Thiruvananthapuram, Aug 16: Reserve Bank Governor D. Subbarao is of the view that the recent policy monetary initiatives have succeeded “to some extent’’. “Has the RBI succeeded in its efforts? To some extent, I would say,” Subbarao remarked during the course of a lecture delivered here...........
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Friday, August 17, 2012
Declining growth a concern
Clearly, the recent developments suggest that RBI would not like to risk cutting the key policy rates for the sake of moderating inflation. A cut in the SLR from 24% to 23% is however an intelligent move. The continued decline in the growth rate must concern one and all. To what extent can the country afford to sacrifice the growth rate for containing inflation is a moot question.
- Srinivasan Umashankar, Nagpur (FE)
'Interest rate decision will depend on inflation situation'
.... "Interest rates to fall when inflation drops...," RBI Deputy Governor K C Chakrabarty said after meeting Economic Affairs Secretary Arvind Mayaram ......
RBI puts half of forex reserves in govt bonds
.....the central bank’s investment of forex reserves is driven by the objective of safety, liquidity and the goal of maximising returns is embedded in these objectives, RBI said.
Twelve banks fail to meet CD ratio norms
Twelve commercial banks operating in Odisha, including top private sector lender ICICI Bank have failed to meet the minimum CD (credit deposit) ratio of 60 prescribed by the Reserve Bank of India (RBI)........
Improvement in govt finances can avert rating downgrade: RBI
........Fiscal consolidation, said RBI Deputy Governor Subir Gokarn, will also help in moderating inflation and lowering interest rates. "The best way to prevent it (ratings downgrade) would be to put in place a sustainable process of fiscal consolidation because that is the most important parameter, indicator on which that risk or threat has manifested. If we can do that reduction ... that risk is averted," he told reporters.......
Rupee slide
This refers to “Rupee depreciation does not help us” (Business Line, August 15). Though dollar earnings of exporters rise when the rupee depreciates, importers have to pay more for capital goods and machinery. The RBI’s directive to exporters to convert half their foreign-exchange earnings into rupees to make dollars available in the market had disappointed exporters. Instead, unnecessary imports should be curbed and more foreign direct investment attracted to increase the supply of dollars. A Tobin tax may also help bring dollar revenue and control the flow of foreign institutional investment.
- N.R. Nagarajan (HBL)
Bondholders withdraw case against Tayals
......RBI imposed a Rs.25 lakh penalty on the lender in February 2010, bringing the troubles facing it to light. The central bank cited irregularities in the running of the bank, including the acquisition of immovable properties, deletion of records in the bank’s information systems and the conduct of some accounts, among others........
Drought year
.......In terms of monetary policy implication, the Reserve Bank of India (RBI) has said that focusing only on core inflation—inflation minus food and fuel— may not be appropriate in the Indian context. Put differently, higher food prices, resulting in higher general price level, will not allow RBI to cut rates anytime soon. As a result, monetary policy may not come to the rescue, as expected, at a time when growth is slowing down.
MFI client base drops by 5 million in a year: Sa-Dhan
......MFIs have brought down their operating cost this year but their profitability is still under stress. The recent RBI announcement of relaxing 26 per cent interest cap is a welcome step and the benefit of this relaxation will be realised by MFIS at the end of this financial year,” .......
Crowdsourcing Based Microlending Service Kiva Launches In India
....The Reserve Bank of India (RBI) requires loan funds sent to non-government microfinance institutions to remain in the country for at least 3 years. As a work around for this, Kiva’s field partners will hold on to loan funds for the minimum 3-year term before sending repayments back to lenders......
Bangalore police to crack whip on fin firms
The robbery bid at Muthoot Mini Finance office at Mariyappana Palya near Jnanabharathi on Tuesday has made the city police to crack whips on banks and other financial firms which do not adhere to Reserve Bank of India’s (RBI) guidelines on security matters. The police have decided to write to the RBI about the violations made by firms and recommend cancellation of their business licenses. The fact that most of the firms have not appointed security guards has made the police to identify such firms and initiate action against them.......
Eyeing company deposit plan? Guard yourself against fraud
......The agents, who collect deposits from across West Bengal, Jharkhand and parts of Madhya Pradesh and southern India, are given on-the-spot commissions of 16-33 per cent. The Reserve Bank of India (RBI) often comes up with advertisements against such companies, clarifying that it does not give any guarantee of the investment options being floated by these companies.........
Thursday, August 16, 2012
“Financial Vandalism” in India, and a Way Forward
.......Just a few days earlier, the Reserve Bank of India (RBI) had announced new regulations affecting microfinance. Though these policies rolled back some harmful policies announced a few months back and helpfully clarified others, they also introduced a controversial new rule saying that microfinance institutions over a certain size would be subject to smaller margins than they were currently allowed between the rates they borrowed and lent at........
.....The second-to-last panel included Archana Mangalagiri of the RBI, calling in from Mumbai. She was evasive at times but was encouraging when she said that the government was willing to listen to arguments for reversing or at least refining recently announced policies if they proved to be impractical........
Banking blues: Rise in NPA points to a rough ride ahead
...."The worst is over. Non-performing assets have plateaued and we do not see any acceleration . The NPA storm that had hit us in 2011 is now hitting other banks," .....
Banks bullish on microfinance post AP crisis, thanks to RBI rules
The microfinance sector has again started witnessing a flow of funds from banks — which had become hesitant in lending to micro lenders in 2011 — encouraged by the new set of regulations introduced by the Reserve Bank of India (RBI).........
Year 2012 is quite unlike 1991, says Subbarao
Read..........A ballooning fiscal deficit, historical-high current account deficit, precarious balance of payments situation….Comparisons abound, but the Indian economy of year 2012 is quite unlike 1991 when it had threatened to default, says Reserve Bank Governor D. Subbarao........
In India, the Three R's Are Being Joined by an 'F': Financial Literacy
....While the national policy is still a work in progress, other organizations are already launching like-minded efforts. The National Institute of Securities Markets (NISM) has been conducting a program called "Pocket Money" for the past few years. NISM functions as a public trust and has been established and funded by SEBI. The RBI has an interactive website centered on financial literacy for children and has produced comic books on the topic......
New law to tackle cash economy recommended
....The panel said the laws which could be amended to further strengthen its provision to tackle black money include the Coinage Act 2011; RBI Act, 1934, Foreign Exchange Management Act, Indian Penal Code and Criminal Procedure Code. The committee, however, said there can be no single or omnibus law to deal with the menace.......
Counterfeit notes from ATMs or tellers: The latest position
The Reserve Bank of India (RBI), to its credit, has one of the best online adherences to the Right to Information (RTI) Act of India. Much of what you want to know has already been proactively declared, and existing circulars as well as guidelines are neatly arranged as well as very searchable. They also tend to be clubbed together by subject once or twice a year on the 1st of July and sometimes also on the 1st of January. The central bank is also very prompt in acknowledging and responding to RTI applications. Most of all, unlike certain other public authorities, the RBI tends not get stuck on technicalities like demanding small amounts of money for photocopying charges—especially when the postage used for said demands is more than the demand............
.....To sum it up, you have to ask your bank branch manager or the manager of the branch which holds responsibility for the ATM you use, whether the ATMs or tellers under their charge are in adherence with RBI’s circular DCM (FNV) No. 5063/16.02.22/2011-12 dated 9 May 2012. And if not, why not?
Figuring it out
........Their combined impact would mean that Finance Minister P. Chidambaram and RBI Governor D. Subbarao may end up shooting in the dark when taking a call on the direction the economy must be given. For instance,........
Banks extending only working capital loans
...According to data released by the Reserve Bank of India (RBI), CD issuance of bank has come down to just Rs 7,800 crore in the fortnight ended July 13 from a whooping Rs 81,460 crore issued in the preceding fortnight ended June 29......
Corporate Debt Restructuring - issues and way forward - Dr.K.C.Chakrabarty
Address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at the Corporate Debt Restructuring Conference 2012, organized by Centrum Group, Mumbai, 11 August 2012
......Before concluding, I would like to emphasise that resources of the banking sector are precious and limited and they cannot be allowed to be used in an imprudent way. CDR is a necessity especially when economic upturn and downturn are a way of life and part and parcel of business cycles for individual companies. Corporate Debt Restructuring has been in existence for more than a decade in India, and this system has fulfilled its objectives to a large extent. It is a mechanism evolved for preserving......
Risks to prolonged slowdown have increased: A Balasubramanian
........In the last few years, fixed income schemes, including liquid funds, have seen a higher level of participation. This is partly due to the poor domestic economic conditions, as well as uncertainty in the global economy, especially Europe. On account of these, we have witnessed inflows into debt funds. We are in an extended easing period, which is likely to continue till December 2013. In this period, the Reserve Bank of India (RBI) will not only reduce the repo rate, but probably, also take the effective overnight rate to six per cent........
Arrest the slippage
....Among official agencies, the Reserve Bank of India, in its July 31 policy statement, had trimmed its GDP forecast to 6.5 per cent from 7 per cent earlier. At the same time, the central bank had warned of many downside risks to growth and upside risks to inflation — factors that might well drag India’s economic growth even lower........
Market observers anticipate further rate cuts
....Market expectations for monetary policy have demonstrated frequent and large swings in recent months. Inflation management has of late been the Reserve Bank of India's focus and the central bank remains cautious about delivering the next bout of rate cut just yet. "We feel that markedly sub-par growth, a softening in core inflationary pressures over the next six months, near-zero fiscal spending headroom, and likely only hesitant government policy initiatives to revive the economy will eventually lead to greater monetary accommodation in the coming months, in our view......
Rediscovering the growth magic
.......A combined and well coordinated fiscal and monetary stimulus was feasible as there was policy space. The Reserve Bank of India had been raising interest rates to prevent overheating of the economy and inflation, which had shown upward movement, had come down and so the RBI could lower interest rates significantly.......
Experts call inflation numbers a mirage, rule out rate cuts
........The unusual decline in reported vegetable prices, limited representation of higher sugar prices and a sharp fall in fuel inflation distorted the overall number. Much against market expectations, they also feel RBI is unlikely to cut rates based on a "transient fall" in inflation. Terming some of the numbers in the basket "a mirage, not an oasis," Sujan Hajra, chief economist at Anand Rathi Share & Stock Brokers, pointed out that ........
Inflation near 3-year low, RBI seen unmoved
.......In addition, core inflation, which excludes food and fuel prices, rose in July to 5.44 percent from 4.9 percent in June, economists estimated. These factors will push inflation higher again and make the Reserve Bank of India (RBI) cautious about relaxing its hawkish stance anytime soon, in contrast with central banks elsewhere that are seen easing policy to counter the global economic slowdown.....
Such gloom; let economy bloom
.......The RBI is often blamed for hawkish monetary policies and high interest rates. It certainly has choked consumer demand and corporates are avoiding taking credit. The flip side is that this keeps the banks’ capital safe. Afflicted by large defaults by power sector and real estate companies, the RBI policy has insulated the banks from defaults by small lenders.It is a moot question whether the RBI should allow banks in the country to face more difficulties in the face of almost `450 lakh crore non-productive assets.......
Indian banks' Pak foray stuck for want of guidelines
The government and the Reserve Bank of India (RBI) are yet to formulate guidelines on Indian banks' entry into Pakistan. Central banks of both countries have gone slow on working out regulatory issues including know your customer (KYC) norms..................
ING Vysya Bank steps into gold loan business
ate sector ING Vysya Bank has stepped into the gold loan business to fund working capital needs of small and medium enterprises (SME) sector.........
Credit card spend touches record high in first quarter
Credit card spending in the country touched a record high during the April- June quarter, thanks to innovative incentives offered by card issuers to their customers. In the first three months this financial year, consumers spent Rs 28,465 crore on their credit cards across point-of-sale (POS) terminals, latest data released by the Reserve Bank of India showed. On a sequential basis, spending on credit cards increased 9.9 per cent, its fastest rise in the past four quarters......
Wednesday, August 15, 2012
'Agricultural land, plantation, farmhouses in India out of NRI, PIO reach'
PANAJI: NRIs and PIOs cannot purchase agricultural land, plantation property or farmhouses in India, said A Subramanya, Manager, Foreign Exchange department, Reserve Bank of India, Panaji. At a seminar organized in collaboration with the Institute of Company Secretaries of India and Gon 'Acquisition of Immovable Property by Non-Resident Indians', Subramanya said there are no restrictions on the number of residential or commercial properties that NRIs and PIOs can be purchased. ..........
Financial inclusion: Miles to go
.....As K.C.Chakrabarty, the Deputy Governor of RBI and in-charge of financial inclusion, noted in a recent speech, “Even where bank accounts are claimed to have been opened, verification has shown these accounts are dormant. Few people conduct any banking transactions and even fewer receive any credit.” Even now, not more than 40% of the population have access to bank accounts. Despite increase in banks’ presence in rural areas, more than half of the 6,00,000-odd villages across the country do not have access to banking.........
RBI asks banks to frame clear policy on deposit rates
...."It has been observed that there are wide variations in the interest rates offered by banks on single term deposits of Rs 15 lakh and above and those offered on other deposits (i.e. deposits less than Rs 15 lakh) of corresponding maturities. Further, banks are offering significantly different rates on deposits with very little difference in maturities," RBI said the notification on Tuesday.........
The Leaderboard: Raghuram Rajan
.....Based on his previous writings, we can expect Mr. Rajan to push for increased foreign direct investment, anti-corruption legislation, and a possible easing of regulatory moves that have thus far limited foreign investment. The Reserve Bank of India (RBI) should expect continued scrutiny from Mr. Rajan, since he believes that the RBI is complicit in high government borrowing- a claim the RBI has already denied.
Chidambaram to meet bank chiefs on Aug 18
Finance minister P. Chidambaram will conduct a quarterly review of public sector banks’ (PSBs) performance on August 18. This will be Chidambaram’s first meeting with PSB honchos after he took charge of the Finance Ministry on July 31. The meeting comes in the backdrop of the economy facing challenges on the growth, inflation, and policy reform fronts........
Karnataka Bank Opens 400th ATM at Bejai Church Complex
....."The Bank plans to install another 50 ATMs by the end of this year. As per a survey conducted by the Reserve Bank of India (RBI), among the 52 banks that provide ATM facilities, Karnataka Bank is in the fourth position, which is a praiseworthy achievement,".......
Two youth held with fake currency
.......The upgraded quality of CFIC (printed in the latest series of currencies of Reserve Bank of India) made it difficult to differentiate it with genuine currency notes...........
Aggressive approach & a clear business model is needed for cashless e-payments
.....The recent steps by RBI to cap the merchant fees for debit cards have the ability to provide the much-needed fillip to the payment business. The hope is that e-payments will grow by 100% year-on-year and that payments can become all pervasive. However, good intent needs to be backed by speed and a clear vision of the end goal. Today, the Indian payment industry is lacking due to low investments and unclear business models for private and foreign operators........
Read - ET
Read - ET
RBI panel for increasing investment limit for FIIs in government securities
....The 13-member group, headed by RBI Executive Director R Gandhi, has made various recommendations on G-Sec market, retail participation and interest rate derivatives market.......
Tight policy may have deepened slowdown, says Subbarao
....“Firstly, the tight RBI policy stance. Secondly, the issue of infrastructural bottlenecks. Third, the lagging economic and governance reforms and governance issues affecting the investment sentiments,”.......
RBI caps bank investment in group business
Banks will find it tough to put money in group businesses such as insurance and other financial service companies with the Reserve Bank of India prescribing a ceiling for investment by lenders in group businesses...........
Centralised mart for G-Secs players soon
....Further, according to RBI Deputy General Manager R R Sinha, the panel has suggested that insurance companies, provident funds and other financially sound entities be permitted to participate in the IRS market. The working group, comprising market experts, RBI officials and other stakeholders, was according to Sinha, constituted under the chairmanship of RBI Executive Director R Gandhi to explore ways to enhance liquidity in the G-Secs and interest rate derivatives markets..........
Banks, post offices may be roped in to sell G-Secs
Bank branches and post offices could be used as distribution channels to get retail investors to invest in government securities, according to a Reserve Bank of India panel......
Five reasons why Indian rupee would continue to fall
 |
| The Indian rupee has shed close to 25 per cent value over the past one year. It is likely to fall further. Here are reasons why the Indian currency could be under pressure. |
The rupee and the J curve
....Unlike China, however, slowing growth has not resulted in slowing inflation. Wholesale inflation remains stubbornly above seven per cent and retail inflation is in double digits. The economy seems stuck in a low-growth, high-inflation equilibrium – reminiscent of the late 1990s – such that the Reserve Bank of India’s hands are tied even as growth continues to flounder.......
When will RBI lower interest rates?
.....The finance minister has already spoken of ‘calibrated risk’, i.e. lower interest rates, amongst other things, to revive growth. But the RBI is on record to say “…as the multiple constraints to growth are addressed” - a euphemism for government action – it will “suitably adjust its monetary policy stance”. Assuming the government does ‘something’ over the next two weeks, will monetary action follow suit?.....
Lower inflation: Time for another Chidu-Subbu tete-a-tete
.....Given the multiplicity of factors, it will indeed be a tightrope walk for policymakers. How much RBI and the finance ministry understand each other’s concerns will determine the way monetary policy will move in the near term. An ideal time for another heart-to-heart chat between Chidambaram and Subbarao, perhaps. Just to ensure both sides are on the same page, unlike a few months earlier.
One-third of slowdown due to interest rate hikes, says Gokarn
Reserve Bank of India (RBI) Deputy Governor Subir Gokarn on Tuesday said the central bank had come to a rough conclusion that about a third of the slowdown was due to interest rate hikes and the rest due to a combination of other domestic and global factors.......
Read - Indian Express
Read - Indian Express
Rate cut hopes rise as inflation eases
.....Finance minister P Chidambaram's comments that interest rates are high and the government will take steps to ease the burden have also added to expectations. But RBI is still worried about the inflationary pressures in Asia's third-largest economy. Governor D Subbarao said on Monday that inflation remained "above our tolerance level". But some experts say slowing growth, sliding exports and industrial output and overall gloomy outlook may prompt the central bank to ease rates. .......
Interest rates that are out of sync with fundamentals are unsustainable
.... If the RBI is going to withdraw liquidity through the CRR on the one hand and then pump in liquidity by paying interest on these impounded balances on the other, the CRR, as a tool of monetary policy, loses all meaning. It would be a case of taking away with one hand and giving with the other — a completely pointless exercise. It is not sustainable because unless interest rates in an economy reflect underlying macroeconomic fundamentals, it will not be possible to sustain interest rates at that level for long without it resulting in serious macroeconomic imbalances..........
Statistical chimera
Inflation has yielded ground neither to the RBI’s monetary policy aggression nor to the pious entreaties of the Government. The public has reason to worry.
Read - HBL
Freeze accounts of fraud accused: Cops
...........The arrests in the case followed a release from the RBI Department of Non-Banking Supervision, Chennai Regional Office against Aphro Trust and its associates functioning from Teachers Colony in Kolathur. The release said the Aphro Trust and its associates were not regulated by the RBI as claimed and warned the public..........
Nabard to refinance loans of farmers in scarcity-affected areas
........Nabard is considering a special line of refinance at 7.5 per cent to enable banks to finance farmers for cultivation/purchase of fodder. The scheme would be finalised in consultation with the state government," said Prakash Bakshi, chairman, Nabard, who was on a visit to scarcity-affected villages in Rajkot district on Tuesday......
Moneyspinner Subrata Roy spins new yarn: direct retail
...Roy has been thwarted both by the RBI and Sebi. A few years ago, the RBI asked Sahara India Financial Corporation to return all deposits by 30 June 2015. The company proclaimed last year that it was winding it up earlier..............
Union govt gives clean chit to HSBC’s India employees
....The bank’s India staff was cleared after a preliminary report from the Financial Investigation Unit and the Reserve Bank of India (RBI), sources said. However, both the agencies have been asked to continue with their investigation and maintain surveillance of the bank’s activities. Sources added that the two have sought more details on HSBC from US authorities......
Tuesday, August 14, 2012
Who killed the India growth story: Delhi, not Mint St
M K Singh takes over as RBI Regional Director Chandigarh
Mr M K Singh took over as Regional Director, Reserve Bank of India, Chandigarh. He will look after functioning of Himachal Pradesh, Punjab, Haryana and UT Chandigarh. Before joining here, Mr Singh was the Regional Director of RBI in Patna and was looking after the states of Bihar and Jharkhand. Mr Jasbir Singh, who was Regional Director Chandigarh, has been transferred to RBI, Central Office, Mumbai as Executive Director.
RBI tells banks to include compensation in cheque policy
.....The RBI has come up with the abovementioned directives as it has noticed that in the CCPs and compensation policies of various banks there is no mention about the compensation in respect of the delay in realisation of local cheques. Instances of delayed credit to customers' accounts without any compensation for the delayed period beyond the time line indicated in the CCPs, in respect of local cheques, have been brought to the RBI’s notice......
Core banking: RBI’s half-baked directions to banks
RBI has just come out with guidelines for issuance of “Payable at par/Multi-city” cheques to all eligible customers in a standard format. But the RBI should have thought of many other possibilities of offering a wide variety of services using CBS. Here is a list of benefits it could have allowed.........
......But unfortunately, many public sector banks in our country are either slow in providing innovative services to the customers or do not bother to find out the customer’s needs. They only act on getting a direction from the RBI, which alone with a little foresight can make the life of bank customers a little more comfortable and convenient in these trying times.
Click to read more.............Polymer rupee notes: Slow or no progress?
.....In fact, in order to counter this menace, a couple of months ago, it was reported that in a pilot scheme to introduce polymer rupee notes, an unannounced entry into the market was made in selected cities like Bhubaneswar, Jaipur, Kochi, Mysore and Sheila, to test the market or public reaction. So far, however, the Reserve Bank of India (RBI) has not yet made its findings public on this score. Nor do we know the quantum of such currency or the unit or face value. But the crucial point is what is delaying the actual introduction of polymer rupee notes at least in the higher denomination of Rs 500 or Rs 1,000 as a start, as the majority of the counterfeit notes detected were in Rs 500?......
Improvident
...........The only saving grace is that, as compared to RBI which has said unclaimed fixed deposits in banks (R425 crore) can be appropriated by a depositor education fund, the labour ministry has said the funds in the inoperative accounts can’t be transferred to anyone else. What good that does to subscribers is not clear though.
Critical thinking on development issues
.....MIDS, as it is popularly known, was founded in 1971. It is located at Gandhinagar, Adyar, Chennai – 600 020; Website: www.mids.ac.in. The institute was reconstituted as a national institute in 1977 under the joint sponsorship of the Union government and the Tamil Nadu government. The Reserve Bank of India established a Chair in applied research in regional economics in the institute in 1985. The central bank had been granting fellowships to Ph.D. scholars. Later on, the RBI made it an endowment......
Inflation too high for comfort - RBI
...."The task for the RBI is to restrain demand. What is the task for the government? The task for the government is to generate supply so that we produce more and that will bring down inflationary pressures," Subbarao said in a speech at a event in south India.......
Economic reforms need an urgency of purpose, RBI governor says
Implementing economic reforms with sincerity and urgency of purpose is essential to return to the high growth trajectory, said Reserve Bank of India Governor D Subba Rao ............
6% growth won’t get India anywhere: Subbarao
....“We must look to grow 10 per cent for another 15 years in order to raise our status from a low-income country to a medium-income one,”.........
Declining investments a cause for concern: RBI
....Reserve Bank of India (RBI) governor D. Subbarao reiterated his concern about inflation on Monday, saying it remained above the central bank’s comfort level, and called monetary policy the first line of defence even when inflation was coming from supply shocks.......
Banks begin reviving special schemes
.......RBI’s latest data shows bank advances, as of July 27, had grown 17.2 per cent over a year, while deposit growth lagged at 13.8 per cent. The central bank has projected deposit growth of 16 per cent in the annual monetary and credit policy for 2012-13. "Concerns that deposit growth has significantly been slower than credit growth for a prolonged period of time is something we have been watching closely and that was one of the issues we discussed with bankers on Monday," RBI Deputy Governor Subir Gokarn had told Business Standard in an interview after the first quarter policy announcement last month......
Loan restructuring skewed towards corporate borrowers: RBI
RBI's outspoken Deputy Governor KC Chakrabarty makes a serious accusation. In a speech supported chapter and worse with statistics he says, public sector banks restructure much more than private banks
Read and watch video...........
Can't Abandon Inflation Agenda, Says India's Central Banker
.....“Clearly the argument is that if you cut rates, you will get some rebound, some stimulus for investment. But on the other side, we're dealing with a relatively uncomfortable inflationary situation. The inflation objective cannot be abandoned,”..........
Loan recast: PSBs bear the brunt
........The Reserve Bank of India (RBI) argues if economic downturn is the reason for debt recast, that should reflect across all bank groups and not just PSBs..........
Read - BS
Read - BS
A question of autonomy
.....it would be desirable if the government sticks to policy making and allows banks the freedom to take decisions in an increasingly competitive environment. Reserve Bank Governor D. Subbarao and his predecessor, Y.V. Reddy, have come out on the side of the banks. Micro-management is bad for banks and, in the long run, hurts the interests of the major shareholder, the government too.......
Not RBI alone
In his column “The RBI’s free pass” (Policy Rules, August 11), Mihir S Sharma is too strident in singling out the Reserve Bank of India (RBI) for the drop in net profit margins of the sampled companies and for the decline in growth. Margins depend on input costs also, more so in the manufacturing sector in which non-availability or high cost of raw materials (like minerals) and power and transportation take a heavy toll........
Read - BS
Read - BS
Recapitalizing India’s banks
....Investor confidence will, however, require a substantial dilution of government ownership and not merely what is required to raise a sufficient amount of money. A lower government stake will also restrict ambitious civil servants in the finance ministry from interfering into the day-to-day business of the banks and its board. While this may be the right approach, under the conditions that prevail in the government, it may be asking for too much. Any loss of ownership and control is likely to face opposition both inside and outside the government. But if government-owned banks are to meet this regulatory challenge, sooner or later, the government will need to overcome this resistance to change or else banks, taxpayers and the economy at large will continue to be locked in a suboptimal situation........
Court restrains 7 from continuing as Tamilnad Mercantile Bank directors
...........Following the court order, the bank is now left with five directors, including the new MD & CEO KB Nagendra Murthy. There are two RBI nominees KN Rajan and K V Rajan. The other two directors are P Mahendravel (who represents the Nadar Mahajana Sangam which had promoted TMB) and S Sundar, formerly with the SBI.
Dhanlaxmi Bank in trouble? What to do if your bank goes belly up
....As a depositor you don’t really need to be worried about your bank going belly up, well almost. Reason being, the deposits which you make with your bank come with some sort of a safety net. This safety net, in banking parlance is an insurance provided on your deposits by Deposit Insurance and Credit Guarantee Corporation (DICGC). This corporation comes under the wings of the Reserve Bank of India (RBI) and as its name suggest, offers an insurance cover on the deposits you make and also guarantee credit. Says, a senior officer, who did not want to be named, from the DICGC, “All commercial banks are covered by DICGC. ” All foreign banks which are currently functioning in India, as well as co-operative banks and rural regional banks are also covered........
SBI might absorb one associate bank this year
State Bank of India (SBI) is likely to merge one of its five associate banks in the current financial year. The board of the country’s largest lender has given its approval for the merger, and SBI will now start the process of identifying an associate for the merger............
Monday, August 13, 2012
Can RBI, finmin turn a new leaf ?
 |
| “the appearance of autonomy is as important as the actual autonomy itself” and “the very existence of a joint committee will sow seeds of doubt in public mind about the independence of regulators” |
.....RBI is answerable to Parliament and, hence, no governor can afford not to consult the finance minister on critical policy decisions. Besides, the government also employs another way of controlling the central bank—the Trojan horse strategy. It’s no coincidence that a majority of RBI governors have been former finance secretaries, including Subbarao. The five-year term of Subbarao’s predecessor Y.V. Reddy that ended in September 2008 is particularly well known for what Reddy himself dubbed as “creative tension”. Reddy’s book, India and the Global Financial Crisis: Managing Money and Finance, a compilation of 23 speeches delivered at various forums in India and abroad offers glimpses of the serious differences between the finance ministry and the central bank on many critical issues........
India leads the world in inflation - S.S.Tarapore
......But at the present time there is considerable pressure on the RBI to undertake monetary easing. Given the unacceptably high inflation rate, monetary easing would be hazardous. Hence, the RBI deserves full support in its cautious approach to monetary easing. While the fisc is weak and cannot afford to undertake further easing, pressures would mount to ease monetary policy. In other words, monetary policy will be the sacrificial lamb to appease the powerful lobbies. There are overt pressures from the government to goad the RBI to reduce interest rates. What is of concern that policymakers and opinion makers genuinely feel that all that it takes to stimulate growth is lowering of interest rates. Thus, sooner or later RBI will be forced to reduce interest rates......
No policy paralysis, but complexities remain: Y V Reddy
.....I would not agree that there is policy paralysis. There are policy difficulties and the initiative would depend on political and economic considerations. We should also be realistic that how much our social context, political context permits us to do,” Reddy said while delivering the 17th Prem Bhatia Memorial Lecture.............
Read - Indian Express
Right guy at the wrong time ?
.....A government official involved in taking decisions at the highest level, who spoke on condition of anonymity, conjectured that Rajan is being brought in to ultimately head the Reserve Bank of India. The current governor of the central bank, D. Subbarao, who was handed a second term at office, will retire in September next year. “Some may argue Rajan does not have enough administrative experience to be the governor of RBI,” the official said. “But then Ben Bernanke (chairman of the US Fed) also did not have any.” That assurance may have convinced Rajan to join the government.
Students from UK institute get a taste of RBI functioning
Finance ministry wants RBI to pay 7% interest on CRR deposits
The finance ministry has suggested that the Reserve Bank of India pay 7% interest on the mandatory deposits parked with it by banks, one among several measures proposed to lower rates even if the central bank does not ease the monetary policy..........
Still southward bound
....Incidentally, a look at rupee debt suggests an interesting possibility. FIIs bought Rs 46,000 crore of rupee debt in the past 12 month and domestic institutions bought an unbelievable Rs 3.8 lakh crore of debt. This is a pointer to the size of the borrowing programme. But it also boils down to a massive bet on rates falling soon. There would be staggering capital gains available on the debt segment as and when, RBI does cut. It may be worth taking modest exposures in medium-term debt funds. This looks to be low risk since RBI is unlikely to hike......
Read - BS
Read - BS
Car seva
D K Mehrotra, who is three or four months into his job as chairman of LIC, the country’s largest insurer, was so solicitous of the comfort of financial services secretary D K Mittal that he managed to create a traffic jam in Mumbai. Both were at the Reserve Bank of India (RBI), Mittal for the central board meeting, and Mehrotra for the customary lunch RBI hosts afterwards. Later, when they were waiting for their cars outside the central bank headquarters, Mehrotra’s was the first to drive up. He then offered Mittal his car but the financial services secretary chose to wait for his car instead. But Mehrotra continued to press his offer, apparently oblivious of the long line of cars forming behind his. Eventually, he reluctantly got into his car after Mittal literally forced him in. Even then, he asked his driver to pull up a little ahead and wait till the car assigned to Mittal, who has been in the news recently for sending public sector banks detailed suggestions on their functioning, arrived.
BS
Micro-managing banks
.......The person, at the centre of the news, D. K. Mittal, the financial services secretary, is, however, unfazed by the criticism. According to him, the intention is to jolt state-owned banks out of their “lazy banking habits and force them to lend more to small-scale and agriculture”. Those are words reminiscent of a bygone era. Rarely does one hear such statements, at least in public in the reform era.........
Undermining RBI
Any domination or interference of the Central government in the functioning of the central bank of the country (‘Govt should not undermine RBI’, Business Line, August 11) may not be in the interests of the economy as a whole. If legislations such as Fiscal Responsibility and Budget Management Act and relevant provisions in our Constitution are adhered to by the Government, no friction can arise.
- K. Gopalan Bangalore (HBL)
Are you being shortchanged?
.......Besides, no less than 13 coin-vending machines have been installed in RBI Kolkata, where all one has to do is insert the currency notes to get the coins of the same value. These vending machines are dispensing no less than Rs 5 lakh in coins every day. RBI is even bearing 50% of the cost banks will incur if they install these machines in urban areas and a whopping 75% in rural areas. Around 70 coin-vending machines have already been installed by various banks in Kolkata and suburbs. And yet, when it comes to giving you the change, there seems to be a perennial crisis. Strangely enough, there is a mad scramble in front of RBI's Kolkata office coin exchange counters every day. But who are these people who are exchanging bank notes for coins? It's impossible to keep a record of that, says the RBI. But ironically, these very coins are then 'sold' for a price right outside the RBI building. It's another matter that 'selling' coins is illegal; these can only be exchanged......
Kerala chamber to provide coins of various denominations
...... 'Coin disrtibution system initiated by KCCI with the aid of RBI is to minimise in particular the difficulties faced by the trading and business community due to the accute shortage of coins in the State,' .........
Poor will now get ATM cards
......What the new norms mean is that no customer who comes to open an account can be turned away even if he cannot maintain minimum balance" said KC Chakrabarty, Deputy Governor, Reserve Bank of India. The new directive comes after banks failed to make any major headway in `no-frills' accounts. Also a major disadvantage of the no-frills account was that without a cheque book or ATM facility the ability to conduct transactions was limited............
Govt to PSU banks: Ensure one a/ c per family
....For financial inclusion of the excluded and to facilitate the electronic benefit transfer that banks were advised to ensure opening of one bank account per family......
Read - FPJ
Read - FPJ
Federal Bank's new Corporate Banking branch
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| H.R.Khan, Deputy Governor, RBI and Shyam Srinivasan, MD & CEO, Federal Bank at the opening of the Bank’s new Corporate Banking branch at Nariman Point, Mumbai on Friday |
Heads of smaller PSBs may get to lead bigger lenders
The change of guard at the finance ministry has triggered fresh speculation about the appointment of chairmen of state-run banks. Chiefs of three PSU banks — Alok K Misra (Bank of India), S Raman (Canara Bank) and M D Mallya (Bank of Baroda) — will retire this year. Historically, the government nominates chairmen from smaller PSU banks as the chiefs of large state-run lenders. Under Pranab Mukherjee’s regime, it was proposed that executive directors of large banks be appointed as chairmen and the names of S S Mundhra, ED at Union Bank; and V R Iyer and R K Dubey, both EDs at Central Bank of India, were shortlisted. But with P Chidambaram back in North Block, there is a feeling that the old practice of lateral recruitment will continue. If so, Arun Kaul (UCO Bank), T M Bhasin (Indian Bank) and M Narendra (Indian Overseas Bank) will benefit because of their seniority.
TOI
Farmers may get short time to repay loan
A disappointing news for the farmers from the bankers: They may now get a shorter duration to pay back loans availed through Kisan Credit Card (KCC). As Reserve Bank of India (RBI) has made changes in the KCC scheme, it has done away with the provision of having a 12-month repayment period. Instead banks will have the discretion to fix a repayment schedule depending upon the harvest cycle of the crop for which loan has been granted...........
The big problem of agricultural loans
The Reserve Bank of India (RBI) has put the biggest four foreign banks on a sticky wicket with a new policy— foreign banks with 20 branches or more face the same Priority Sector Lending (PSL) requirements as domestic banks...........
.....The shortfall must go in what bankers refer to as “penalty deposits” at the National Bank for Agriculture and Rural Development (NABARD), earning between 7.5% and 2.5% depending on how badly the bank missed the target. Why do so many banks resort to penalty deposits rather than lend more to agriculture? This is because additional viable borrowers in agriculture have been very hard to find.......
Banks biased against SMEs, agri sector in debt recast: RBI
........“Public sector banks have more retail, agriculture and SME book but it’s not reflected in the restructured book, while private sector banks have more corporate book, but the restructuring quantum is very less,”............
Govt carrying misconception on gold NBFCs: AGLOC
......Association of Gold Loan Companies (AGLOC), not comfortable with the measures undertaken by the Reserve Bank of India, has said government has a lot of misconception about the industry.......
Gold import caused high current a/c deficit last year: Rangarajan
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