring price stability, more importantly for the poor, he said the government will use its foodgrains stocks to moderate prices and enhance imports of essential commodities. In his first media briefing after taking charge of the Finance Ministry, Chidambaram said fiscal and monetary policies must point to the same direction to moderate inflation. "The government will work with the Reserve Bank of India to ensure that inflation is moderated in the medium term.........

Read...........

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............

Read........

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........

Read - TOI 

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.............

Read........ 

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)...........

Read......

RBI wants banks to cut base rates, not select lending rates

With banks led by the country's largest lender SBI choosing to cut spreads on certain categories of loans instead of the base rate, deputy governor Anand Sinha today said the Reserve Bank would like the banks to cut the minimum lending rate to better carry forward its monetary policy measures. "The base rate is supposed to be responsive to the changes in monetary conditions....Reserve Bank would definitely want the responses to be through the base rate," Sinha said at an IDBI Bank event here. ........

Read - TOI

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......

Read - BS 

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.

Read........ 

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.......

Read - ET 

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.......

Read.........

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. ............

Read - TOI

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............

Read - ET 

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.............

 Read......

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.........

Read........... 

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. .........

Read - TOI

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........

Read - ET 

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.........

Read...........

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.......

Read - BS 

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......

Read...... 

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........

Read............

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.

Read...........

Reddy may be head of next finance panel

Former RBI Governor Y V Reddy, hailed as the man who saved the Indian economy from the 2008 global financial crisis, could be soon named the head of the 14th Finance Commission. The main objective of the commission, which is re-constituted every five years under a residential directive, is to define the financial relations between the Centre and states. Reddy, if appointed, will be Vijay Kelkar’s successor who headed the 13th Finance Commission, which submitted its report to Parliament in February 2010.

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.............

Read.....

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.........

Read - BS

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........

Read - TOI 

ICIF discusses Interest-free Banking with RBI Deputy Governor

...... high power delegation of Indian Centre for Islamic Finance (ICIF) had a very fruitful and detailed discussion on the feasibility of introducing interest-free banking in India with Deputy Governor Reserve Bank of India, Mr Anand Sinha and other officials at RBI headquarters in Mumbai on July 2, 2012........

Read....... 

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..........

Read.........

‘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,”.......

Read.........

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.

Read - Book review by P.P.Ramachandran

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......

Read - BS

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.........

 

Read.........

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........

Read............

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.........

Read..........

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...........

Read..........

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....... 

Read - Mint

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......

Read - The Hindu

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......

Read - TOI

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.........

 

Read...........

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........

Read - Indian Express

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.......

Read - Mint

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 .......

Read - Mint

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? ......

Read - The Hindu

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......

Read - DNA

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.

Read - ET

‘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.........

Read - DNA

Subbarao bats for a 'less-cash' country

Reserve Bank of India Governor D Subbarao said a goal of the regulator and the banking industry was to make the country a less-cash society, and this had to be achieved by encouraging and expanding the electronic payment and settlement system across India. “Though large-volume transactions have been shifted to the electronic mode, the retail payment system continues to be paper-centric and we remain largely a more cash society compared with peer countries like Brazil, Mexico and Russia,” he said here on Friday, during a function at the Institute for Development and Research in Banking Technology..........

Read - BS 

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.........

Read...........

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..........

Read........

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............

Read - The Hindu

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.

Read - DNA

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........

 

Read..........

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........

Read......

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 ।......  

Read more.......

 

       

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 ..........

Read - TOI

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............

Read - The Hindu

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.......

Read...........

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.

Read - The Hindu

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..........

Read.........

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............

Read......

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.......

Read - Hindustan Times

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.........

Read - Mint

'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.

Read - TOI

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........

Read - The Hindu

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..........

Read - Indian Express

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........

Read - ET

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,”.......

Read - Mint

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,"................

Read.........

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....

Read - Hindustan Times

‘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,” ..............

Read - Indian Express

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 ..........

Read............