......True, RBI’s task is difficult due to high government borrowings and inflation-induced distortions in demand-supply of capital. Government borrowings from the market to finance nearly two-thirds of its fiscal deficit are forcing RBI to constantly buy bonds. The measures taken last week do little to directly address the fiscal gap......
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.
Thursday, September 20, 2012
Guj likely to have common BCA for financial inclusion
......“Every bank either appoints an outside agency or they go on their own for business correspondent programme. But for better penetration in the remote areas and achieve set targets, a common business correspondent for the entire state is being considered,”......
RBI for no agency business to private banks for three years
......In a letter to the Reserve Bank of India (RBI), the finance ministry has said that for the next three years no private sector bank will get the agency business of the centre and states, pegged at about Rs 20,000 crore......
We must encourage foreign direct investment rather than more debt
......The recent relaxations in the external commercial borrowings (ECB) guidelines announced by the Reserve Bank of India (RBI) favour soft, but potentially risky, options over harder, but more prudent, options.......
RBI mulling financial products to check gold imports
NEW DELHI: Concerned over rising gold imports, the Reserve Bank today said it is planning to come out with financial products on the lines of gold ETFs to give options to investors to take advantage of price movement in the precious metal. "...We can provide people with financial attraction of gold without them having physcally own it. That would in a sense reduce the pressure on imports. So ETFs are one such," RBI Deputy Governor Subir Gokarn told reporters on the sidelines of a PHD Chamber event here.......
The M-Banking Leader
......After RBI removed the Rs 50,000-per-day cap on m-banking transactions, banks are trying to push this service to all corporate clients. What’s driving them? M-banking costs a tenth of what a bank spends at a branch for a similar transaction.......
Wednesday, September 19, 2012
Way to Go, Guv
This refers to ‘Governor Does His Bit’ (ET, Sep 18). The RBI Governor will be praised for his persistent efforts and consistent policy stance in his recent monetary policy reviews. He hasn’t neglected the underlying growth-inflation dynamics but has been pragmatic enough to provide a complementary monetary policy action through reduction in CRR by 25 basis points. It’s time for Indian economy to have monetary and fiscal policies working in tandem so that its economic ills are ameliorated, improving the conditions for economic growth keeping the inflation at a tolerable threshold.
- RAMAN KUMAR AGRAWALLA (ET)
RBI Governor meets Chidambaram
...... "You have to wait till October 30. I can't say on September 18, what we will do on October 30. I discussed some purely administrative issues with the Finance Minister. There was no discussion on policy".......
RBI issues guidelines on banks' illiquid assets
......The guidelines on which comments are invited till 19th October, permit banks to follow any recognised model or method for computing the amount of valuation adjustment. RBI said that illiquid positions are generally disposed of at much lower price than the value reflected by banks in the books of accounts as per applicable accounting standards.......
‘Liquidity should not be a constraint to economic activity’
The Reserve Bank of India does not want liquidity to be a constraint to economic activity, said Subir Gokarn, Deputy Governor, explaining the rationale for the Cash Reserve Ratio (CRR) cut announced on Monday.......
Supporting policy needed to lower biz risks: Subir Gokarn
R
Read.....
egulators need to maintain a balance between regulation and innovation as per local requirements, RBI Deputy Governor Subir Gokarn said today as he pitched for a supporting policy framework to lower business risks......
Read.....
India cbank says bond purchases remain option despite CRR cut
......"Open market operations have always been very tactical when situation has been tight. When we've felt that the pressure might persist, we've used OMOs and that option remains," ......
Read......
Read......
'No actual monetary loss to the govt'
......This is not the first time Subbarao has defended Chidambaram. The former finance secretary had maintained his stand on the same issue before the Public Accounts Committee. Subbarao also said he disagreed with the controversial note prepared by the finance ministry for Prime Minister Manmohan Singh, which said Chidambaram should have insisted on auctioning of 2G spectrum......
Indian economy – imperatives for second generation reforms
Address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at the inaugural session of the State level seminar, organized by the Department of Economics of the Vivekananda Education Society’s College of Arts, Science and Commerce, Mumbai, 14 September 2012
......The regulation and supervision of the financial system in India is carried out by different regulatory authorities. The Reserve Bank regulates and supervises the major part of the financial system. In the past five decades, the Indian banking system has traversed through a difficult path endeavoring to balance several competing and conflicting demands on it from large, medium, small and tiny borrowers in both the organised and unorganised sectors. The banking system’s activities were initially tightly regulated and their freedom was restricted. It also confronted several domestic stresses and external shocks. However, the regulations have changed over time to ensure that the banking system steps out ......
Read.......
Don't sit on our changes: Chakrabarty
...... “What we call operational efficiency of the banks, that is one thing that should happen,” Chakrabarty said. On the larger economy, he said unless there were institutional reforms, policy reforms would not percolate downward. “My view is that a lot of things need to be done at the government level, state government level, at RBI level. But what has been done, its full benefit has not been taken by the people. Reform is not taking place at the individual level,”......
Thank the SBI chairman .......... and RBI’s caution
......The empirical evidence presented by Chaudhuri seems to have convinced not only RBI, but also top experts like C Rangarajan and Montek Singh Ahluwalia who are now unequivocally endorsing the relative superiority of a CRR cut as a policy instrument for inducing lower lending rates.......
....... To put it in a nutshell, it is a cautious policy announcement that intends to strike a fine balance between growth and inflation.
CRR cut contraindicated
Apropos the edit on the Reserve Bank of India’s (RBI’s) announcement of a cut in the cash reserve ratio (CRR), one wonders at the rationale, if any, for the injection of Rs 170 billion into the system that will eventually become larger owing to the workings of the money multiplier (“RBI does minimum,” September 18). The RBI review admits that liquidity conditions have remained comfortable. But it expects the situation to be tight in the context of the expected pick-up in credit growth in the so-called busy season, advance tax payments and the festival-related currency demand. But there is no evidence to support these premises if one looks at the trends in the economy relating to the underlying variables. It is a moot point whether the CRR cut will lead to a reduction in lending rates without affecting deposit rates. State Bank of India’s net interest margin (NIM) was 3.85 per cent as on March 12, 2012. The domestic and foreign NIMs were 4.17 per cent and 1.70 per cent, respectively. The bank’s Indian customers are subsidising their foreign counterparts. SBI has been at the vanguard of the demand for the reduction, nay, abolition, of the CRR! Those who argue for growth over price stability should note that inflation has affected savings, especially in financial assets. It is wiser now to borrow to finance the purchase of a house rather than try to save the amount over a period. In an inflationary situation, the borrower gains at the expense of the lender.
- A Seshan Mumbai (BS)
Banks not passing benefits of rate cut to borrowers: RBI
According to RBI Deputy Governor Chakrabarty reduction in policy rates will not serve any purpose unless banks bring down their spreads and pass on the benefits to borrowers........
Read - Moneylife
Read - Moneylife
Dr Chakrabarty’s concerns are shared by most bank customers. But here bankers and policy makers will say market forces are at work. If banks can accept deposits at very low rates and lend after retaining a 3 to 5 per cent Net Interest Margin why should they work harder to improve their working in favour of their clientele?
- M G WARRIER
Role of Monetary Policy in fiscal ability a global debate
......"It is not surprising, therefore, that the RBI, which is emerging as a role model for monetary stability, has decided to wait and watch till, perhaps, the second Quarter Monetary Policy review in October, for any further cut in policy rates"......
One-Minute Guide | Cash reserve ratio
I am part of every scheduled commercial bank’s overall cash balance. I am that portion of the banks’ net demand and time liabilities or deposits which needs to be kept in a current account maintained with the Reserve Bank of India (RBI).......
Read - Mint
RBI Monetary Policy: Calculated pause or characteristic freeze?
......Writing a foreword to a book authored by former Governor of Reserve Bank Y V Reddy, Andrew Sheng, the former Chairman of Hong Kong Securities and Futures Commission explains why Asians instinctively "freeze" when they encounter a crisis. Has RBI made a calculated pause or sensing a crisis has it frozen?
Read........
RBI stands pat, but may soon have to sprint
......Yet, India Inc need not turn to the wall and sob. At least, not yet. For, the RBI’s small move on Monday may just be the trailer with big action to come the next time round. Yes, the RBI may be blinded by its concern over inflation, but it cannot be deaf to the clanging alarm bells on low industrial output growth......
Rate cut demand, an obsession - M.Y.Khan
The Reserve Bank’s policy announcements would go a long way in silencing the hue and cry over decreasing the repo rate and the reverse repo rate in order to make available cheap bank credit. The recent increases in interest rate have been a cause of stress for the business community. But investment is not directly impacted by interest; it is affected by profit. Therefore, the clamour for lowering rates seems overstated, and the RBI, perhaps realising that, has responded appropriately by reducing only the cash reserve ratio (CRR)......
Sceptical of reforms, will RBI cut rates in October?
......“I am very confident that between now and October 30, since the government is expected to take a number of additional policy measures and also lay out the path of fiscal correction, the response of RBI on October 30 will be far more supportive of growth,......
Understanding RBI's move to slash cash reserve ratio
......Undoubtedly Governor Subbarao is not taking his eyes off the inflation rate, which is still not in the comfort zone. In the latest monetary review, RBI has kept the repo rate unchanged at eight per cent.......
Subbarao says he could have done better
A simmering political cauldron, stoked by the recent decisions of the Finance Ministry to hike fuel prices and FDI limits in retail, is likely to now boil over, with RBI Governor D. Subbarao admitting to the Joint Parliamentary Committee (JPC) investigating the 2G scam that he could have performed better in his role as Finance Secretar......
Tuesday, September 18, 2012
Subbarao takes the middle path
RBI: Cautious, careful, correct
The stage was set by the government over the weekend with big ticket announcements - the diesel hike, the FDI opening up, the PSU divestment. All that was required, we are led to believe, to get the party rocking was the RBI " do its bit" to get the crowd on its feet and on to the dance floor. The " do its bit" concerned the one thing that corporate India has consistently asked the RBI to do - cut interest rates. That is the story that marked the weekend, built the expectations and raised the pressure on the RBI as it went into the mid- quarter monetary policy review on Monday. Fortunately, the RBI has not succumbed entirely........
Striking a balance
....The latest policy moves announced by the Reserve Bank of India (RBI) on Monday can be seen in tandem with the reform announcements from New Delhi last week. Together, they should improve investor sentiment in the short term. But not enough has been done to address the longer-term structural problems in the Indian economy....
RBI does minimum
......The RBI’s action should be seen as the absolute minimum it could do in order to express support for the apparent increase in activity from the Central government on reform and fiscal consolidation, without compromising the fight against inflation. Indeed, the RBI’s statement says as much. On its future course of action, the central bank says that “as policy actions to stimulate growth materialise, monetary policy will reinforce the positive impact of these actions while maintaining its focus on inflation management. Only this will ensure that the economy derives the maximum benefit from the recent, and anticipated, fiscal and supply-side policy measures.”......
CRR cut more potent than rate: PMEAC
......"The RBI has taken a cautious step. The latest data on inflation has not been encouraging...Under the circumstances, I believe this (25 bps reduction in CRR – cash reserve ratio) is the maximum the Reserve Bank could have done," ......
RBI issues guidelines on treatment of banks' illiquid assets
The Reserve Bank today issued draft guidelines on prudent valuation of banks' long-term assets which are illiquid in nature. "The prudent valuation adjustment for illiquid positions has assumed greater importance in the wake of the recent financial crisis," RBI said in the draft supplementary guidance.......
Water purifier donated to school lies idle
.....Mr. Subba Rao procured a purifier from Mumbai to donate to the school in keeping with his promise to provide safe drinking water to the students. The students with poor social and economic background, told Mr. Subba Rao during his visit to the school a couple of years ago, where he had studied up to VII standard, ......
RBI plays wait-and-watch game as politics dominates
......Considering the state of the Indian economy and governance, the reforms did not merit immediate rate action. Market and economy watchers should be patient and wait for FDI — “foreign direct investment” — approvals to go through. Perhaps Subbarao was watching the political game instead of succumbing to the excitement of the moment.......
CRR cut a welcome step in right direction: Montek
......"..What RBI has done is that they have acted in the market by releasing resources. It is the release of resources that will make an impact on the rest of the system. It is a step in the right direction, "......
Analysts says CRR cut indicates RBI's concern on growth
Analysts and economists have welcomed the RBI decision to keep the rates unchanged in view of the sticky inflation and increase the liquidity with a marginal CRR cut, saying an interest reduction is a bit too far off as the positive impact of the reform measures will take a while to materialise.......
Lending rate to pinch less
| RATE CUT MUST WAIT BUT DOVISH TONE IS HERE |
 “Given the comfortable liquidity and the recent reduction in deposit rates by banks, interest rates in general could be expected to trend downwards gradually”Chanda Kochhar MD & CEO, ICICI Bank |
 It is a positive move but not to the extent we hoped for. It shows that RBI is willing to respond. Our asset liability committee will meet tomorrow to take a call on interest ratesPratip Chaudhuri Chairman, State Bank of India |
 “Everyone was expecting a rate cut this time. However, RBI seems to be waiting for inflation to soften further. So, probably in the next 6 weeks or so, we can expect a rate cut. Banks have already started lowering rates and a cut by RBI next time will help consumers get relief”Rajeev Talwar Executive Director, DLF |
Read - BS
Sound strategy
......Without in any way discounting monetary policy’s role in supporting the growth revival, the RBI is categorical in stating that continuing inflationary pressures alongside risks emerging from the current account deficit and fiscal deficit constrain a stronger policy response to growth risks. Restricting monetary action to a CRR cut for now is a good idea.......
RBI is giving positive signal; repo cut may come in Oct
......The CRR cut will infuse around Rs 17,000 crore into the system and this infusion is not going to do wonders for systemic liquidity and bank credit growth. However, the CRR cut is definitely a precursor for policy easing in RBI’s forthcoming policy review in October 2012.......
Sorry, no gifts: Why the RBI held back on rate cut, again
......"As policy actions to stimulate growth materialize, monetary policy will reinforce the positive impact of these actions while maintaining its focus on inflation management," ......
Smiling Appa - The Boss
"Hearty GR
Archived..............."
This is a second shocking news within
a short time of two three weeks after sudden and shocking demise of Smt Anitha
Srinivasan GM RBI Chnadigarh. Shri GR Appa was my first boss (Staff Officer) when
I joined RBI in 1974. He was very witty and had a knack to extract the
work very smilingly from his juniors. I would always cherish fond memories of
GR. May God rest his soul in peace and give courage to his family to sustain
the shock.
- Ramakant Kulkarni
Ex.Member
of Faculty CAB Pune and Ex. GM NABARD Pune
Emerging Kerala: Submerged priorities
......Reserve bank of India (RBI) Deputy Governor Subir Gokarn was a lone sane voice in the sound and fury created by the indoor festival that was “Emerging Kerala” in Kochi. He said the state should exploit the inherent strengths while planning for economic development. Kerala has all the potential to develop at par with some of the developed countries.......
Currency time-bomb: Counterfeit notes galore with election in the corner !
......It would appear the very purpose of having test runs with Rs 10 polymer currency notes by the RBI was to see and assess the market reaction and, perhaps, introduce the polymer notes on a gradual basis, if and when a final decision is taken by the government. We need to take care of higher denominations rather than small notes !......
Monday, September 17, 2012
RBI’s prescription for ailing economy
......The most disturbing feature of the whole exercise is the bankers' attitude to these accounts. Governor Subbarao is more blunt when he says: " The general impression I got is that frontline, managers treat no- frills accounts as a nuisance and low income households as an intrusion into their time and business. This is disappointing to say the least. Actually, financial inclusion should be looked upon by banks as an opportunity to build " fortune at the bottom of the pyramid". Outsourcing financial inclusion to other layers may be useful upto a point. Ultimately, these layers have to be integrated with the mainstream banking.
Subbarao's tightrope walk
The govt has shown its animal spirit, but for RBI Governor D Subbarao, the task has become more complicated. Will he cut rates to keep the animal spirit going or stick to his anti-inflationary stance......
An uncommon policy review
......It is a judgement call; but at the risk of sticking out my neck, my hunch is that the Governor will find it hard to not meet the government halfway and announce a small 25-percentage-point cut in policy rates, most likely in the cash reserve ratio, the subject of a hotly-contested debate between SBI chairman Pratip Chaudhuri and RBI Deputy Governor K C Chakrabarty. Though as a die-hard monetarist, I would be happy to be proved wrong !
Read - ET
Hearty GR Archived……
Shri G R Kulkarni, Ex.AGM and In charge of the then CRDC (now Reserve Bank of India
Archieves), Pune expired due to heart attack on September 15, 2012. He was on his
way to Pune Rly Stn. to catch Pragati Express at about 7 in the morning. After getting down from an Auto he suddenly
felt uncomfortable and succumbed
to massive heart attack on the spot. He was 74. He left
behind his wife and two daughters. Funeral took place in Pune on the same day.
Shri Kulkarni joined the Bank in early sixities and had worked in DBOD, DICGC,
Chennai Office, PPD CO and CRDC (during 1995 to January 1998). He had retired as
Asstt General Manager (Adm) from CAB, Pune. He was quite hale and hearty. He was very friendly with all and was
popularly known as "Appa ". May his Soul rest in peace and may
Almighty give strength to bereaved family to bear the loss.
- R.M.Deole & Shrikrishna Purohit (via e-mail)
Banks need to improve systems to protect asset quality: RBI
Indian banks need to improve their systems and processes to identify early any stress on the quality of their loans, the Reserve Bank of India (RBI) said. "Asset quality of banks is one of the most important indicators of their financial health. However, it has been observed that existing MIS on the early warning systems of asset quality, needed improvement," ......
Will RBI tango with govt on Monday?
Though the government surprised people by biting not just one reform bullet but many in just 48 hours over the weekend, the question now is: Will the RBI Governor walk the much-needed monetary extra-mile on Monday or will be weighed down by the 68 bps spike in August inflation?......
Finance ministry to meet bank chiefs today to boost realty lending
......The panel, headed by Ajai Kumar, chairman and managing director of Corporation Bank, is expected to give its report by month-end. Mittal will also attend the meeting of the sub-committee of the Financial Stability and Development Council (FSDC) at the Reserve Bank of India (RBI). The sub-committee is headed by RBI Governor, D Subbarao, in which all financial sector regulators are members. RBI deputy governors also attend the FSDC sub-committee meetings.......
Beware! Fraudsters using RBI to trap innocents
...... RBI never asks for any details about customers’ account,” a Jammu based RBI official expressed. He said that RBI’s official website is www.rbi.org.in adding, “RBI through its website warns people about the cheaters and the phishing emails.” RBI cautious public against fictitious offers, never asks customers about their bank details, he said and added, “if anybody has complaint, it can be lodged to a local police, cyber crime authorities against such fictitious offers of money from abroad and SMSes.”......
Rs 13-cr fake notes in 6 yrs, ICICI Bank puts in plaint
After detecting counterfeit currency with a face value of around Rs 13 crore from all the branches of ICICI Bank, the bank has registered a complaint with Delhi Police. Over the past six years, the bank has received this fake currency notes through its various branches......
OBC launches RuPay with withdrawal limit of Rs 25K
......"RuPay is a domestic branded card and the idea is to make card payment system cost effective. Cost and affordability are the primary reasons for the need of it," A P Hota, Managing Director and Chief Executive Officer of National Payments Corporation of India (NPCI) that governs RuPay system, said.......
Gujarat HC order may set tone for AP court MFI verdict
......“The Gujarat high court order can have a persuasive value on the case, though it is not binding on the Andhra Pradesh high court,” said Bomi Daruwala, a partner at legal firm Vaish Associates Advocates. “The central Reserve Bank of India Act will prevail over the state law on regulation of NBFCs, as ruled by the Gujarat high court.”......
No currency
Sometime ago, Baba Ramdev had suggested taking Rs 500 and Rs 1,000 notes out of circulation as a measure to curb black money. Possible? No, Reserve Bank Deputy Governor K C Chakrabarty told someone who asked the question at an event. Withdrawing these notes and introducing an equal amount of money in lower denominations was beyond the current capacity of the mint, he explained. So, doing this would stall many day-to-day transactions. The question is whether the yoga guru-turned activist will understand this simple truth.
BS
Model education loan scheme set for an overhaul
......Although RBI mandates banks to lend 40 per cent of their total advances, towards agriculture, education, home loans, SMEs and MSMEs to achieve the priority sector lending target, there is no limit specified for each sector.
Despite everything, RBI may lower rates
.........the Reserve Bank of India (RBI) will once again take stock of the global and domestic economic scenario and brief the markets about its views and course of action. To understand what to expect from the RBI, it would be useful to chronicle recent developments in the domestic and global front which will impinge upon monetary policy......
Four weddings and no funeral
......The rupee has, like other non-dollar currencies, seen a fairly significant rally both in the build-up to QE3 and in the wake of the announcement itself. The fact that the QE3 news came on a day when our own government decided to announce fairly hefty increases in fuel prices just added to the currency’s momentum. If the Reserve Bank of India (RBI) decides to reciprocate this fiscal initiative with a cut in the repo rate, more appreciation could be on the cards as investor sentiment gets another boost. But how high can the rupee go?......
Political will, need of the hour to sustain euphoria
......With the Government doing its part on reforms, now all eyes are on the Reserve Bank of India's mid-quarter review of the Monetary Policy on Monday. There is an air of optimism among traders that the RBI might actually announce at least 25 basis point cut in interest rates. However, inflation at 7.55 per cent in August – much above the central bank's comfort level – has given little headroom for RBI......
All eyes on RBI in the reform run
......Most economists and bankers are sceptical. But the Finance Ministry is optimistic, pinning hopes on the RBI’s statement of July 30 on “Macroeconomic and Monetary Developments First Quarter Review”.......
Policy rate caution
With the “party” that began over the weekend, there have been calls for the Reserve Bank of India (RBI) to take it easy and cut the policy rate..........
RBI’s turn
The government’s barrage of announcements complicates Governor Subbarao’s choice
......The set of policy measures announced last week is unlikely to yield results this fiscal. The headline inflation at 7.55 per cent is high and is climbing again. Two weeks later, the diesel price rise will push it one per cent more. Yet if the RBI governor wants to vote for optimism on the economy, a 50 basis point cut in repo rates will do nicely......
Read - Indian Express
What will RBI do?
Will the RBI cut rates on Monday or maintain the status quo?
Answers to that would depend upon whether the RBI thinks that the diesel price hike is the starting point of an earnest attempt on the part of the government to mend its finances. In the recent past, the RBI has consistently complained of government inaction in the face of a burgeoning fiscal deficit. So it had to fight the inflation battle single-handedly. With a new finance minister and first concrete proof of government’s willingness to take tough measures, the RBI has some leeway to go easy on interest rates.
Read - The Hindu
Will the central bank go for a rate cut?
......In normal circumstances, a rate cut by the Indian central bank is ruled out even though Asia’s third largest economy is slowing. But I would like to believe the Reserve Bank of India (RBI) may go for a rate cut to send a signal to the market, if not for anything else.......
RBI needs to take 'calculated risks' and cut rates
......It is time the Reserve Bank gets rid of its obsession with the inflation numbers, while completely ignoring grave situation thrown in by constantly decelerating industrial growth, Assocham President Rajkumr Dhoot said. "We would urge the RBI to stop taking baby steps, if at all, and go in for calculated risks to revive the industrial output," he said......
Government mulls financial products to dampen gold demand
The government and financial sector regulators-the Reserve Bank of India and the Securities and Exchange Board of India -are in discussions to launch financial products intended to discourage demand for gold in its physical form and excessive speculation in real estate...........
Kangra Co-op Bank adopts RTGS
......Kangra Bank is the largest urban co-operative Bank of the National Capital Territory of Delhi. It is said to be the first Co-operative Bank not only in NCTD Delhi but also in northern region of the country to have joined RTGS network run by the Reserve Bank of India......
RBI approves reappointment of Ananthakrishna as Karnataka Bank chairman
Reserve Bank of India has conveyed its approval for reappointment of Ananthakrishna as part-time chairman of city based private sector bank - The Karnataka Bank Ltd a further period of three years, as proposed by bank's board of directors........
Saturday, September 15, 2012
RBI Governor D Subbarao faces great dilemma as calls for a rate cut gets louder
They are three very different gentlemen in the same boat. One, known for his lung power, strong views and occasionally unfortunate choice of words, is a favourite of the media. You are tempted to believe him, but fear his views may be brushed aside later.
The second has a towering personality and a baritone, complete with wavy hair and Marx-like beard. The man leaves you bewildered.
The third, their boss, armed with a disarming sense of humour, is soft-spoken and transparent - perhaps too transparent that borders on being simplistic. It's entertaining listening to their divergent views on the same subject in the course of a fortnight.........
Will RBI governor D Subbarao now take momentum into high gear and cut rates?
Highlights and rationale of the recommendations of the working group to review the existing prudential guidelines on restructuring of advances
Keynote address of Mr B Mahapatra, Executive Director of the Reserve Bank of India, at the
round table on the highlights and rationale of the working group to review the existing prudential guidelines on restructuring of advances by bank/financial institutions, organised by the Centre for Advanced Financial Research and Learning (CAFRAL), Mumbai, 13 September 2012
.......One group of commentors have expressed reservations on some of the recommendations of the working group; the other commentors, particularly the print media, have generally appreciated the recommendations. I, as the chairperson of the working group accept the brickbats and bouquets with all humility. I am grateful to CAFRAL for organising this round table and giving me an opportunity to explain the highlights and rationale of the recommendations of the working group.......
My View on "Prepaid payment instruments yet to pick up: RBI"
Growth of prepaid payment instruments (PPIs) continues to be sluggish though non-bank entities also can issue them, said G. Padmanabhan, Executive Director, Reserve Bank of India......
The payment system should be improved in such a way that it should gradually lead to elimination of corruption, black money and high denomination notes of Rs 500 and 1000.Prepaid instruments should be made compulsory in high value transaction areas like bullion and other commodity markets, whole sale markets in vegetables and fruits, scrap dealings, etc. Trails of transactions should not be the immediate objective although it may be the end result,as it may discourage many to switch over to PPIs. The efficiency of the Payment System should be one of the yard sticks to assess the inherent strength of the economy. This will also make Financial and banking inclusion a reality over a period. The economy will definitely get a boost if payment system is improved with all safety,speed and accuracy. With improved IT system, the efficiency of the Payment system can easily be targeted and achieved. Many of the present ills of the economy, the Payment system will prove to be a solution.
- Dr.T.V.Gopalakrishnan
RBI ED's optimism along with the comments of Dr T V Gopalakrishnan give some hope about some changes and improvement in the payment system. Perhaps RBI and GOI could consider introducing new and innovative PPIs. Gold-backed Debit Cards could be one option. If a depositor agrees to maintain an average balance of a pre-decided amount, his account should be credited with gold of equivalent value.He should be in a position to withdraw cash, make payments and buy things using the card, but his balances in the account will vary with the price of gold any day. This is just an example. Similar instruments against commodities and services could be thought of.The present position of major portion of PPIs in sort of cash certificates is not very encouraging. As Dr TVG hints, PPIs should also become instruments for bringing transactions which will not otherwise get through formal channels get into banking system.
- M G WARRIER
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