...."I think liquidity is okay...whatever is the liquidity, that is adequate and comfortable. This is always monitored," Reserve Bank of India Deputy Governor K C Chakrabarty said on the sidelines of an event organised by Assocham......
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, November 22, 2012
Banks can cut rates in current policy framework: RBI
New Delhi: Banks can further reduce interest rates within the current monetary policy framework, but are penalizing good borrowers because of rising bad debts, said K.C. Chakrabarty, Deputy Governor at Reserve Bank of India (RBI)..........
Liquidity is comfortable at the moment: Chakrabarty
The Reserve Bank on Wednesday said there is enough liquidity to take care of the lending activities of the banking system. “I think liquidity is okay...whatever is the liquidity, that is adequate and comfortable. This is always monitored,” Reserve Bank of India Deputy Governor K.C. Chakrabarty said on the sidelines of an event organised by Assocham in New Delhi........
The Game Changers: 20 Extraordinary Success Stories of Entrepreneurs from IIT Kharagpur
Many IITians after graduation tend to head for MNC jobs and seven figure salaries – but several have chosen the different path of entrepreneurship. This book traces the story of 20 such entrepreneurs from IIT Kharagpur. The introduction is written by Damodar Acharya, director, IIT Kharagpur, and the foreword by alum D. Subbarao, Governor, Reserve Bank of India. This book joins a range of others about entrepreneurs from Indian institutes (such as IIM-Ahmedabad).
Read........
RBI overplaying inflation, says Jagdish Bhagwati
.....There will be pressure on RBI from the Government to cut rates and prop up growth, especially with general elections not very far away, where it will have to establish its credentials before the voters, Bhagwati argued. The professor of economics and law at the Columbia University, however, applauded Subbarao for standing up and preserving the independence of the central bank by not giving in to Government's wishes in the recent times. "It is a very good thing and that is a plus factor."
RBI signs MoU with the State Bank of Vietnam
.....The MoU was signed on November 16, 2012 at SBV Headquarters, Hanoi, Vietnam, by G Jaganmohan Rao, Chief General Manager-In-Charge, Department of Banking Supervision, Reserve Bank of India and Nguyen Huu Nghia, Chief Inspector, Banking Supervision Agency, SBV. .....
Read......
Legal liability of a stolen cheque
As all nationalized banks are working under the control of the Reserve Bank of India (RBI) they are expected to follow rules and regulations codified by the same regulatory authority. But if something unforeseen incident happens and if there is no co-ordination or understanding of co-operation between the banks, they are susceptible to legal confrontation. This has happened in case of a stolen cheque which was deposited in one bank and was en-cashed by the person who stole it by producing it in the bank which had issued the cheque........
Banks to face penalty for violating info sharing norms
The Reserve Bank of India today said banks may face penal action if they fail to adhere to the norms regarding sharing of information relating to credit, derivatives and unhedged foreign currency exposures among themselves.Banks have been asked to put in place an effective mechanism for information sharing by end-December 2012..........
RBI asks banks to monitor unhedged forex exposures of companies
.....In February 2012 banks were directed to rigorously evaluate the risks arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium while extending fund-based and non fund-based credit facilities. It had also asked banks to consider stipulating a limit on the unhedged position of corporates on the basis of banks board-approved policy. However, the central bank is not convinced with the banks actions. Hence, the RBI reiterating its directive has asked banks to implement the norms and submit a compliance or action taken reports to the Reserve Bank before end-December 2012 after obtaining the approval of their board of directors. The central bank is planning to put in place a detailed guideline to ensure forex exposures of corporates are covered.
Sudha Krishnan appointed nominee director on Canara Bank
“...the central government, nominated Sudha Krishnan, Joint Secretary, Department of Expenditure, as government nominee director on the board of directors of Canara Bank with immediate effect and until further orders,” Canara Bank said in a filing to the BSE.........
Transforming the way banking is done
.......What impact have the new banks had? Today, they have a market share of 20 per cent in deposits and advances. This has been achieved in a growing market, indicating that private sector banks have successfully capitalised on the growth of the Indian economy. But more than acquiring market share, the real contribution of private sector banks has been to transform the way banking is done in India. ......
KPMG Study of India's Best Banks in 2012
.....The Reserve Bank of India (RBI) is in the process of classifying some domestic banks as systemically important institutions that would get special regulatory attention. Banking institutions worldwide are yet to recover from the shocks of 2008. The net gainers are Chinese banks, which advanced in the top 100 global bank ratings.........
Read - Business Today
The gold effect on inflation
..........In conclusion, if gold prices stay elevated or increase going forward, and wealth effects emanating from this externally generated feature are quantitatively important, then monetary policy has that much more work to do to tame inflation.
Gold gains with dollar flat
NEW YORK, Nov. 21 (UPI) -- Gold prices rose Wednesday as the Reserve Bank of India banned banks from loans earmarked for gold purchases. The bank said the ban was meant to discourage speculative gold purchases. Borrowing could continue for gold purchases for jewelers, however, the banks said..........
Govt wants to wean you off gold: You should say ‘no, thanks’
.....In fact, both the finance ministry and the Reserve Bank are being hypocritical in trying to de-emphasise gold here. In 2009, they themselves bought 200 tonnes of gold in order to bolster official reserves – indicating that they have less trust in paper reserves (even US dollars) than gold. What is sauce for the RBI is not sauce for us ordinary folks? The RBI’s accounts for 2011-12 show that while foreign currency assets went up by 14.2 percent, the value of gold holdings went up by 31.5 percent......
Wednesday, November 21, 2012
RBI and the chicken game
........of all the “strategies” in this game of chicken—chickening being slowing in face of a speeding automobile—one vehicle speeding away and the other slowing is the most frequent solution. A similar game has been played for a while between the finance ministry and the Reserve Bank of India (RBI). It is, of course, rash to try and understand monetary and fiscal policy coordination failures by looking at vehicular aggression on Delhi roads. But the behaviour of India’s fiscal authority—its finance ministry—is not very different from that of speeding drivers. Consider two recent episodes—useful for analysing the repeated play of the chicken game........
Differences with RBI governor is media creation: Chidambaram
......"I have already explained about the....media created differences between Government and RBI (Governor)", he said when asked if "his problem with RBI Governor is because he did not oblige with rate cut".......
The unsavoury hurry over new bank licences
.......By now it has been established that the ostensible reason for more bank licences as expressed two budgets ago—more financial inclusion—is arrant nonsense. This author had, in 2006, done an exercise in banking market concentration around the world, which showed that India was the third-most fragmented market. Some water has flowed under Mint Street since then—with the disappearance of the likes of Centurion and Bank of Rajasthan—but the essential point remains the same: if such levels of competition have not helped the cause of financial inclusion, a few more licences will not accomplish that.......
Coincidence
RBI prefers a law
...........North Block seems to have ignored the message in Subbarao’s remark: the central bank would prefer the powers came through a legislative amendment. The powers given outside the Act could come with stings and be taken back similarly — without a legislative process. Statutory bodies such as the RBI should not be made subservient to the whims and fancies of officials in ministries. The central bank has faced problems on such issues relating to banks earlier due to lack of clarity of law.
M.G. Warrier, Thiruvananthapuram
Banks can open admistrative office in large cities sans RBI permission
MUMBAI, NOV 20:
Banks need not seek permission of the Reserve Bank to open administrative offices in large cities (Tier-I), the central bank said today. “With a view to further increasing operational flexibility of banks, it has been decided to permit domestic scheduled commercial banks (other than RRBs) to open offices exclusively performing administrative and controlling functions in Tier-I centres without the need to obtain prior permission,” it said in notification today....
HDFC Bank launches mobile banking in Hindi
Indore: Targeting 560-million Hindi-speaking population, the second largest private sector lender HDFC Bank today launched a mobile banking application in the national language. Mobile banking services is part of the bank's overall strategy to use convergent communication platform to engage with customers, ...........
Read - FE
Bank to start scheme to help girls’ education
The Mann Deshi Foundation of Satara,
working for the empowerment of rural women, has come up with a scheme
for girls to pursue education beyond Std VIII. Under the scheme, a girl
can open a bank account on which the bank will add 5% interest as well
as deposit 5% of the cumulative savings and interest earnings as its
contribution..........
Read........
Corporates, banks taking undue advantage of CDR mechanism
....."If the reason for the recent increase in restructured accounts is indeed the economic downturn, it should have been reflected across all bank groups and not just public sector banks," said K.C. Chakrabarty, Deputy Governor, Reserve Bank of India (RBI) at a seminar last August. If a company is unable to meet the new demands it has agreed to under CDR, or wriggles out of them, the restructured assets turn into non-performing ones. This is precisely what is happening. ....
No move to give SLR status to corporate bonds: RBI
Reserve Bank Deputy Governor HR Khan today indicated there was no move at present to give SLR status to corporate bonds. "We had a meeting with the Finance Minister (P Chidambaram) recently. But, I think, nobody is serious about giving SLR status to corporate bonds," Khan told reporters on the sidelines of an RBI-ADB summit........
RBI Governor D Subbarao on the state of banking industry and challenges it faces
......We believe more banks should come in but some necessary conditions (such as amendments to the Banking Act) have to be fulfilled. I don't think it is possible to issue new licences without changing the Act. The old guidelines did not contemplate the entry of corporate houses into banking. If we allow corporate houses, it's important we have the amendment or the authority we have sought......
Read - Business Today
US has issue with dollar swaps as Re not fully convertible
Reserve Bank of India Governor D Subbarao believes a central bank should intervene in the forex market "only to manage economic stability disruptions". Analysts had called upon the RBI to enter the forex market and buy dollars to recoup the rupee and thus arrest the imported inflation, which is the main reason for the continued price spiral......
RBI seeks alternative to $
Even as China tries to promote the Yuan as an international currency, Reserve Bank of India (RBI) has joined the effort of chipping away at the dollar's pre-eminent position as the world's currency. The central bank on Monday called for inclusion of emerging market currencies as alternative reserve currencies to the dollar. Delivering the 46th A D Shroff Memorial Lecture in Mumbai on Tuesday, RBI Governor D Subbarao said that the dollar's monopoly as a reserve currency had resulted in many countries facing a liquidity problem as foreign creditors and foreign investors turned risk averse. "Paradoxically, even as the US economy was in a downturn, and its central bank resorted to extraordinary quantitative easing, the dollar strengthened as a result of flight to safety," Subbarao said. ......
Spend more on productive purposes, Subbarao tells government
Highlighting the need for government spending on productive purposes, Reserve Bank Governor D Subbarao today said future generations should not pay the price for the high borrowing of today. "Government borrowing is not necessarily bad, but if the government borrows and consumes, that is bad," ........
No-flub account
...... In the middle of her passionate plea for financial inclusion, she paused to ask the official sitting next to her, “What do you call them, free-fly...?” It took the Delhi chief minister a little while to understand the term. Only with a bit of effort could she finally pronounce the phrase “no-frills accounts”.
RBI harmonies definition for Infrastructure lending
Reserve Bank of India has harmonised the definition of infrastructure lending for financing by banks and financial institutions to avoid confusion. The definition has been aligned with the master list of Infrastructure sub-sectors’ notified by the Government on March 27, 2012....
SLBC forms sub-committees to improve service
.....In a bid to boost export activities in the state, the SLBC also set up a sub-committee to give inputs for improvement of untapped export potential of the state. The sub-committee on export is formed as per suggestion of Khan and will have representatives from RBI, NABARD, SLBC, Odisha Export Promotion Council, financing bankers and exporters' Association.......
Alvi coop bank board of directors dissolved
VADODARA: In a significant move, following orders of Reserve Bank of India, the Registrar of Cooperative Societies has dissolved the board of directors of Alvi Cooperative Bank and appointed an administrator with immediate effect..........
MINISTRY TO START SELECTION PROCESS FOR NEW BANK CMDs, EDs IN DECEMBER
The
finance ministry will begin the process to select new CMDs and
executive directors of PSU banks in December itself. Usually, this
selection process takes place in January and February every year. The
move to advance this is not an indicator of the ministry’s efficiency.
Rather, insiders say, DK Mittal, secretary, for financial services,
wants to complete the process before he retires in January 2013.
ET
ET
Finmin Keeps an Eye on PSU Banks through Nominees
The
finance ministry has devised a method to give directions to chiefs of
state-run banks without appearing to be intrusive. Of late, the ministry
has been issuing instructions to its nominee directors on issues that
they should take up at board meetings, and marking a copy of the same to
the chairman and managing director (CMD). Since these nominees
represent the government, the ministry is well within its right to
convey the concerns of the dominant shareholders through them. Earlier,
the communications were addressed to CMDs which invited criticism from
RBI for micro-management by the government.
ET
ET
Keeping A check
.....The CTS is an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically. The RBI, in a circular last year, emphasised that homogeneity in security features will act as a deterrent against cheque frauds, while the standardisation of field placements on cheque forms would enable straight-through-processing, both under CTS and MICR clearing.......
Stocks of gold financing firms fall after RBI bans loans for buying gold
Shares in gold finance companies Manappuram Finance and Muthoot Finance fell on Tuesday after the Reserve Bank of India banned loans for buying gold in a bid to dissuade people from indulging in speculative activity.........
Banks ready, but borrowers missing
.....“Inflation is a key reason for the high interest rate. Credit flow is muted as investments are not happening. While interest rate will fall as inflation comes down, what is key is speeding up investments in infrastructure sectors like power and road. The supply side bottleneck needs to be addressed, like fuel linkages in the power sector. Road projects also need speedy environmental clearances. If infrastructure investment is boosted, it will also have a favourable impact on sectors like steel and cement,”.....
Crisis of confidence hits banks, borrowers
......RBI has also noted that increasing risk aversion has hampered the flow of credit and as a result, banks parked their excess funds in government securities. “In contrast with the overall slowdown observed in the major balance sheet items of banks, growth in investments accelerated during 2011-12, compared with the previous year. This trend partly reflected increase in risk aversion by banks, with a growing preference to park funds in safer instruments, against the backdrop of weak macro-economic outlook as well as rising NPAs,” the central bank said.......
Is Dhanlaxmi Bank up for sale?
......Jittery investors pressed the panic button anticipating that the Reserve Bank of India (RBI) might now proceed for a forced merger of the private sector lender (with a bigger bank), which had gone through a management change in February, 2012. Markets were agog with names likeAxis Bank and HDFC Bank as potential acquirers......
Dhanlaxmi Bank continues to see senior-level exits
....The All India Bank Officers' Confederation had accused the bank of window dressing its accounts to show inflated profits. The bank's management had dismissed these allegations and claimed that it was a motivated attempt to de-recognise the bank's performance.......
'Indian economy unmoved by reforms'
......Pending an infusion of new capital into the banking system, the government is seeking to counter the cyclical downturn by cajoling cash-rich state-owned firms to speed up investments. A better strategy would be for the government to curtail its own consumption expenditure and reduce its borrowings. More household savings would then be freed up for corporate investments, and not just by state-controlled companies. But fiscal consolidation in a slowing economy has to be gradual, lest it makes the short-term growth challenge worse........
Bank to pay Rs 1L for refusing fresh cheques
A district consumer forum has asked the American Express Bank to cough up Rs 1lakh (Rs 50,000 each) as collective compensation to a couple for "causing harassment and more loss by unnecessary correspondence". The order was passed by the Consumer Disputes Redressal Forum after Ved Prakash and his wife Raj Pawar filed a complaint saying the bank had refused to refund or issue fresh cheques in place of the ones that were reported missing in Australia. .......
Tuesday, November 20, 2012
Worrying disconnect
North Block-RBI relations need to get better
.....Of late, the relationship between the government in New Delhi and the RBI has degenerated into a public spat about priorities, which has destabilised the development of this institutional arrangement. Certainly, divergent views can and should be expressed. But they should not be seen as being pushy. In addition, the disconnect seemed to be spreading worryingly into other fields. Consider the government’s reappointment of Deputy Governor Subir Gokarn for an additional two-year term — generally automatic but, according to a report in this newspaper last week, now subject to a search committee and an interview. Mr Gokarn’s three-year tenure is due to end this week and that a decision on the matter is yet to be finalised is a reflection of poor advance planning. Also, at a time when Chief Economic Advisor Raghuram Rajan has been away from New Delhi to fulfil his prior teaching commitments in Chicago and the RBI governor himself is due to move on in less than a year, many would imagine the reappointment of the deputy governor in charge of the monetary policy department would be automatic, given the macro crisis India faces......
Don't lend for buying gold in any form, RBI tells banks
The Reserve Bank today directed banks not to give loans for purchase of gold in any form, including primary gold, bullion and jewellery, to dissuade people from indulging in speculative activity..........
To pump up savings, FinMin wants banks to offer ‘gold plan’
The Finance Ministry has sounded out the Reserve Bank of India (RBI) and commercial banks on the possibility of introducing a gold accumulation plan (GAP). The GAP is likely to be pitched as an alternative to direct investment in the yellow metal by gold-obsessed Indian consumers.........
Finmin urges corporate affairs ministry to notify to keep ailing banks, insurers out of CCI
The finance ministry has urged the corporate affairs ministry to notify that ailing banks and insurance companies will not come under the purview of the Competition Commission, a step that can help speed up issuance of new banking licences. In a letter to the corporate affairs ministry, financial services secretary DK Mittal has requested immediate notification to this effect since banking regulation amendment bill and competition bill are yet to be passed by Parliament.......
Two more lean years
....the Reserve Bank of India (RBI), which hasn’t issued any new banking licences in 10 years, is holding up the finance ministry’s plan, and for good reasons. Before it allows new deposit-taking institutions to be set up, including by non-financial corporate groups, the RBI, which is also the country’s banking supervisor, wants the legal authority to sack rogue bank boards. Amendments to the country’s banking laws that would have accorded the monetary authority such wide-ranging powers were introduced in Parliament seven years ago. They were never passed. The central bank is quite right to be circumspect, even at the cost of annoying the finance minister.......
FinMin relaxes norms for top jobs in govt banks
With nine public sector bank chiefs set to retire in 2013-14, the finance ministry has relaxed the eligibility criteria for the selection of chairman and managing director’s (CMD) post in these banks. According to bankers, a candidate who has served as an executive director (ED) for six months in public sector banks can now aspire to be a CMD. Earlier, only officials who served two years as ED were considered for the CMD’s post. However, the criterion for residual service — the number of years left for a candidate to serve the bank — has been kept unchanged at two years.............
The nature and grounds of political obligation in the Hindu State
This is a revised edition of a classic work published in 1935. The author Dr. J. J. Anjaria was a well- known economist who was a student in Bombay University and the London School of Economics. He was Chief Economic Adviser in the Ministry of Finance and Executive Director in I M F and later held the post of Deputy Governor of the Reserve Bank of India..........
RBI justified in asking for amendment before final guidelines on new licences: E&Y
The govt continues to push the Reserve Bank of India (RBI) to issue final guidelines on new bank licences and move ahead with the process. At the same time, the RBI continues to seek the passage of the Banking Laws Amendment Bill before it moves forward on the issue. According to Ashvin Parekh of E&Y, the RBI is justified in asking for the amendments to be passed before the guidelines are finalised......
RBI action improved credit availability in 2012-13
There has been a marked improvement in credit availability in 2012-13 on the back of steps taken by the RBI to put more money into circulation. This can be illustrated in terms of the funds locked up within the RBI and scheduled commercial banks vis-Ã -vis the total currency in circulation among the public........
The future of Non Banking Financial Companies in the economy
......However, considering the reluctance and restrictions that RBI has observed in giving banking licences, the feasibility and smoothness of conversion still remains a question mark. In continuation to the Government’s proposal of encouraging penetration in the banking industry, RBI has released a set of norms to ensure stability and growth in the sector. It had observed that non-banking finance companies (NBFCs) who wished to convert into banks should have a minimum net worth of Rs. 200 crores. However, RBI has decided to provide some relief to NBFCs if their net owned funds fall below the below the stipulated Rs 200 crores...........
Need to monitor 'shadow banking' in India: Financial Stability Board
An international body of financial authorities today highlighted the urgent need to monitor the "shadow banking" activities in India, given a sharp annual growth of over 20 per cent in such businesses over the recent years. The "shadow banking system" refers to credit intermediation involving entities and activities (fully or partially) outside the regular banking system and is estimated to have reached a size of nearly Rs 37 lakh crore in India. ......
No target or band has been set for rupee: Gokarn
Reserve Bank will intervene in the forex market only to curb excessive volatility in exchange rate but stated there is no target set for rupee, deputy governor Subir Gokarn said here today. "Our approach has been that the exchange rate of the rupee should be market determined and the Reserve Bank should be intervening only to manage excessive volatility... Without targeting any particular level or band," Gokarn told an RBI-ADB conference on 'Managing capital flows' ............
RBI will intervene to check any excess rupee volatility: Gokarn
....“Therefore, the intervention policy not only aims at quelling the excessive volatility, but also attempts to moderate speculative one-way downward movement of the India rupee,”....
Corporate Bonds May Soon be Part of SLR
........The ministry has initiated talks with the RBI and the corporate
affairs ministry to facilitate these changes that could ignite bank
interest in corporate bonds and encourage companies to raise funds
through debentures, which accounted for lowly 3.9 per cent of their
funds needs in 2010-11.........
RBI concerned about FII debt flows
The Reserve Bank of India (RBI) has raised concern on debt flows by foreign institutional investors (FIIs) in the capital market. RBI Deputy Governor H R Khan said there was a need to reduce debt inflows, which, due to interest rate differentials, had have come at a very quick pace.......
All efforts to be made to rein in fiscal deficit at 5.3%: C Rangarajan, PMEAC
....On key policy rates cut by the Reserve Bank, Rangarajan said: "We need to watch the behaviour of prices for some more time. Of course, the Reserve Bank will take all factors into account, but there is still some time for Reserve Bank to take a decision." The RBI will come out with the mid-quarter review of monetary policy on December 18. The third quarter will be announced on January 29. .....
Ernakulam to soon be first to achieve 100% banking
.......The press meet was addressed by S Jayamohan Nair, Deputy General Manager, Union Bank of India, C V George, General Manager, RBI, Kochi, K D Joseph, Assistant General Manager, RBI, Thiruvananthapuram and K R Jayaprakash, Lead District Manager.
SBI to send new cheque books by Dec 15, update your address
After announcing the implementation of cheque truncation system (CTS), the State Bank of India (SBI) has asked its customers to update their mailing address. The lender is preparing to send the new series of CTS compliant cheque books by December 15, 2012.....
FYI: Banks pay you Rs 100 per day as fine when
Fees and fines are part of our life, especially when it comes to banks. You are slapped with a fee, if you don’t maintain the minimum balance in your savings account. You pay a credit card bill late; there is a late payment fine. If a cheque is bounced for financial or non-financial reasons (forgot to write the date on a cheque) and you have to pay up for that. There are hundreds of reasons as to why you could land up paying a fee to a bank. But, did you know, as per the Reserve Bank of India, banks too have to pay you a fee?...........
Fixing home loans
.........The Reserve Bank of India (RBI), worried about systemic risks from this skew, constituted a working group to discuss how banks can be made to offer more fixed rate loans to retail borrowers. The committee has suggested that banks flag off this transition with 7-10 year fixed rate loans that carry a reset clause, while augmenting their long-term funds to facilitate such products.........
2G case: RBI Governor D Subbarao deposes in court
New Delhi: RBI Governor D Subbarao Monday deposed in a Delhi court as a prosecution witness in the 2G case, saying he had questioned in 2007 the spectrum fee of around Rs 1600 crore for pan India licence.....
Read......
Read......
Finance Minister P Chidambaram to meet chief ministers of southern states today
......The high-profile meeting with the chief ministers will be held against the backdrop of the half-yearly review of monetary policy by the RBI last month, wherein the key policy rates were left unchanged.
RBI cancels licence of Ghaziabad Urban Cooperative bank
T
he Reserve Bank has cancelled the licence of Ghaziabad Urban Cooperative Bank as it had become insolvent. "In view of the fact that Ghaziabad Urban Cooperative Bank, Ghaziabad (UP), had ceased to be solvent and with all efforts to revive it having failed the Reserve Bank of India delivered the order cancelling its licence to the bank on November 16, 2012," RBI said in a notification today.......
Monday, November 19, 2012
Financial reforms: Relevance to the Common Person - S.S.Tarapore
.....Witness the Approach Paper's slant of cutting down the Reserve Bank of India (RBI) to size by taking away a large part of the domain of its operations, ostensibly, on the ground that the RBI should exclusively focus on monetary policy. The Bond- Currency- Derivatives markets will be totally out of the purview of the RBI. A glaring feature of the Commission's recommendation is to take away capital controls from the RBI and to lodge this in the Ministry of Finance- all in the name of Full Capital Account Convertibility! Consistent with the stance of the Approach Paper it can be inferred that the RBI would have no say in exchange rate management and forex markets, and therefore, forex reserve management. The RBI's handling of the 1991 forex crisis is internationally recognised, as is its gradualist approach to capital account convertibility. This whole issue is not only whether India abolishes capital controls altogether but an issue of managing the entire external sector. It would be a monumental blunder to go along with the FSLRC recommendation to strip the RBI of its role.......
RBI-FinMin conflict of views is old hat in India
......Chidambaram needs to understand the RBI’s role in the country’s economy and gracefully acknowledge it. The key area where things began to clash is when the government seemed to go public on some of its preferences but without being prepared for the consequences. When Subbarao took over as RBI Governor, the initial perception was that since he is from North Block, the Government (read: MoF) could manoeuvre him, especially on the (interest) rate front. However, Subbarao turned out to be a part of that disappearing breed of civil servants who not only know what they are doing but are also willing to make timely decisions – without any fear or favour – and accept responsibility for them. It’s too bad for his critics, as he knows macroeconomics well.
RBI, govt not antagonistic to each other: Chidambaram
.......Even as the government makes out a case for the central bank to support growth, it doesn’t mean “they (the Finance Ministry and the RBI) are antagonistic to each other”, he said. “What we are trying to do is to argue our case, argue the case for growth, argue the case for taming inflation and then of course whatever the judgement is arrived at…,”
Why RBI and FM must both do their own things
The perceived difference of opinion between the Finance Minister and the Reserve Bank of India (RBI) Governor appears to be out in the open. If true, it is an indication of the frustration both sides feel since we do not appear to have made progress either on growth or tackling inflation. The ministry and the central bank have been tossing the ball into each other’s courts—and both have been taking some actions—but interest rates do not look like coming down fast enough to lift growth sentiments. How exactly do we deal with this situation?..........
No end to central bank’s woes
.........I hear that the constitution of a search committee does not automatically disqualify Gokarn for another term. If the committee is convinced, he can get another stint at RBI, or someone else could replace him. There is nothing wrong in forming a search committee to identify a suitable Deputy Governor, but why does the government have to wake up so late for such a critical appointment? .............
A panchayat sans ATMs in 100% banking district
.....Under the prevailing banking norms stipulated by the RBI, service cooperative banks are among the several entities which are not eligible to be called a bank, despite doing business in the financial sector. Though the RBI had brought the issue to the notice of the authorities in the State, the opposition by the cooperative sector had forced the apex bank to withhold the move in the State, according to sources in the banking industry. Such banks could face the axe of the apex bank, as and when the existing waiver on nomenclature is reversed........
Nabard mandate will be safeguarded: Namo Narain
The Centre remains committed to safeguarding the mandate with which National Bank for Agriculture and Rural Development (Nabard) has been set up. This clarification has come from Union Minister of State for Finance Namo Narain Meena in a letter to Tapan Sen, Member of Parliament, dated November 5. Nabard has been formed by an Act of Parliament, the Minister recalled...........
Courage Under Fire
......Perhaps her grounding in turning around a ‘weak’ operation started in her role as the CEO of Bank of India’s New York operations way back in 1995. That stint also helped her understand the importance of close engagement with bank regulators, which stood her in good stead while dealing with the Reserve Bank of India (RBI), both in establishing institutional credibility and in securing RBI’s and the government’s support for a number of vital matters.........
Fraud e-mail on internet banking
.........“The mail has referred to provisions of Banking Regulation Act, 1949 and Prevention of Money Laundering Rules, 2005 and informs bank account holders about RBI setting up a new 24x7 Centralised monitoring centre to monitor financial transaction flow from internet banking accounts. The e-mail then gives a link asking account-holders to update their account information,” a statement issued by RBI said here. “RBI clarifies that it has not sent any such mail and.........
Effect of central bank independence in a graphic
.....This alone should be reminder to those at the North Block when they appoint the successor to Dr Subba Rao next year. The hard won credibility of the RBI can be squandered in one moment of madness.
Ethical principles that banks need to follow
....Until July 1, 2010, banks had got into the unfair practice of sub-PLR lending to certain borrowers. Fortunately, the RBI constituted a Working Group on BPLR (Chairman: Shri Deepak Mohanty) and Base Rate system came into being. Since then the administration of lending rates has become transparent, an essential quality expected from entities like banks at all levels. Ethics should dominate customer service rendered by banks. Business etiquette should be an integral part of ethical customer service. Bankers need to be trained in this line. Fundamentally, banks should not differentiate customer service rendered to a small customer and a large customer........
State govt sore with SBI, other banks; complains to RBI
BHOPAL: Commissioner Institutional finance Ashok Shah, in a letter to RBI Deputy Governor Dr K.C.Chakrabarty has complained that the State Bank of India ( SBI) and its associates and some of the Regional Rural Banks were not doing what was expected of them. He also referred to the decisions taken in the last state- level Bankers’ committee (SLBC) meeting. Shah said, ” Dr Chakrabarty had expressed a deep concern over lack of network of bank branches in villages. RBI has relaxed licensing rules for opening bank branches in rural areas.........
Read - FPJ
Read - FPJ
We have a banking licence: MSC Bank
PUNE: In response to the recent statement of RBI Governor D Subbarao, the Maharashtra State Co-operative Bank Limited has stated that it has a banking licence which the Reserve Bank of India had issued earlier this year. Subbarao had said in the city on Friday that the bank was still not eligible to get a banking licence and was under RBI's 'directions.' The bank's general manager, Vijay Bhagat, said in a communication that the MSC Bank had complied with all norms and conditions prescribed by the RBI which has issued a banking licence to it on April 19, 2012........
Both CCI and RBI To Vet M&As In Banking
While CCI will see competition part of such deals, the RBI will see prudential aspects
....."For M&A activities, they (banks) will have to seek Reserve Bank approval from prudential point of view. RBI is the sectoral regulator so the health of banks is the concern of the RBI, health of banks is not CCI’s concern, CCI’s concern is their behavior in the market and the consumer in the market," ......
Economy looks at govt for help, govt at its shoestring coffers
.....It is a chain of inaction on all fronts. Investment-led growth seems out of question as a vicious cycle emerges here- high inflation is reducing purchasing power of households, private sector not investing due to lack of demand plus high interest rates, RBI not cutting rates as it expects government to take action on fiscal front as inflation is high, government unable to spend due to widening fiscal deficit, and so on. “There is a sqeeze from all ends”, said Sabnavis. Somebody will have to break this cycle, be it RBI by cutting rates or public sector units sitting on cash pile up of over Rs 2 lakh crore. But RBI measures will have a lag effect, while investments by public sector units will not come immediately........
Why more Banks?
Kudos to Duvvuri Subbarao, Governor, RBI who has said that no new banking licence will be given without legal backing ('FM proposes, RBI disposes on licences') The Governor’s assertion that the Apex bank is not in a hurry to issue banking licences to new private banks despite pressure from the Finance Minister is really laudable. We already have umpteen number of banks — both government and private — in our country and a careful study of the functioning of these banks would reveal an inadequacy in expected achievements despite the absolute freedom given to them by both the Finance ministry and the Apex bank.Political interference has crippled the growth of government banks. Also, by virtue of their inherent lethargy, the public sector banks never extend good service to their deserving customers, while the private sector banks earn their cake by making the middle income group pay heavy interest and penal interest through their nose.
—Tharcius S Fernando, Chennai (DNA)
Govt pressures RBI on bank licence
...........In a letter addressed to
RBI Deputy Governor Anand Sinha, financial services secretary D K
Mittal said the government hopes to get the Banking Regulation Bill 2011
passed during the winter session. The letter pointed out that RBI
doesn't need to wait till the bill is passed as under certain existing
laws the banking regulator has the powers to govern these entities. "In any case, if RBI issues the final guidelines, the process of
granting a licence to a new private sector bank would take six months to
a year, and in the meanwhile, the bill would be passed. Even before the bill is
passed, RBI would have adequate powers ... " says the letter. The letter
, a copy of which is with TOI, was sent just days before finance
minister P Chidambaram asked RBI to issue final guidelines for new bank
licences earlier this week........
Triple whammy
It is fairly common nowadays to receive unflattering reports on the economy. After all, the slowdown in the economy is all too evident. Periodic reports, both official and unofficial, have recently tended to focus on the negative aspects. However, receiving three sets of worrisome economic data on the same day is something unusual..........
A case of misreading risks
.....The 2012-13 budget had no provisions for taking stock of, and overcoming, uncertainties. In a very different context, Y.V. Reddy, former Governor of the Reserve Bank of India (RBI), pointed out the dangers of not appreciating risks in formulating and implementing the 12th Five-Year Plan. While the time horizon for the two—the Plan and the budget—are different, the principles of appreciating risks and uncertainties (ignoring the difference between the two) are not divergent.........
Subscribe to:
Posts (Atom)