Soft spoken gentleman no more........

With abundant grief, I am sharing with you the news relating to the sad and sudden demise of our friend Shri K.Ravindran [retd. from C O, DAPM, Mumbai] at his native place in Thrissur, Kerala on 1st Dec.2012, due to massive cardiac arrest. He served in Economic Dept. as EA, before promotion as AM [merit] and worked in Chennai office from 1985 & later went back to Mumbai to work in CPC, DA, DAPM -vigilance, etc. A soft spoken gentleman, he was of great help to all who approached him, especially when he was in CO [DA-vig.]. May his departed soul rest in Heavenly Peace!

- As reported by Subramanian Ramachandran   

Supervisory college for SBI, ICICI Bank

India’s banking regulator is introducing the supervisory college concept for two of the country’s largest domestic banks that have a worldwide presence. The objective is to keep these lenders abreast of the latest worldwide regulatory rules and evaluate their worthiness for global operations. As part of this process, the Reserve Bank of India (RBI) met State Bank of India (SBI) officials along with regulators from the UK, the US, Europe and a few other countries on Monday, said two persons familiar with the development. They declined to be named as RBI is yet to formally announce this exercise...........

Read - Mint

RBI may not cut rates unless inflation falls

RBI has become more mindful of growth risks and it is unlikely to shift from its anti-inflationary stance till inflation peaks out, says a Kotak Economic Research Report.........

Read - Moneylife

Why more banks?

.....We already have umpteen number of banks, both in the government sector and private, and a careful study of the functioning of these banks would reveal inadequacy in expected achievements despite absolute freedom given to them by both the finance ministry and RBI...........

Read - FE

Should FEMA be amended?

....In a parallel development, no sooner had the DIPP Press Notes 4 to 8 been released, a Delhi Lawyer lodged a PIL in the Indian Supreme Court challenging these Press Notes as being ultra vires in overreaching the RBI, as the relevant provisions of ( FEMA) had not been amended. The court was apprised by the attorney general that on the next working day itself, RBI had issued a notification pursuant to DIPP’s action, permitting deletion of the item of multibrand retail from Schedule ‘A’ of FEMA and providing for amendments to provide for the sectoral holding......

Read - BS

State proposes to impose ban on money circulation schemes

....“No individual or company or firm or business association, in any form, shall run a scheme that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the pyramid out of the action or performance like sale or purported sale of goods or services by the downline members,” it says. Nodal police authority will be submitting periodical information to the Reserve Bank of India about the money circulation schemes. A competent authority, which would be declared by the State government, would be responsible for taking all actions, including winding up entities indulging in money circulation scheme.......

Read - The Hindu

Sign of Ageing

The Supreme Court has rightly taken note of dishonour of cheques due to mismatch of the drawer’s signature with specimen signature available with the bank. Signature variation with mala fide intention must be viewed seriously and the drawer of such cheques should be punished. However, in most cases, the signature may vary due to ageing of the account holder. In such cases, the bank must issue a notice to the customer or, if notice to individual customers is not possible, issue a paper notification and advertise in the media with standing instructions to customers to change their signatures in bank records once every 2-3 years. Clearance of cheques issued by account holders who do not comply with the requirement may be put on hold till they change signature in bank records. 

ET

Gold: Why central banks aren’t taking their own advice

......At a function organised by the National Institute of Public Finance and Policy in Delhi, while C Rangarajan, currently Chairman of the PM’s Economic Advisory Council, was mildly critical of efforts to drive gold imports underground by taxing it heavily, another former Governor, YV Reddy, came out more strongly on the side of gold. Rubbishing arguments that tried to paint gold as an unnecessary indulgence, Reddy asked rhetorically: “If Mercedes Benz and after-shave lotion can be imported, why not gold? It is both an investment and consumption good. Many people seem to mistake that it is only a hedge against inflation. There is a demand for it. It is being imported.” While Reddy went on to add needlessly, “If you can, try to stop it”, Rangarajan underscored the point that any such effort was bound to fail and only invite more smuggling........

Read..........

Check your cheque

.....While the Reserve Bank of India (RBI) deadline does not mean that after this date cheques will be dishonoured, customers must replace their old cheques, says A P Hota, managing director and CEO, National Payments Corporation of India (NPCI). “Old cheque leaves will not start bouncing after January 1, 2013. This is an indicative deadline for banks not to issue old cheques and to ask customers to replace the old cheques. The RBI has not indicated to banks not to honour old cheques,” he says. Most banks don't charge any fees for replacing old cheques but some might charge a nominal fee.......

Read - BS

Valuing Bank Stocks

.....A bank is not at all like other industries in respect of ownership. In fact, being an owner of a bank is very demanding and legally complex. Firstly, the Reserve Bank of India (RBI) puts a limit on the ownership in a bank. The main promoter cannot have a clear majority. The day-to-day functioning, the deployment of the bank’s assets, etc, are all subjected to guidelines laid down by law.......

Read - Moneylife

Banking on faith

Banking is a business transaction between bankers and consumers. Thus, any negligence on the part of banks would amount to deficiency in service under the Consumer Protection Act 1986. It is unfortunate that many a time people encounter various problems with banks and find it difficult to get it resolved because of the unfriendly approach of these banks...............

Read - The Hindu

PSBs have no need to fear consolidation, nor should they consolidate out of fear

The debate on bank mergers is back on the table. The finance ministry is reportedly nudging public sector banks (PSBs) to consider mergers to ensure a strong banking sector, driven, perhaps, by the finance minister's preference for large banks. However, it would be naive to expect mergers to solve the woes of PSBs, especially the most pressing issue of lack of capital to comply with the higher capital requirements mandated under Basel III........

Read - ET

You can bank on this career

According to a study presented to the Planning Commission, the banking sector has the potential to account for as much as 7.7 per cent of the Gross Domestic Product of India. With the expansion plans of public sector banks, the retirement of a large number of people in middle-level management and the introduction of new services such as bancassurance, the banking sector in India will require an addition of more than 7.5 lakh skilled people in the next five years. This has given a fillip to the aspirations of graduates across the country who are prioritising their career choices............

Read - The Hindu

Pratip Chaudhuri - SBI's conscience keeper?

.....The sweet lime soda and asparagus soup arrive, giving us an opportunity to ask him about his own fair share of disagreements with the Reserve Bank of India (RBI). But 
Chaudhuri laughs them off and says his comments about the abolition of cash reserve ratio ( CRR) had nothing to do with SBI. He just wanted to initiate a discussion on a topic that affects all banks. He is glad RBI recognised the problem and has been reducing CRR gradually......

Read - BS

DK Mittal gets additional charge of disinvestment department from government

The government on Monday gave financial services secretary D.K.Mittal additional charge of the disinvestment department, a move that may shore up floundering disinvestment programme.....

Read - ET

Govt to finalise Rs 15,000 cr fund infusion in PSBs this week

.....Asked about holding company structure, Mittal said the Reserve Bank of India has given its feedback and the Finance Ministry is analysing it. "RBI has broadly agreed on this... However, there is a need to look at regulatory platform because it would be such a large conglomerate (holding company) and how to be regulated. What kind of capital adequacy it should have," he said. "Broadly, they (RBI) said we support this view...The government is yet to take a view on (holding company structure for the public sector banks)," he said. The 2012-13 Union Budget had proposed setting up of a financial holding company that would help raise resources to meet capital needs of state-owned banks......

Read..........

Sahara & the art of eating Dosa

........ But, did you ask what about the Dosa? My grandmother once told me a story about a king who wanted to capture his lost kingdom. He repeatedly attacked the capital and failed each time. When he was tired and was about to give up, he overheard a conversation between a mother and his kid, who was trying to eat the dosa from the middle and getting his fingers burnt. Mother scolded the son: “Don’t be like our stupid king and go for the centre, which is the hottest. Start from the edges, where it is a lot cooler.” The king sprang up, marshalled his forces, attacked the fringes, gained strength and confidence and eventually won back the kingdom. People dealing with Sahara should first learn eating the dosa.

Read - BS

State Bank of India may use POS terminals for utility bill payments

The State Bank of India is evaluating the prospects of utilising the point of sale (POS) terminals installed at merchant establishments to accept remittances towards utility bills........

Read - The Hindu

IIM Kashipur holds finance summit on economic reforms

.....Dr V Ranganathan, mentor – faculty at IIM Kashipur, RBI Chair Professor on infrastructure and member of the Telecom Regulatory Authority of India, said making economic reforms are not enough, reforms in governance and attitude is the need of hour. Increasing the efficiency & response should be given more attention and reforms should not be limited only to papers but rather be implemented properly.

Read.......

A rare fiscal constellation on city sky

Read - ET

Subbarao conducts poll on inflation, wins handsomely

The icing on the cake was the support extended by his predecessor, Yaga Venugopal Reddy

It’s not often that Reserve Bank of India Governor D Subbarao personally conducts a poll on the central bank’s stance on inflation. That’s precisely what he did at a conference in Mumbai today. Participating in a panel discussion, which was being moderated by him, Subbarao suddenly turned to the audience and asked them to raise their hands on whether they wanted RBI to give priority to growth. Only a few hands went up. The next poser was whether they supported the central bank’s anti-inflationary stance. An overwhelming majority of the audience, comprising economists and researchers at the Indira Gandhi Institute of Development Research voted in favour. The icing on the cake was the support extended by his predecessor, Yaga Venugopal Reddy, who also supported his monetary policy stance during the panel discussion...........

Read - BS

Subbarao in talks with former RBI bosses

A

t the recently held Indira Gandhi Institute of Development Research (IGIDR) annual conference, RBI governor D Subbarao held an engaging discussion with former RBI governors namely Bimal Jalan, YV Reddy and C Rangarajan, chairman, PMEAC.   

Below is the edited excerpt from the panel discussion.........

Click to read and watch the video..........

Reducing deposit rates is difficult in view of inflation

.....Interest rates will have some softening bias. In the last six to nine months, inflation has not come down as expected. The RBI has given an inflation target of 7% for this financial year. From a bank’ s perspective, base rate is somewhere around 9.75-10.50%. Overheads are roughly around 2-2.50% for every bank. Cost of funds, that is deposit rates, are around 5-8%. So where is the scope for interest rate reduction? Banks will either have to reduce deposit rates or cut overheads. Reduction of overheads is not possible in one day. Banks can reduce lending rates, if they can.........

Read - Mint

Dark clouds for India's public-sector banks

.......The RBI has repeatedly advised banks to strengthen their credit monitoring mechanisms. All the PSBs have thus put in place dedicated credit monitoring departments at the corporate as well as at the secondary and tertiary levels to monitor accounts at an early stage of showing stressed signals. Regardless of these efforts, cash recoveries together with upgradation to standard category have been overshadowed by a higher level of slippages. In the case of the top five to ten banks, the sharp rise in NPA levels is on account of a few big-ticket advances and because some restructured accounts have not turned at the pace anticipated...............

Read - BS

Unique, unflagging and unremitting..........

A cup of morning tea...........

Special Greetings to Shri Mangesh Tarambale for successfully completing two years of VITALINFO.  Let there be many many more years of success. God Bless You. 

- A U Shaikh, Ex-AGM, Premises Dept, Mumbai  

Carry on Mangesh for years to come.  May God bless you with all the energy & vitality required to keep the early morning cup of tea/coffee called "VITALINFO" ready for the EXRBITES Group by the time the members get up.  

 
Regards
B.D.Mahajan, Ex-DGM,   

Sir, Yes, very appreceative, yeoman service to the group, many thanks !

Onkar Nath, Ex-Manager, Jammu  

Congratulations and greetings on the second anniversary. Every day, we share and enjoy the results of Mangesh's work, which he starts when most of us are sleeping. We are grateful. Many happy returns of the day to VITALINFO!

- M.G.Warrier, Ex-GM

Dear Shri Mangesh Tarambale, congratulations on successfully completing two years of Vitalinfo.  I find that Vitalinfo is a very good source of information and is  very useful to a retired banker like me. you are rendering a very good service.  May God bless you with health, wealth and prosperity.

Yours truly,

Sarveswara M.V

Cybercrime in RBI chief's name

.....A forged letterhead of RBI showing its address as Shantipath in Chanakyapuri New Delhi is an attachment and the mail ends with "Yours in service D Subbarao RBI Governor". The letter reads "Reserve Bank of India Union Pay Settlement Committee and the ATM International Inc wishes to congratulate you on the successful emergence in our ongoing fund remittance promo to all ATM card users across the globe. The mail also asks the mail recipient to furnish personal details including name address contact number age and occupation and a fee of US $350. The mail claims that only after that an amount of $1.8 million will be transferred to their account. .......

Read - TOI

Are you ready for the new cheque regime?

.....The CTS will do away with the need for physical movement of cheques from a bank branch to a clearing house before the amount is credited to the customer’s account. Instead, entrenched with standardised features such as watermarks and a pantograph, cheques will be cleared electronically through an encrypted and highly secure online gateway........

Read - Hindustan Times

Accepting a new high

...... “I am not saying that we would definitely change the number, but we will certainly revisit our strategy.” Could this be a prelude to revisit the aggressive monetary policy position of the central bank in its quest for low inflation? If that is so, then there is danger that RBI’s stance will lose credibility........

Read - Mint

Cash transfer—are banks ready?

........One way of meeting the challenge could be allowing new banks to open shops. The banking regulator is not willing to do so unless the law that governs banking regulation in India is amended and RBI is empowered to supersede the board of a rogue bank. It is insisting on this as a precondition to allowing industrial houses to open banks as it feels that without this power, it will be difficult to supervise smart corporations who can divert money to their own group companies and deny funds to competition. Incidentally, among the first set of banks that was allowed to set shops in 1994 there was at least one corporate house...........

Read - Mint

IIP crawls, all eyes on RBI

......However, falling global oil prices and declining core inflation as well as growth offered the RBI room to adjust interest rates, RBI deputy governor Subir Gokarn said last week. While inflation remains iffy, largely due to food products, at 5.3%, GDP growth in the March quarter was the lowest in nine years. As Citigroup economist Rohini Malkani puts it, “While our base case is one more round of rate easing, subdued trends in growth coupled with lower core inflation could result in the RBI easing more than ours as well as market expectations.”......

Read - FE

NGOs told to introspect

.....Dr. Rao, who has been appointed member of the Economic Advisory Board of the Reserve Bank of India (RBI) recently, delivered the keynote address at the inaugural of a two-day national seminar on “Nation Building – Role of NGO s – Agriculture and Rural Development”, organised by the Department of Political Science of M.R. College (Autonomous) ......

Read - The Hindu

Banks gain little of what gold NBFCs lost, local lenders real beneficieries

In the past two quarters after the Reserve Bank of India (RBI) capped the loan-to-value, gold loan non-banking financial companies (NBFCs) have de-grown their book sizes and just the two major players have lost a business of over Rs 9,000 crore. However, banks, which have been active in the gold loan space, do not seem to have benefitted much from this. Instead, the unorganised moneylenders and pawn brokers are the ones who would have gained more from the loss of gold loan NBFCs..........

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

Bright side to India’s gold fetish

......PAPER GOLD DOESN’T WORK

This has the Reserve Bank of India thinking up yet newer ways to curb gold purchases. Could banks offer some kind of ‘paper gold’ or derivative gold so that the country does not have to actually import gold in order to satisfy its masses? Well, the paper gold idea has been tried, but has not enjoyed great success.........

Read - HBL

Too many curbs on gold import will push up smuggling: PMEAC

........"If we ban gold imports, the smuggling will go up... there are already indications that smuggling of gold has gone up in the last three months,".........

Read......

Adding glitter to paper gold

.....Exchange-traded funds (ETFs) with gold as the underlying assets are mutual funds listed on the stock exchange. Many such ETFs have been launched recently, and are flourishing. Obviously, many more new products are necessary for a more complete integration that alone will make an impact on gold consumption. RBI Deputy Governor Gokarn made out a persuasive case recently for new gold-backed financial products such as modified gold deposits and gold accumulation plans besides gold-linked accounts and pension products. Many of these are popular in important financial centres such as Singapore. The average citizen in those places is better informed about the financial markets — exchange rates, gold prices and so on. That would make it easier for the authorities to popularise new innovative products, linking gold to the banking system......

Read - The Hindu

The golden rule

What can a central bank do to control the demand for gold? Precious little, going by a conversation between two respected former governors of the Reserve Bank of India, C Rangarajan and Y V Reddy, at an event organised by the Indira Gandhi Institute of Development Research. Reddy joked that the prejudice against gold has a gender bias. He looked at Rangarajan and recalled that he once told him that his wife (Rangarajan’s) had this fondness for gold and kept buying it. Rangarajan tried to dissuade her, but in the end he agreed that she was right.

BS

Is gold boon or curse for India?

......"We are concerned about gold, lending against gold by non-bank finance companies (NBFCs) because of financial stability concerns and we have been concerned about gold from an external management perspective because of the pressure it puts on current account or capital account depending on your account for it," he explains. Subbarao was speaking at the Indira Gandhi Institute of Development Research (IGIDR) annual conference. However, he clarifies that RBI has not put any fresh restriction on gold but only barred banks from lending for purchase of gold...........

Read........

'Fake currency is a crime that knows no boundaries'

......What the world is concerned about is – among other things they are concerned about – grave crimes with grave ramifications like terrorism, human-trafficking, drug-trafficking, and smuggling. These are grave crimes, which know no borders. Fake currency is a crime, which knows no borders. These crimes are committed and those crimes are punishable under specific laws. But the proceeds of the crime continue to flow into the economy........

Read - BS

President invited for Uttar Pradesh assembly's 125-year celebrations

.....In a letter written to the president, the chief minister said it was the wish of the legislators and the people of the state that Mukherjee be the chief guest at the momentous function, scheduled between January 8 and 10, 2013. Akhilesh Yadav also wrote to Communications Minister Kapil Sibal for release of a special commemorative stamp and to union Finance Minister P. Chidambaram for release of a special coin by the Reserve Bank of India (RBI) for the anniversary......

Read.......

PSU banks under lens for ‘fixing’ savings account rate

 Competition Commission of India, the fair play watchdog, has decided to look into the common, 4% interest rate being paid by all public sector banks on savings bank deposits despite the Reserve Bank of India moving to an unregulated regime in October 2011. "They seem to be acting in tandem and it needs to be investigated. Because of this policy, small depositors are losing out and banks are also losing business," said a CCI official, who did not wish to be identified.  The official also said that banks such as Kotak Mahindra and Yes Bank, which had started paying up to 7% on savings bank deposits, had seen a surge in inflows. .........

Read - TOI

Cash transfer: Govt asks banks to expand rural reach

Read - HT

Few ATMs disabled-friendly

.....To a query to the RBI via an RTI application filed by Singh seeking the number of ATMs made accessible to disabled, the reply sent on October 31, 2012, states "this department has no infor -mation". To another query on action taken by the department of banking operations and development following the RBI's letter to the department of banking supervision in January 2012 to ensure compliance by banks, the reply stated deputy chief commissions, office of the chief commissioner for persons with disabilities and ministry of social justice, government of India, have been advised to look into the matter.......

Read - TOI

Cheque signature mismatch may lead to criminal proceedings: SC

...." Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138 of Negotiable Instrument Act, so also dishonour on the ground that the ' signatures do not match' or that the ' image is not found', which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act," the bench said......

Read - FPJ

Chidambaram asks banks to give more education loans

Around 24 lakh students took loans for education with banks having an outstanding amount of Rs 52,000 crore, Union Finance Minister P Chidambaram said today, as he asked banks to lend more money for this purpose.......

Read - DH

Thousands of depositors trapped in scam-hit coop bank

.....“The Board of Directors jointly and severally failed to exercise control and supervision over the sub-committees and overall control and manage the affairs of bank in the interests of shareholders, depositors and the public by violating various guidelines issued by RBI in various circulars,” said the re-audit report, prepared by Kirtane and Pandit. On a writ petition filed by the depositors, the Bombay High Court stayed sale of the bank’s immovable properties. It also issued orders not to cancel the bank’s licence without its prior permission, but the RBI on February 10, 2012 issued notice revoking the licence.......

Read - The Hindu

FM’s pushing too hard

.....Not too long ago, nineteen Regional Rural Banks were merged into eight entities without consulting the RBI. The FM’s defended its action with the view that the RRB Act of 1976 did not specify any such consultation. But the Act does mention that the RBI will represent the central government on the boards of the RRBs. So in fact, the RBI, along with the NABARD and State governments, does have a role to play in the destinies of the RRBs; all the more so when the health of the sponsoring banks being asked to merge the smaller entities falls under the purview of the central bank. The dangers implicit in the impatience of the FM with the RBI’s dogged insistence on its obligations to future depositors and clientele of the new banks can hardly be overstressed. Asking the central bank to work on faith rather than fiduciary principles, on personal guarantees rather than legislated ones could push a fragile banking system already burdened with stressed assets into systemic risk-prone zones. Perhaps, the RBI will agree and begin the norm-setting effort; but in doing so, it would be acting against its better instincts and its history as one of the most efficient regulators in the world........

Read - HBL

Microfinance in Banking Industry: Challenges faced by the banks

....The Reserve Bank of India appointed a sub-committee of its board to look into issues concerning the microfinance sector and its implications on policies of the banks. Then the RBI Deputy Governor said “Already banks have been allowed direct lending at a small charge in remote areas through business correspondence and technology have been introduced to reach out the unbanked areas” With a view to improve poor people, a pilot project for providing micro credit by linking Self-Help Groups (SHGs) with banks was launched by National Banks for Agriculture and Rural Development (NABARD) in 1991-92 with a view to facilitating smoother and meaningful banking with the poor. RBI had then advised commercial banks to actively participate in this linkage programme. The scheme has since been extended to Reginal Rural Banks (RRBs) and co-operative banks.......

Read.........

Panel to probe defunct RBI unit's functioning

VADODARA: The syndicate members of M S University (MSU) on Friday constituted a four-member committee to probe the functioning of Reserve Bank of India's Endowment Unit in the last 10 years. The committee has been asked to submit its report within six weeks. The decision comes in the wake of embarrassment that the university faced last week after country's apex bank dragged the state university to an Ahmedabad court by filing a civil suit demanding recovery of Rs 97,63,000 for not appointing a RBI chair professor.......

Read.........

Govt proposes high-level committee to check investment frauds

New Delhi: With an aim to safeguard the investors from possible frauds involving collective investment schemes, the government has proposed a high-level committee of members from Reserve Bank, Sebi, Corporate Affairs Ministry and Economic Office Wing of state police departments. The Finance Ministry has requested all states and union territories to set up such a committee to enable enhanced information-sharing among the concerned agencies.........

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Technical committee to review presentation of accounts

........The terms of reference, in brief, of the Committee are: Whether the existing presentation of two separate Balance Sheets of Issue and Banking Departments needs to be merged into a single Balance Sheet of the RBI. Whether it is necessary to have separate Profit and Loss Accounts for the Issue and Banking Departments or whether the present form of a combined Profit and Loss Account will continue. Whether the disclosures presently made in the Balance Sheet and Profit and Loss Account and the notes to accounts are adequate or can be elaborated/ improved. The Committee will comprise Y. H. Malegam, Director on the Central Board of the RBI as Chairman. Indira Rajaraman, Director on the Central Board of the RBI, B. Mahapatra, Executive Director, RBI, P. R. Ramesh, Chairman, Deloitte Haskins and Sells, and V. Venkataramanan, Partner, KPMG, are the other Members. S. Ganeshkumar, Chief General Manager, Department of Government and Bank Accounts, RBI is the Member-Secretary..........

Read.......

Dangers of letting govt print money

What if there was a financial system that would eliminate the need for the central government to issue government of India bonds through RBI to fund the fiscal deficit or that would end the practice of fractional reserve banking through a CRR of 4.25%? A surprising new IMF research paper entitled ‘The Chicago Plan Revisited’ by Jaromir Benes and Michael Kumhof is making waves in economic circles, especially with monetarists. The paper suggests that the world would be much better off if we adopted a system where the banks did not create our money. So, instead of a system where more money is only created when more debt is created through the money-multiplier effect, we would have a system of debt-free money that is created directly by the central government. There have been others that have suggested such a system before, but to have an IMF research paper actually recommend that such a system be adopted is a big deal...........

Read - FE

Money for nothing

......A former RBI Governor, Y V Reddy, put the situation in perspective in a paper presented to the Bank for International Settlements in June. He said: “In 2001-02 the problem was one of slow credit growth. We described it as lazy banking and tried to encourage banks to improve credit growth with regulatory and monetary policy initiatives. Soon the lazy bankers became crazy bankers. Excess credit seems to have been preceded by slow growth in credit. The problem is to identify the point at which credit growth becomes excessive or too rapid.”............

Read..........

RBI launches inflation expectations survey of households

New Delhi, Nov 30: The Reserve Bank of India today launched the 30th round of the Inflation Expectations Survey of households with reference period October-December 2012. The central bank has been conducting the Survey on a quarterly basis since September 2005. The Survey seeks qualitative responses from households on price changes (general prices as well as prices of specific product groups) in the next three months as well as in the next one year and quantitative responses on current, three-month ahead and one-year ahead inflation rates, a central bank handout said.  Giving details it said the results of the Survey are being used by Reserve Bank as one of the important inputs to the monetary policy formulation.........

Read........

REC decides not to apply for bank licence

.....The finance ministry is nudging RBI to issue new bank licences within the current framework, while assuring the law will be amended in due course of time. However whether public undertakings can establish new banks would be clear only after RBI issues the final guidelines on new licences. Media reports earlier suggested REC, PFC and IFCI were in talks with two foreign banks to jointly establish a new bank, to create more reach and have a diversified ownership.......

Read - BS

Barclays says RBI unlikely to cut rates on Dec 18 review

The Reserve Bank is unlikely to cut the repo rate before the end of January, British brokerage Barclays Capital said on Friday. "Repo rate cuts, which should lead to an actual easing of call money rates, are not expected before late January," it said in a report released here.......

Read - DNA

Woman held for duping businessman of Rs.10 lakh

......."They sought Rs.10 lakh from the complainant for getting the money from IMF. The victim transferred the money into two accounts. The complainant also received emails purportedly from IMF and RBI (Reserve Bank of India) intimating him of the clearance of the said amount," said the officer. Rahmatullah got suspicious when he received a phone call purportedly from the RBI asking him to transfer another Rs.1.20 lakh for further clearance. "When the complainant verified the authenticity of the e-mails from RBI, it was found to be bogus," ......

Read.......

A long haul

.......To expect the growth rate to travel sharply upwards from here is, however, to be more optimistic than what the data warrants. The 5.3 per cent GDP growth rate for the second quarter of 2012-13 means the economy has grown at just 5.4 per cent in the first six months of the year. To reach the RBI projected 5.8 per cent growth rate for the year means the economy would have to clock an average of 6.2 per cent in both the December and March quarters. On the way, it will have to counteract the recessionary conditions in Europe and a US economy swinging between recovery and another recession............

Read - IE

Rate cut to 2009-10 level key to recovery: Ajay Shankar

.....A revival would primarily depend on the easing of interest rates by RBI to 2009-10 levels; the industry would like this soon enough. The revival would be strengthened with a competitive exchange rate so that domestic value addition isn’t at a disadvantage. An increase in investments in infrastructure, especially in roads and power plants, would stimulate industrial demand. This should, hopefully, happen soon enough, as identified bottlenecks are removed.

Read - BS

FII limit in G-Secs, corp bonds hiked

.....The government, which is battling a high current account deficit (CAD), is trying to attract more foreign funds into the country. CAD, which is the gap between inflows and outflows of foreign funds, was a high of 4.5 per cent in 2011-12. In the current fiscal, CAD is expected to ease to 3.5 per cent. In order to contain CAD, the RBI has already imposed restrictions on financing of gold purchases to curb speculations of the yellow metal......

Read - The Hindu

Public sector banks may extend ‘festival offer’ on retail loans up to March-end

........As per Reserve Bank of India data, since the beginning of the current financial year and up to October 19, banks’ home loans have increased by Rs 25,800 crore and auto loans rose by Rs 9,100 crore. Since the growth in loans for consumer durables has been low in the financial year so far, Finance Minister P. Chidambaram has asked PSBs to consider further steps to promote credit flow to this sector.

Read - HBL

Growth pick-up will depend on RBI policy: Sajjid Chinoy

...........If the politics gets more constructive and authorities can push ahead with the National Investment Board, a balanced land acquisition policy, and boost sentiment (so that the rupee appreciates and has a disinflationary impact allowing the reserve bank to ease monetary policy more aggressively), growth is likely to pick up in 2013. Else, the key drivers of the slowdown in the Q3 2012 are unlikely to go away in a hurry.

Read - BS

Tiger economy left limping as GDP plunges to post lowest growth since 2002-2003

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Struggling for a Six: The great GDP growth challenge

.......A little help from Mint Road and Subbarao would do wonders, but much of the task will have to be done by Chidambaram himself.  The pace of reform holds the key. Even after the GDP figures came in on 30 November, the 30-share BSE Sensex held strong, at well above the 19,200 mark as the market continued to remain bullish on the reform agenda. However, the veteran of many a battle, Chidambaram knows only too well that bourses can be fickle.........

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No chance of a sixer!

............With GDP growth in the first six months clocking just 5.4 % we will have to grow 6.3% in the second half to realise the RBI’s projected growth of 5.8% for the year. That’s a tall order, though not impossible. The only catch is that given the government’s track record to date, I would not put my money on it.

Read - ET

It’s a real race against time

.....It has been obvious to observers, notably the central bank, for some time now that the government will have to get its expenditure under control before the economy can step back on to a higher growth path. The RBI has made lower interest rates conditional on fiscal rectitude and the government has reacted by biting the reform bullet. Subsidy diversion is being trimmed through innovative cash transfers, an efficient goods and services tax is back on the table and infrastructure investments are sought to be put on the fast track......

Read - Hindustan Times

This is the bottom: India GDP unlikely to go below 5.3%, say experts

.......“From the RBI perspective, this number should not make much difference because the central bank’s full-year estimate is similar to this. Also, this data is two months old and the RBI will be looking at current trends. The sentiment has improved, we need to see whether the industrial production data also shows improvement. “I don’t think the RBI has completely disregarded the weakness in growth, but we need to see the next two inflation readings..........

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Options in gold

.....However, it is not yet clear whether RBI will make regulations needed for other banks and financial institutions to launch such products or would associate itself with these products. In any case, its intention is to curb physical import of gold, which has been weighing heavily on the current account deficit (CAD) of the country. In the financial year 2011-12 (FY12), the country had imported 1,067 tonnes of gold worth $60 billion. Some of the products mentioned by Gokarn were modified gold deposit scheme, gold pension plan, gold-linked account and gold accumulation plan......

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Should gold loans be banned?

RBI’s move to prohibit bank financing of gold comes as no surprise. the question is, will it work? is there a mechanism to segregate the speculators from those who genuinely need money against gold?..........

Read - IE

Not much sound in Kelkar Committee

.....the committee talks of how the fiscal deficit has crowded out the private sector. While this is a theoretical outcome, in our context, this has never really been proved in the last two years. RBI has never stated that it has raised rates because the government was borrowing too much. It was an anti-inflation stance that provoked such action. Second, liquidity has never been an issue as banks were never constrained to lend to the private sector because of paucity. RBI has supplemented well with open market operations to ensure that the mismatch was corrected......

Read - IE

HSBC scraps its plan to buy RBS India assets

......However, the Reserve Bank of India (RBI) was not comfortable with the structure and directed the banks to re-work the deal. It is learnt that the banking regulator was of the view that RBS cannot sell its India branches to HSBC as part of the transaction. RBI follows a restrictive policy of offering branch licences to foreign banks. In a year, the RBI typically offers foreign banks around 12 branch licences in total. As per the revised structure of the deal, RBS was supposed to surrender its branches to RBI while the banking regulator will finally decide the distribution of these licences among foreign banks in India. While sources indicated that RBI had permitted the transaction as per the re-worked structure and has allowed transfer of some RBS branches to HSBC, the deal was called off as the banks failed to reach an agreement on certain parameters......

Read - BS

A flawed Approach - S.S.Tarapore

......The leitmotif of the Approach Paper is that all that needs to be done is to dismember the Reserve Bank of India (RBI), create a unified financial regulatory agency and concentrate even greater powers in an already all-powerful Ministry of Finance. While doing so, the Commission appears to be oblivious of the fact that the macroeconomic management would be greatly attenuated by its passion to hive off activity from the RBI. The endeavour should be to see how the present financial legislation should be strengthened to improve the efficiency and effectiveness of policies and to be able to enforce the regulations in a more purposeful manner. In yielding to its great passion to overhaul the system, the Commission has deviated from its central objective.......

Read - HBL

Banking’s new lingo

This refers to the news item titled “Subbarao warns against casino banking” (FE, November 18). One more interesting term has been added to the existing vocabulary of bankers and students of financial management. “Casino banking” has been termed as the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits. Some years ago (2009), the term “narrow banking” had been in vogue. A narrow bank, in its narrow sense, had then been defined as the system under which a bank places its funds in risk-free assets with maturity periods matching its liability maturity profile so that there is no problem relating to asset liability mismatch and the quality of assets remains intact without leading to emergence of sub-standard assets. This extreme risk averseness has been also dubbed as “lazy banking” and “zombie banking”. Other such terms often referred to are: “class banking”, “mass banking”, “inclusive banking”, “logical banking”, “safe banking”, etc. What next? “Sitting-on-the-fence banking”—neither going this way nor that? “Water-on-the-duck’s-back banking”—no policy guidelines ever affect this sector? Perhaps it’s time for RBI to come out with an A to Z primer (arm-chair banking to zombie banking) to educate the layman about such interesting definitions.

 - JS Broca, New Delhi FE