......."We need to move towards a situation in which the level of CRR comes down and it is used as an instrument of credit control only in extraordinary circumstances,"......
Read..............
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The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Saturday, September 8, 2012
A policy out of sync
....The central bank can also influence interest rates, by raising or reducing the ‘repo’ and ‘reverse repo’ rates at which banks borrow from or park money with it. Given these far superior monetary policy options — that are, more importantly, culturally in sync with the current regulatory philosophy — the CRR is an anachronism that ought to be dispensed with, or used in “extraordinary circumstances”, as Rangarajan puts it. The CRR made sense in 2007-08, for instance, when the country was inundated by over $100 billion of capital flows, which posed unprecedented challenges to domestic liquidity management. That is hardly the case now, when forex inflows have moderated considerably and firms are battling liquidity constraints. Now that Rangarajan, a former RBI Governor himself, has favoured doing away with the CRR, it is time to make a start. By neither reducing the CRR nor the repo rate, the RBI has made it difficult for banks to bring down their cost of funds, without which they cannot lower their lending rates either. The only way out, then, is to reduce deposit rates, which is what the State Bank of India (SBI) has done and others, too, may follow..
CRR’s relevance should not be overlooked
.....In his article “An MRI on health of the economy” (Business Line, September 7) noted economist and former RBI Deputy Governor S. S. Tarapore has already explained this aspect. He had shown how payment of interest on CRR would make it ineffective as a monetary policy instrument. There could be situations when interest payments will exceed incremental funds impounded through CRR in a year, and overtime, the spiralling effect will damage the RBI’s balance-sheet. Moreover, the prevailing fiscal position of the Government also warrants not paying interest on CRR balances. If the RBI is saving Rs 21,000 crore as suggested by Chaudhuri, the entire amount will be transferred to the Government as part of the RBI’s profit......
Read - HBL
Reserve Bank of India only deferring the inevitable
.... “We feel that RBI is delaying the inevitable, as eventually interest rates will have to be lowered in the coming months. We expect another 100 bps of repo rate cut before the fiscal ends. A favourable inflation number and steps towards fiscal consolidation, if any, will increase chances of RBI bringing forward interest rate cuts.”
Read - BS
To CRR, or not to?
.....CRR was mainly used to neutralise the inflationary impact of deficit financing during the 1970s, 1980s and 1990s. Accordingly, it was gradually raised from its statutory minimum of three per cent in September 1962 to 15 per cent by July 1989 and again brought down to 4.75 per cent. Now, will the central bank reduce CRR on September 17? Or will it actually set up a committee with a mandate to submit the report after the present governor steps down? The debate continues.
Read.......
Coin shortage affects ‘change’ business
.....The supply shortage has also left businessmen paying steep commissions to coin dealers. They now pay twice as much to procure coins as they did nine months ago. "Dealers supply coins at a commission of up to 20% for 5 coins and 16% for 1 and 2 coins. The commission was 9% last year," said P Suresh, co-founder of the Sangeetha chain of restaurants. .....
.....An RBI official denied that there was a shortage. "We supply coins in bulk to industry associations through banks or through our regional offices," said Alpana Killawala, Chief General Manager, Department of Communications, RBI.
Small change, big business
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| Brokers rule the roost at RBI counters for coins and notes |
Read.........
‘Banks come across fake notes every day’
.....Mr. Ravindranath said that Superintendent of Police Labhu Ram had suggested that a workshop on fake-note detection be organised for police personnel and the public. He said that some RBI officials could be asked to participate in the workshop and educate participants about simple ways of detecting fake notes. Mr. Ravindranath said that his bank was in consultation with the RBI for conducting the workshop. According to some other bankers, fake notes are usually in circulation in bars and restaurants, mining companies and other places of work where a huge labour force is concentrated......
Pass The Loan Or Face The Bullet
This is an article in the latest India Today, which must open the eyes of RBI/NABARD/Govt and indeed all stake-holders and address the problem before our banker collegues get into deeper problems.
- K C Shashidhar, CGM, NABARD, Mumbai
……….."Banks are given a target figure for granting Kisan Credit Cards (KCC) as soft loan to farmers. This is a priority area, and though targets are seldom achieved, managers feel the threat of transfer or other tough action if they don't achieve at least 50 per cent of the goal. Unscrupulous intermediaries use these circumstances to their benefit, arrange loan seekers and bag a 'cut' in the process. The trouble begins when the go-betweens get greedy, and produce people with fake identity and land-ownership papers, and then put pressure on us for loans. More often than not, we bow to their wishes. After all, they are goons, and the state government doesn't give us any security," explains a manager of a branch in rural Patna………..
Economy still fundamentally strong, positive surprises in offing: Deutsche Bank
..... we are cautiously optimistic that between the finance ministry and the RBI, at the very least infrastructure spending, will be revived and some monetary easing would take place.
RBI Governor Subbarao to appear before JPC on 2G
RBI Governor D Subbarao, who was the Finance Secretary when 2G licences were allocated, will appear before the Joint Parliamentary Committee examining the issue as a witness on September 18. He was the Finance Secretary between April, 2007 and September, 2008. The controversial 2G radiowave licences were allocated in January, 2008.........
Will Chidambaram stick to Pranab's choice?
Finance Minister P Chidambaram will soon have to decide whether to stick by his predecessor’s choice of former Reserve Bank governor Y V Reddy for chairmanship of the 14th Finance Commission, to be set up next month. Reddy’s name was suggested by the finance ministry during Pranab Mukherjee’s tenure. Earlier, former economic affairs secretary R Gopalan’s name for one of the members of the Commission was doing the rounds but now officials say he might not be the part of the body, to recommend on sharing of funds between the Centre and the states for 2015-20.......
Urgent need to act on fiscal front to stabilize economy: former RBI Governor
At a time when the markets and investors continue to await action from the government on various fronts including on fuel prices, former RBI Governor, Dr. Bimal Jalan feels there is an urgent need for the government to act, particularly on the fiscal front. He feels that politics and political compulsions are continuing to come in the way of economic progress and calls for political reforms to ensure smoother functioning of the economy.......
Needed: Financial literacy for regulators
There are thousands of similar customers who have been looted by these insurance companies. I am sure IRDA gets hundreds of such complaints every day. Why is the regulator not taking any action against such fraud in the country? I am a well-educated MBA from IIM-Ahmedabad, having been taught by Mr Rangarajan, Dr KP Krishnan and such seniors…”
Read - Moneylife
Whitewashing the banking sector
What’s the real level of non-performing assets (NPAs) in the Indian banking system? NPAs, or loans defaulted by borrowers for a period of 90 days, could be more than double of what has been already announced by the banks as they have found a way out to repackage the problematic loan accounts and brush them under the carpet..........
Read - Indian Express
Read - Indian Express
Economics vs politics
..... If rating agencies are not convinced there is a credible plan to fix the fisc, a rating downgrade taking India to junk level looks likely. Though the RBI Governor has said India will be able to manage, this seems more like wishful thinking.....
Read - FE
RBI permits investment in Pakistan by Indian corporates
....."It has now been decided that the overseas direct investment by Indian parties in Pakistan shall henceforth be considered under the approval route," RBI said in a notification. The moves comes days after India allowed investment from Pakistan. ....
Friday, September 7, 2012
An MRI on health of the economy - S S Tarapore
....Till the late 1980s, the approach was that the RBI should reveal the bare minimum required by law and secrecy was the hallmark. Progressively, a more enlightened approach emerged and the RBI now provides a more meaningful presentation. The RBI Accounts and Balance Sheet provide a Magnetic Resonance Image (MRI) of the health of the economy and is very different from a corporate balance-sheet. When the RBI balance-sheet swells, it invariably portends a difficult situation for the economy. Quite often, an increase in the RBI profits is a cause of concern and the payment of dividend (by way of the surplus transferred to government) is no different from created money.......
How RBI steers four horses that pull in different directions
.....In India, the Reserve Bank of India (RBI) has multiple and conflicting objectives to manage. It has to manage inflation, growth, rupee and government of India’s borrowing programme. If RBI tries to lower inflation by raising rates, growth falters. If RBI tries to revive growth by cutting rates, rupee can depreciate. If RBI supports the borrowing programme, inflation can move higher. If RBI raises rates to defend the rupee, growth can suffer. Every action of RBI in managing one objective has some bearing on another objective.......
RBI should lay down entry norms for new banks, says Rangarajan
....“If the Indian banking system is to remain competitive over time, there should be periodic entry of new banks, a closed system can only become oligopolistic,”.......
Risks to financial stability have worsened, says RBI
.....“(In India) downside risks to financial stability have worsened due to global and domestic factors… there is increasing evidence of deteriorating asset quality (in the banking system),”......
Read - Mint
CRR: The proxy war between FM and RBI
If the CRR is, god forbid, indeed taken away,
it will be a cardinal sin, the saddest day for the economy
.....Under current rules RBI doesn’t have the power to pay interest on CRR. This power was taken away from the RBI through an amendment to the RBI Act in 2006, an amendment which RBI itself suggested. Old timers say RBI gave up this power, only because as long as it has the option to pay interest, bankers will always lobby for it . In fact, that the CRR is really a battle ground between RBI and finance ministry is best evident from the war between the two institutions when these amendments were passed in 2006. That Amendment bill brought a bunch of changes. Hitherto the CRR could not be cut below 3 percent, but the law said that RBI may pay interest on CRR above 3 percent, if it wishes. The 2006 amendment removed the 3 percent lower limit. RBI argued CRR could go to zero if the situation warranted, but at all times it won’t pay interest – a clever move that the finance ministry apparently realised only after the amendment was passed......
CRR, a tool for rare use: Rangarajan
The country needs to move towards a situation where Cash Reserve Ratio (CRR) level comes down and that it is used as an instrument of “credit control” only in extraordinary conditions, said C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, on Thursday. As “Open market operations (OMOs) became increasingly major instrument….The role of CRR, as credit control, will come down,”......
Read - The Hindu CRR is not beyond debate.....but the last word is RBI’s
Apropos the issue of whether we need the cash reserve ratio (CRR) or not, Deputy Governor K C Chakarbarty needs to rethink his position that regulatory issues need not be subjected to debates. If the Constitution of India can be amended 116 times over 62 years, why can’t we consider changing the regulatory framework?................
......From the Reserve Bank of India’s (RBI’s) perspective, CRR is vital for controlling liquidity in the system. And indeed RBI should have the final say on the issue since CRR is part of the monetary policy, which is the sole preserve of RBI.
Use CRR only as last resort: Rangarajan
Rangarajan says CRR should be reduced
The chairman of Prime Minister’s economic advisory council, C Rangarajan, has added to the debate on banks’ Cash Reserve Ratio (CRR), saying it should be brought down and used only in extraordinary conditions. He said the need for using it reduces with the option of Open Market Operations (OMOs) in place.....
Read - BS
SBI expects 1% reduction in CRR on 17th September
..............Explaining the rationale further, Chaudhuri said the total incremental income to SBI will be only around Rs100 crore in case of a repo cut. "That is why when RBI raised the rates three times, none of the banks moved the rates. So, I will say though repo rates and base rate move in the same direction, the correlation is very weak." The statement comes in the middle of a row he started last week by calling for abolition of the CRR, saying this would release the much needed funds to the system.
Read - Moneylife
‘Stake dilution in public sector banks poses political problem’
....“The other alternative of reducing the share of the government in public sector banks poses difficult political problems,” Dr. Rangarajan said addressing a financial summit here. His comments come within two days of Reserve Bank Governor D. Subbaroa stating that if the government decides to maintain its stake at 57 percent, it will have to pump-in Rs.90,000 crore while if it decides to bring it down to 51 per cent, it would need to infuse Rs.70,000 crore......
RBI advises against gold investment
On a day gold prices touched a new high, the Reserve Bank of India (RBI) urged the public against choosing gold as an asset for savings or investment. "Because interest rates are very low, people are investing in gold. But the poor should never invest in gold for whenever they have purchased gold, it either lands up in the temple or in the hands of the moneylender or, at the most, it may be given away during a daughter's marriage," said K C Chakrabarty, Deputy Governor, RBI.......
GMLA not applicable to NBFCs under RBI Act: HC
.....According to section 5(2) of the GMLA all NBFCs registered under RBI Act and operating in Gujarat come under purview of the GMLA They will have to report to the Registrar General of Money Lenders. The Court held that this was in direct interference with the institutions which are registered under the RBI Act. The state law was encroaching upon the RBI Act which is a central act. The section 5(2) of the GMLA is against the Constitution of India as it seek to have control over all NBFCs already registered under the RBI Act. "The GMLA will not be applicable to all NBFCs registered under RBI Act," the court held.......
LIC's 11% SBI stake makes RBI see red
.....The Reserve Bank of India (RBI) has conveyed its discomfort to the bank’s management, according to a top SBI official. “These are two big institutions. RBI is not comfortable with two large institutions having a cosy relationship,” the official said. A top RBI official also confirmed the development. “Any institution that wants to have more than five per cent stake in a bank needs to have our prior approval, even if the stake is acquired from the secondary market,” the RBI official said. “We don’t want the banking sector to have too much capital from volatile sources,” he added.......
'Banks should give replacement before leaving a consortium'
...The panel was also formed to increase the information sharing process within banks in the consortium because the finance ministry is of the view that despite the Reserve Bank of India (RBI)’s repeated requests, there is an asymmetry in information among banks and the companies have been taking advantage of it............
Manage your credit well to curb NPAs: RBI to banks
.............“Overall improvement in the risk management systems, upgrading technological platforms and building up of specialised skills in the banking system are the challenges which will distinguish the more successful ones from the others. It is important that competitive pressures are not allowed to override basic prudence,”............
Sinha backs call for higher NPA provisioning
Reserve Bank of India (RBI) Deputy Governor Anand Sinha has backed the Mahapatra committee’s recommendation of higher provisioning for restructured assets. Banks, however, had opposed the proposal, saying this would lead to a sharp rise in bad assets.........
RBI: Do not differentiate between depositors
The Reserve Bank of India (RBI) has told banks not to differentiate between high-value depositors and small depositors. “There can be reasonable difference (in the interest rates), but it shouldn’t be large,” said Deputy Governor K C Chakrabarty...........
RBI Deputy Guv for Less Disparity in Deposit Rates
...."We at RBI would want banks to offer more or less similar rates to all depositors, although a reasonable difference is fine," the senior most Deputy Governor told a gathering at the MR Pai memorial award function (the award was given to women's self-help group Sewa). The late MR Pai was a crusader for the rights of bank depositors.....
ECB action could help trim CAD: Chakrabarty
...."Yes, the bond-buying programme announced by ECB today could increase the fund flows into our economy. If it happens, which is likely, then it can help bring down our high current account deficit (CAD). From that point, the move is good for us but it also can increase commodity prices," ......
Revised guidelines on priority sector lending – rationale and logic - K C Chakrabarty
.......The priority that senior management of banks accord to priority sector would determine the success of our efforts in this area. Without this commitment, it would not be possible to accomplish this task. Let me assure you that the top management at the Reserve Bank is fully committed to this goal, as is evident from the amount of time we spend on this subject at our meetings and outreach visits and the number of enabling policy initiatives that we have taken in this regard. Financial inclusion and priority sector credit are closely interconnected subjects as financial inclusion is the process and priority sector loans are the business effect/ end product of the same in the books of the banks. If we are doing financial inclusion, then these targets are achievable, if not, then these are not. The new guidelines, then, is the new mantra...........
National Housing Bank to introduce guidelines for non-banking housing finance cos.: Chairman
......``Besides, the lending sector cannot lend beyond a certain point due to capital constraints and with securitisation they would be enabled to continue to lend and can come over all constraints if they are able to securitise,`` said Verma while releasing an ASSOCHAM study titled `Securitisation: The Emerging Funding Vehicle` along with A.K. Choudhary, General Manager, Department of Banking Operations and Development (DBOD), Reserve Bank of India; S.C. Aggarwal, chairman, ASSOCHAM Capital Market Committee........
Read...........
PERFORMANCE OF THE INDIAN RUPEE
..........In terms of managing the currency, the Reserve Bank of India (RBI) has been unique in that it has been following a flexible exchange rate policy in the last couple of years (except for the heavy intervention in the three months to January 2012). The current stance is significantly different from the rigid stance of the pre-1991 period. This flexible stance led to a significant ................
India's banks face tough period
I
ndia's struggling banking sector will face a period of lower profitability as it seeks to raise at least Rs 5,00,000 crore (USD 90bn) in extra capital to meet the new Basel III international banking standards, the head of the nation's central bank has warned...........
Indian Banks Have Catalyzed Growth: Now They Have to Grow
....."If the economy grows 8%, 9% or 6.5%, the banking sector will grow at at least two-and-a-half times the rate of India’s GDP growth. The sector could grow 16%-to-24% per annum year-on-year for the next decade. That means by 2020, we as a sector can be five times what we are today. So the growth opportunity is huge.".........
1/3rd of new ATMs should be visually-challenged friendly: RBI
...."It has been brought to our notice...that visually challenged persons are facing problems in availing banking facilities like internet banking... Banks are, therefore, advised to strictly adhere to instructions... and extend all banking facilities to persons with blindness, low-vision and other disabilities.," ......
Fraudulent debit card transactions on the rise in AP
Fraudulent Internet debit card transactions are on the rise in the state and form the second highest among the complaints being received by the Banking Ombudsman after the disputed ATM transactions. In this case, the additional security feature — an instant password sent to customer’s mobile phone at the time of every transaction — provided by the banks to check such instances has also become the target of the fraudsters, according to M Sebastian, Banking Ombudsman of Andhra Pradesh...........
Credit card usage 30 times that of debit card payments annually: RBI
Indians use a credit card for an average payment amount of about Rs 55,000 in a year — which is nearly 30 times the money spent through debit cards. However, the number of debit cards in the country is more than 15 times than that of credit cards, shows an analysis of data available with Reserve Bank of India............
Read - HBLNo debit cards please, we're Indians
Indians use a credit card for an average payment amount of about Rs.55,000 in a year — which is nearly 30 times the money spent through debit cards. However, the number of debit cards in the country is more than 15 times than that of credit cards, shows an analysis of data available with Reserve Bank of India........
Swiping with value additions
| ON THE CARDS |
|
Read - BS
How to beat a cheque-stealer
How can you beat the crook who stole your cheque from the bank’s drop box? Easy. Write down the account number of the person after his name in the column ‘Pay’ on the cheque leaf. The Banking Ombudsman (Delhi, J&K and some parts of UP and Haryana), M. Rajeshwar Rao, toldBusiness Line: “People, while depositing, do write the name, account number and phone number on the reverse of the cheque. However, when the cheque is sent for clearance, normally the front portion is photocopied or scanned and sent. If details are ok and there is no alteration, the cheque is cleared.....
Thursday, September 6, 2012
World Bank appoints Kaushik Basu as chief economist
...."Having worked in ministry of finance, in addition to his impressive academic achievements, Kaushik is uniquely suited to help us offer evidence-based solutions and advice to client countries and provide innovative excellence in leading our development research,” ......
Short-Term Sacrifice for Long-Term Growth - Duvvuri Subbarao
NEW YORK, August 29, 2012 — Dr. Duvvuri Subbarao, Governor of the Reserve Bank of India, defends his monetary policy and offers his reasons why potential investors should be optimistic about the Indian economy.......
RBI rules out allowing mobile wallet facility by mobile operators
.....RBI Deputy Governor HR Khan on Wednesday ruled out allowing mobile network operators (MNOs) from offering cash-out or mobile wallet facility unless they convert their services as banking business correspondents, reports PTI. "We don't want to permit cash-out facility by the mobile network operators. We are very clear that they should not bypass the banking regulations. However, mobile wallet facility can be given to them if they work as business correspondents of banks," Khan told reporters, at the second day of the FICCI-IBA banking summit.....
RBI cold to mobile wallet
| HUMBS DOWN TO VIRTUAL MONEY |
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Read - BS
‘Mahesh Bank Teachers’ Awards
........Shri M.Sebastian, Chief General Manager & Banking Ombudsman, RBI, Hyderabad has emphasized the need of financial literacy to the student in addition to the text book education, which is very important in the human life. The World is behind financial education and RBI emphasizes the literacy on financial system. Sebastian felt that financial literacy should not be confined to the financial institutions but also to extend to the teaching community since teachers have greatest influence on the minds of students. Teachers play a major role in shaping the young India and good facilitator to the student as well, Sebastian avered. He complimented the entire team of Mahesh Bank for instituting Mahesh Bank Teachers’ Award and said that this event should continue as an annual feature henceforth. Sebastian conveyed greetings to the teaching community on the Teachers Day.........
3rd Annual get-together of EXRBITES
As you know our Group EXRBITES was founded on 24th September, 2009 and has completed 3 successful years. The credit for which goes to all the members. Today we can say proudly that EXRBITES has come a long way. While on our first annual day we were only 60 with 22 from Chandigarh, today we are 301 from all over India and abroad, with 54 from Chandigarh alone. Like earlier two years we propose to celebrate our Third Annual day also in a grand manner. To celebrate the event in a befitting manner we propose to arrange a contributory lunch-on family get-together in Hotel Shiraaz II, SCO 15, Sector 5, Behind K C Theatre, Panchkula between 11 am to 4 pm on Sunday, 30th September, 2012. The contribution for the same will be Rs. 250/- per head. Those who are interested may please convey their acceptance and number of persons to the undersigned by phone/SMS or email as early as possible but in any case not later than 23rd September, 2012. You are welcome to bring your friends if you think that they can be our prospective members. Please feel free to send your suggestions to make the programme a success.
with regards,
Madan Gauria
Moderator
Exrbites
Tel: 0172-2666780, 09569172198, 09915106631
email: madan.gauria@yahoo.com
Serving or retired.... doesn't matter.................
Dearth of coins: Fact or fallacy?
....The RBI has identified “distribution” and “delivery” as the constraints leading to shortage of coins and currency notes across markets in the country. “We have identified that distribution is an issue in this respect even as the last mile delivery has also been a problem,” the RBI Deputy Governor said. Distribution of coins and currency notes across six lakh villages in the country is not an easy task and it depends on the network available. “Even banks do not have such a network”, the RBI official said......
Read - The Shillong Times
SLBC panel identifies steps to boost CD ratio in Karnataka
......The sub-committee in its recommendation to the SLBC has suggested that lending to agriculture allied activities like dairy, poultry, horticulture (fruits and vegetables) should be given priority. The other recommendations are credit flow to Micro, Small and Medium Enterprises (MSME) units through adoption of clusters identified by United Nations Industrial Development Organization (UNIDO) in the state should be accelerated. Housing sector also offers scope for higher credit dispensation.....
Missing the punchline
On Tuesday, reporters raced each other out of a banking summit in Mumbai to file their stories without waiting for the punchline. The unlikely humourist was D. Subbarao, governor of the RBI, a rather humourless institution. But when the economy is a black joke — black as coal, in fact — he can perhaps be excused his attempt to lighten up........
Money supply
With reference to the article, “RBI allows too much money supply” (Business Line, September 5) it should be noted that at times of unyielding inflation, money supply in the system should be such as to enable people to buy essentials of daily needs without difficulty. The present availability of money is quite reasonable in relation to the prevailing inflationary situation and commodity prices. The substantial fall in savings deposits in banks in recent time would vouch for the above fact. The lack of enough cash in hands when commodity prices rule high would cause immense hardship to the common man.
- T.R.Anandan, Coimbatore (HBL)
RuPay cards to be acceptable at all PoS terminals by January
......"The RuPay will be acceptable in all PoS terminals from January, which is at present accepted in 48,000 merchant terminals," AP Hota, managing director and chief executive of NPCI told reporters on the sidelines of a banking summit organised by FICCI and IBA......
For Bankers, work-from-home benefit staff & boost profits
In an age when the working class spends at least a couple of hours a day commuting either on busy roads or in overloaded trains and metros, flexiplace working is considered progressive HR. Now, a clutch of foreign banks operating in India has realised that allowing people to work from home is not just employee-friendly but employer-friendly too........
Read - ET
Self-service — add it to the banking lexicon
This comes as a whiff of fresh air, for sure. Banks are encouraging customers to take up the concept of self-service in India in a big way. Though at an early stage, the technology is being used to reduce customer traffic at bank branches and let employees focus more on serious banking services...........
ICICI working on technology to offer transaction services through Facebook
ICICI Bank will soon add another digital platform for dispensing its banking transaction services — Facebook. The country’s largest private sector lender was the first bank in India to use the social media site to provide services such as account enquiry and cheque book request. Now it is preparing to take this initiative one step forward by offering transaction services to its Facebook customers. This is part of its efforts to provide its customers next gen banking solutions in line with its Khayaal Aapka (your care) philosophy..............
Across the board
Foreign institutional investors (FIIs) have been worried about the rising debt levels of India’s large business groups for some time. But their latest concerns focus on the presence of the chief of a major infrastructure group on the board of the Reserve Bank of India (RBI), which regulates the banking sector. He was inducted last September for a four-year period.........
Debate on CRR
A formal debate on whether or not to continue with CRR would be most welcome. CRR is an important monetary tool in the hands of the RBI to control liquidity in the system, both in terms of maintaining a reasonable level of inflation and having conducive interest rates for the growth of the economy. From the bankers’ view point, CRR is presently not fetching any value and their concerns are understandable as income, profit and resources are all now under serious strain.
- S Umashankar, Nagpur (HBL)
RBI needs CRR
This refers to your edit “Debating cash reserve ratio” (September 4). At a time when the Reserve Bank of India (RBI) has been fighting a persistently stubborn bout of inflation in the country, the debate on the relevance of the cash reserve ratio (CRR) is unfortunate. RBI has kept multiple tools of credit control to address multiple objectives and the CRR has been used to manage structural changes in liquidity. Although liquidity can be managed through open market operations, the inadequate size and lack of depth in the Indian bond market limit the potency of that tool. Even if the banking regulator agrees to do away with the CRR, the funds that are released to the banking system cannot supplement the liquidity position of banks. Perhaps one way to pacify banks is to reintroduce interest payable on such deposits held as CRR with the central bank.
- K V Rao Bangalore (BS)
CRR cut will enable bank to reduce base rate: SBI chief
State Bank of India Chairman Pratip Chaudhuri again made a strong pitch for a reduction in banks’ Cash Reserve Ratio (CRR) at the Reserve Bank’s mid-quarter review of monetary policy scheduled September 7....................
The hidden truth to PSB profitability
........What makes the situation worrisome for state-owned banks is the inadequate provisioning for these bad loans. In 2009, the Reserve Bank of India (RBI) had made it mandatory for banks to put aside Rs 70 for every Rs 100 that had become an NPL. Last April, the central bank unexpectedly relaxed the norms on this provisioning coverage ratio (PCR), under which banks were not required to maintain a PCR of 70 per cent for bad loans after September 2010..............
‘Investors should put money in fixed income avenues’
......“As a result, inflation is likely to rise in the coming months. So we are not hoping for the RBI to announce any cut in repo rates in 2012. There are possibilities of a 25 basis-point cut between January and March of 2013. At present, RBI is not decreasing the rate as inflation will not come down with that, and it might increase further. On the contrary, growth will be hampered. So they will continue the current rate levels till end of 2012,” ........
RBI has no FDI data of Wal-Mart's Rs 455 crore in Bharti unit
US retail giant Wal-Mart Stores Inc has invested Rs 455.8 crore in a subsidiary of Bharti Ventures in 2010 via its Mauritius arm but the RBI has no FDI data of the same, Parliament was informed today........
Read - ET
Read - ET
The usurers in AP are back in business
Two years after Andhra Pradesh cracked down on micro-lenders with a stringent new law, the usurers are back in force and poor borrowers are in danger of sliding into their clutches......
Read - Mint
Aphro Trust scam: Cops issue alert for kingpin
CHENNAI: A look-out circular has been issued against I P Yesudoss, managing director of Aphro Trust. The trust had, in violation of RBI guidelines, allegedly collected money from several people after promising to secure loans for them............
Read - TOI
Read - TOI
Wednesday, September 5, 2012
Deveshwar appointed on RBI board
New Delhi, Sep 4 (IANS) The government has appointed ITC chairman Y.C. Deveshwar as a director on the central board of directors of the Reserve Bank of India. A notification to this effect was issued by Vijay Malhotra, undersecretary in the finance ministry. Deveshwar's appointment will be for a period of four years.
Profile........
Profile........
‘Language plays important role in financial inclusion’
.....Meena Hemachandra, Principal of College of Agricultural Banking, said that banking is a business related to all people, and requested all to use Hindi extensively. They should not be overly mindful of the fact that they are unable to find the exact words to use......
Basel III to benefit Indian banking system: Subbarao
.........“The moral hazard relating to too-big-to-fail institutions which encourages risky behaviour by larger banks has been a huge issue on the post-crisis reform agenda,”......
RBI allows too much money supply - A.Seshan
........Carrying the imprimatur of the Central Board of Directors, the Annual Report of the Reserve Bank of India (RBI) is perhaps its most authentic statement on the state of the economy and the possible solutions to the various problems faced in almost every sector........
RBI expresses helplessness on shortage of coins of rupees one and five
Have you been blaming the Reserve Bank of India (RBI) for the changes in currency and the fact that the Rs2 coin looks like the Re 1 coin, the 50 paise coin like the demonetised 25 paise coin, etc.? RTI (Right to Information) activist Subhash Agarwal has discovered that the blame lies with the finance ministry, Government of India...........
Govt mints more two rupee coins in 2011-12
......The RBI has replied that the production of these coins was also increasing and their availability would improve. It has, however, declined to say anything on the design of the one rupee coin which the activist has found to be very similar to the 10 paise coin. Instead it has directed him to take up the matter with the Government of India since the design is done by them.
Engine trouble in India
....“The persistence of inflation at a high average rate of 9% during 2011-12 further atrophied financial saving, as households attempted to stave off the downward pressure on their real consumption,” said RBI in its annual report, and added: “The trend of falling savings rate, particularly that of public sector savings, needs to be reversed for adequate resources to be available to support a high-growth trajectory during the 12th Plan”........
Two-speed economy
.....The lack of growth in industry is also seen in the credit numbers for banks. The latest Reserve Bank of India data shows that growth in bank credit to all types of industry—micro and small, medium, and large—has been zero this fiscal. Between 23 March and 27 July, there has been absolutely no growth in bank credit to industry.........
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