.....While RBI may need to react to Moody’s somewhat sweeping condemnation of how banks are governed, Moody’s also points out that India’s loan classification rules were far more lenient than in other parts of the world; it pointed out that very often bad loans were being categorised as ‘restructured assets’ in the process allowing banks to get away with lower provisioning. RBI needs to work on this and some of it will probably be addressed in the new rules but simply framing rules may not be enough, there is also something about the lending culture that needs to change. RBI Deputy Governor KC Chakrabarty, for instance, has pointed out that much of the restructuring doesn’t seem transparent and, moreover, that there seems to be some element of discrimination. Neither of these is desirable but.......
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.
Friday, December 7, 2012
De-jargoned: Business correspondent
....According to guidelines issued by the Reserve Bank of India (RBI), various entities including non-governmental organizations and microfinance institutions registered under the Societies Act or Indian Trusts Act, societies registered under the Mutually Aided Cooperative Societies Act or the Cooperative Societies Act of States, post offices or various other individuals who qualify the RBI criterion can become BCs........
Paper glitters more
......An interesting idea recently suggested by RBI Deputy Governor Subir Gokarn of popularising “paper gold” — financial savings instruments which are backed by gold — is worth pursuing immediately. Long available in centres like Singapore, these products in effect call upon banks to buy and sell gold at market determined prices so that their customers can enjoy all the benefits of gold investment without the hassles of storing it physically. The craze for physical gold will hopefully come down then.
Holder of an instrument not affected by the taint of fraudulent preference: Court
.....The taint of fraudulent preference did not extend to the holder in due course said the Delhi High Court inReserve Bank of India vs JVG Finance Ltd when the petitioner sought to restrain the said Anup Rawla from en-cashing the Indira Vikas Patras.......
Thursday, December 6, 2012
Govt appointments -- where uncertainty is the only certainty
.....Subir Gokarn, the high profile economist who was handpicked by RBI Governor in 2009 to steer the country's monetary policy in an uncertain times, completed his three-year term on November 23. There were two certain options before the government. One, extending his tenure as he is eligible for extension, Two, terminating his service and appoint a new person. But the ministry choose the middle path. Neither did it terminate Gokarn's contract nor gave him an extension. The government decided for an interim extension, till December 31, just to add more speculation to one of the most crucial appointments of financial market regulation. Because Gokarn's re-appointment is not ruled out, technically, say the bureaucrats of Raisina Hill, where the finance ministry is housed, he can appear for the interview which will be conducted by the recently appointed search panel headed by Subbarao. Subbarao did the best he could do to avoid uncertainty regarding this crucial appointment as he strongly recommended Gokarn's extension around four months before November 23. This is neither the first time nor the last time that due to indecision of the government uncertainties over key appointments linger........
Is the RBI Being too Modest?
.....It is evident that RBI is following a very conservative practice of (a)
not routing the unrealised gains through the Profit and Loss Account,
and (b) creating a CR on the market value of assets instead of the cost
price. As RBI transfers balance profit to the central government, these
accounting practices are depriving the government of its share of
surplus and building reserves much beyond stated needs.......
Mamata skips her date with RBI Governor
It may improve investors' sentiment but the parliament's decision to vote in favour of allowing foreign direct investment (FDI) in multi-brand retail may have cost the Reserve Bank of India's (RBI) governor D Subbarao his date with West Bengal's flamboyant Chief Minister Mamata Banerjee. Subbarao, who is in Kolkata for the central bank's board meeting tomorrow, was scheduled to pay a courtesy visit to the chief minister. It has been a custom to meet the chief minister whenever a RBI governor visits a state. The calendar of top RBI executives lists one of Subbarao's today's engagements as "meeting with chief minister of West Bengal" at 5:30 PM in Writers' Building. The meeting was cancelled without the state government or RBI offering an explanation.........
Complaints linked to education loans see a drop in 2012
CHENNAI: If one goes by the statistics of the Reserve Bank of India, students are finding it easier to get education loans. S Ganesh, Banking Ombudsman, RBI, said there is a decrease in the number of complaints related to educational loans. RBI data show that the banking ombudsman received 569 educational loan complaints during 2011-12, 149 complaints lesser than the previous year. In 2009-10, the ombudsman got 980 such complaints. "If a student whose grievance against a bank is not resolved to his satisfaction by the bank within one month, he/ she can approach the banking ombudsman, if the complaint pertains to any of the matters specified in the banking ombudsman Scheme 2006," said Ganesh........
IMF does a rethink on capital controls
....IMF continues to argue that gradual progress towards an eventually open capital account is still a worthwhile goal, but timing is the key. This comes very close to the position taken by the two committees headed by former Reserve Bank of India Deputy Governor S.S.Tarapore, which argued that India needs to, for example, have a lower fiscal deficit, a stronger financial system and lower inflation before it can open the door wider to welcome inflows of foreign capital. Current policy is going in the other direction, which is a risky course of action.....
My tribute to soft spoken gentleman.....
K.Ravindran - Ravi as he was fondly called by his friends, was a thorough gentleman,a gem of a person. He was there in CPC when I joined the bank and we were in touch till his retirement. It is so shocking and really difficult to believe that he is no more. May his soul rest in peace and God grants courage to his wife and daughter to bear his loss.
S.R.Chawla
I am deeply shocked hearing the news of sad and sudden demise of Shri K Ravindran. I had the privilege to work under him in Mumbai. I had never seen him getting annoyed or shout at anybody even when he was hurt by the behaviour of the person on the other end. I learnt many things from him. He used to enjoy the most tedious items of work given to him without ever complaining or grumbling about them. This is a great human loss. May his kind soul rest in eternal peace.
Harish
My View on "FM's pushing too hard....."
Government and the Bank (RBI) have different agenda- Former views everything from political angle-their prime concern is their vote bank. Whereas RBI is concerned with Economy of the country, stability in the financial sector and many more things as per the Act. When European Crises was at the peak and prior to that during the South Asian Crisis, it was RBI which insulated us, to a great extent, from the crises. This was acknowledged world over. Perhaps our politicians don't have faith in the Institution that is why slowly they are hitting on its autonomy, not consulting it and doing the things the way it suits them. God only can save us.
Ashok Kumar Bhargava
My View on "Ministerial attacks on regulatory authorities deplorable"
Statutory bodies like RBI should not be made subservient to the whims and fancies of officials in ministries for exercising the powers they are expected to exercise as part of their mandated functions. RBI has faced problems on such issues relating to banks earlier due to blurred clarity in powers and interpretation of law. Perhaps, RBI has learnt from the recent experiences while handling new generation private sector banks which did not survive and the interests of the clientele had to be protected by the regulator with GOI support. Last ten years or so, RBI has been loitering around North Block for permission to continue a pension updation granted by RBI in exercise of powers available under Reserve Bank of India Pension Regulations which is being questioned by finance ministry which has interpreted the pension regulations differently. An amendment to RBI Pension Regulations made to conform to the GOI interpretation of the regulations is pending with finance ministry for more than a year. Such experiences too, can put RBI on guard while acting on trust.
- M.G.Warrier
RBI warns of 'tough times' ahead
The top brass of the Reserve Bank of India (RBI) today said the government and the regulator's role in managing crisis is likely to be tested as "tough times" may continue for the Indian banking industry. "It will be tested over time," a top RBI official told bankers. RBI's top executives met bankers at a meeting organised by the Bankers' Club...........
Sluggish deposit growth means CRR cut’s on
....On an annualised basis, deposit growth has slowed down to 13.4% mid-November compared to 16.5% growth seen last year. Indranil Sen Gupta, economist with Bank of America Merrill Lynch, said deposit growth has begun to flounder at 13% levels with the Reserve Bank of India (RBI) delaying primary liquidity......
ABS IMPACT - Competition Commission Agrees to Look Into Charge of Cartelization by Banks for fixing 4% Interest on Saving Bank Deposits
....I feel contended that CCI has taken note of our concerns and ToI has reported that CCI is looking into this issue of cartelization by PS Banks. However, I am sure to note that Reserve Bank of India is totally silent on this issue. Inspite of fact that RBI is the top most regulator to the banks and has eminent, vocal statisticians like K C Chakrabarty (presently DG of RBI), who considers himself to be the biggest crusader of Financial Inclusion, has never chided the CMDs of PS Banks on this issue.......
Know Your Banking Rights
.....Customers dealing with banks should familiarise themselves with all the applicable rules and regulations as also the duty cast on the banks by RBI so that they can protect their rights more effectively.
ICICI Bank launches online Flexible Recurring Deposit product “iWish”
.....ICICI Bank Limited, India's largest private sector bank, today announced the launch of an innovative online Flexible Recurring Deposit product called “iWish” for all its savings account customers. This product offers customers the flexibility to choose when and how much to save to meet their goals and, for the first time in India, share their goals on Facebook with friends and family who can choose to contribute to the goal.......
HDFC Bank to hold national 'Blood Donation Drive' on December 7
......This is the sixth consecutive year that HDFC Bank has conducted this campaign. The Bank started this initiative in 2007 when over 4000 volunteers came forward for this cause. Since then the camp has grown in size and stature. In 2011, collection had jumped ten-fold to touch over 40,000 units from 4000 units in the first year. “It is heartening to know that with each passing year more and more people are eager to be a part of this life-saving campaign. This year the campaign is moving into colleges to create awareness and encourage our country’s youth to participate in this important drive........
Bid to link ETFs & gold deposits
.....In an attempt to tide over the problem of ETFs purchasing physical gold, which is the underlying assets, the finance ministry, Sebi and RBI are considering transferring the metal generated through the deposit scheme to the funds. Officials privy to the discussions, however, said that a final discussion on the modalities is yet to be taken......
Fighting the gold bug
....It is ironic that the RBI, which bought around 200 tonnes of gold in 2009 from the International Monetary Fund, is now worried about Indians’ preference for the yellow metal in physical form. At best it is offering only a band-aid solution and is treating the symptom of high gold demand rather than addressing the underlying factors behind the strong demand for gold......
Govt likely to infuse Rs 4,000 cr in SBI this fiscal
State Bank of India today said it is expecting around Rs 4,000 crore infusion from government this fiscal that will ramp up its capital base to over 13 percent. “I think the government will give us capital and it should be around Rs 4,000 crore. What mode it will be, is a matter that is being discussed,” Managing Director and Chief Financial Officer Diwakar Gupta said today.......
No cartelisation in fixing saving deposit rates: SBI
......The nation's largest bank SBI today dismissed allegations of cartelisation by big banks in keeping savings deposit rate unchanged despite RBI deregulating this over a year ago. Disputing the charges, SBI Managing Director and Chief Financial officer Diwakar Gupta said the bank's decision not to raise interest rates on savings deposits is a purely commercial one and does not amount to cartelisation. "I said it is not cartelisation,"......
3 main reasons why SBI is not doing well
Chairman of SBI (State Bank of India), Pratip Chaudhuri after getting the coveted seat of the nation's largest lender, thought that problems would perhaps be fewer than what he faces right now. His predecessor, OP Bhatt was known for its bold moves sometimes, which Chaudhuri acknowledges, but it left the nation's largest lender with questions to answer with no immidiate solutions at hand. From the large pension liability to the home loan business going down, the man had to tackle some of tough problems at hand.........
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Wednesday, December 5, 2012
Ministerial attacks on regulatory authorities deplorable
.....The constitution of the country, as well as the RBI Act, envisions complete autonomy for the Reserve Bank of India, as the prime custodian of the monetary policy of the country to shield the economy from any fiasco, arising from political muddling or populism. Notwithstanding this constitutional safeguard against any political interference in the working of the RBI, the FM’s repeated assertions using the words such as, “in our (government’s) view, the government and monetary authority must point in the same direction and also walk in the same direction. As we take steps on the fiscal side, RBI should take steps on the monetary side” are altogether unwarranted and amount to constitutional impropriety. Even the Prime Minister had to intervene, though gently, on the side of the RBI and justify the autonomy enjoyed by the RBI......
RBI logo recalls treacherous British era
Two nominees of RBI on LVB board
The Reserve Bank of India has appointed two of its senior officials on the board of Lakshmi Vilas Bank (LVB), apparently to safeguard the interest of depositors. The RBI has appointed R. Ravi Kumar and Ashok Narain, General Managers in the central bank, as additional directors of the private bank as per Section 36AB(1) of the Banking Regulation Act, 1949, the bank said in a filing to the BSE........
Tell RBI your inflation expectations…
......The survey will ask you the amount of money you have to spent on food items such as milk, wheat, rice, chana dal and tur dal. Keep in mind that the result of this survey will be used by the central bank as one of the important inputs to its monetary policy formulation.
Govt banks struggle to find people as old guard retires
.....The Khandelwal committee, which was set up to address the human resource challenges of state-owned banks, while acknowledging the manpower shortage banks are facing, said: “The leadership gaps in public sector banks are palpable. In the next five years, 80 per cent of general managers, 65 per cent of deputy general managers, 58 per cent of assistant general managers and 44 per cent of chief managers would be retiring.” So many people leaving at the same time has prompted the Reserve Bank of India to call the 10 years from 2010 to 2020 as the ‘decade of retirement’......
Government seeks 64 years as retirement age for public sector banks's chiefs
.....Government officials told TOI that the finance ministry has moved a proposal to the Appointments Committee of Cabinet, suggesting that banking being a specialized activity, it needed chairmen and executive directors with at least a five-year term instead of the average tenure of one-two years at present. In fact, it pointed out that in technical departments, the retirement age was already increased to 64 years and argued for a similar dispensation for bank chairmen and managing directors, a move which is being seen as a precursor to raise the superannuation age in government-owned banks over the next few years......
An academic question
The Indira Gandhi Institute of Development Research ( IGIDR) in Mumbai is close to the fabled film city, so it was inevitable that the institute would receive proposals for film shoots on campus. Many years ago, IGIDR Founder-Director Kirit S Parikh said in his speech at a conference at the institute, film-maker Manmohan Desai wanted to shoot a scene there for a film starring Sridevi and Amitabh Bachchan. Sridevi was to play the daughter of a rich father who had studied at the institute. But, Parikh said, he did not allow the shoot because he believed that the institute’s academic contribution would be seriously compromised. The institute was established by the Reserve Bank of India.
BS
Why we need new banks fast
.....Subsequently, in 2003, two more new private banks were given licence -- Kotak Mahindra Bank and Yes Bank. The promoters had to bring in higher capital, Rs 300 crore each. This time too the objective was to intensify competition. Almost a decade since then, the competition has indeed intensified among banks but only on the urban turf and still at least 40 per cent of the nation’s adult population does not have access to banking services. Which is why India needs more banks. The RBI should not delay the process any more. It should go ahead and allow the “fit and proper” individuals, institutions and even industrial houses to set up banks.......
P Chidambaram ask banks to play more proactive role in hiring their employees
The finance minister has asked chiefs of public sector banks to play a more proactive role in terms of recruiting their employee rather than being excessively dependent on Institute of Banking Personnel Selection (IBPS) to fill vacancies. P. Chidambaram conveyed this to bank chiefs at a meeting in Delhi while adding each banks should design its recruitment policy to suit its own requirement. At present, IBPS screens and conducts a uniform online examination on the applicants on behalf of public sector banks. IBPS does not interview the candidate for the PSU bank, but has a say in directing candidates, who have cleared examination, to different banks for interview. "Bankers have been satisfied with IBPS and recently some banks were thinking of asking IBPS to interview candidates on their behalf. However, the FMs view on the subjects will results into rethinking on this matter," said a banker present in the meeting............
Keltron core banking software for co-op banks
....The aim is to provide access to cost-effective package with total technology support to the cash-strapped cooperative institutions in the State. The changeover to core banking technology has now become imperative thanks to constraints associated with the legacy systems to deal with tough competition. All new-generation banks and almost all nationalised banks have completed the changeover to the sophisticated technology offered by core banking. But this has come at a price since they have all plumped for proprietary technology owned and services provided by big multinational companies......
PIL against finance companies
The Madras High Court Bench here on Tuesday ordered notice to Union Finance Ministry and Reserve Bank of India seeking their reply to a public interest litigation petition alleging collection of exorbitant rate of interest by private non-banking financial companies such as Muthoot Finance Company and Manappuram Finance Company from those availing gold loans..........
No need to change RBI's inflation comfort level, says Rangarajan
.....In 1998, Rangarajan had called inflation rate at six-seven per cent as “acceptable level”. His idea of threshold was: at what level of inflation do adverse consequences set in? “Then, inflation level was as high as 10-11 per cent, so cutting down inflation to six per cent was also very difficult,” said Rangarajan. He noted that high inflation created problems on the exchange rate side, and it was desirable to contain inflation to four-five per cent — a comfort zone as set by RBI. According to Deepak Mohanty, Executive Director, RBI, if inflation persisted beyond the threshold level of 4-5.5 per cent, it could lower economic growth over the medium term. In his paper titled “Inflation Threshold in India: An Empirical Investigation,” he said prolonged high inflation, even if originating from the supply side, could give rise to increased inflation expectations and cause general prices to rise.......
Govt's bank challenge
The new Basel III norms, which are to be implemented from January 1, 2013, should render the global banking system much less vulnerable. But their implementation starts at a time when Indian banking is under stress. Public sector banks (PSBs), which hold roughly 70 per cent of all assets, are in especially poor shape. There is provision for Rs 15,000 crore of PSB equity infusion in the 2012-13 Budget. But given decelerating growth and a big fiscal deficit, the government will struggle to recapitalise PSBs..........
926 bank branches in Mumbai, Navi Mumbai to receive advance tax
.....“As many as 926 computerised branches of public and private sector banks will receive advance income tax in Mumbai and Navi Mumbai. These arrangements have been made for the convenience of the income tax assesses,” RBI said in a statement on Tuesday.........
Rs 32,000 fake notes at banks in a year
Raipur : Fake currency notes of over Rs32,000 were recovered last year from different branches of banks in the capital city. The counterfeit notes included currency denomination of Rs1,000, Rs500, Rs100 and Rs50, police said. Officials at the Civil Lines Police station said in all fake currency worth Rs31,650 were submitted with the police station that was deposited in Axis Bank Pujari Chamber Pachpedi Naka, SBI main branch, Union Bank, Bank of India, Tatyapara, in past one year. The notes were sent to Reserve Bank of India, Nagpur, for verification. After it was confirmed police registered a case against the unidentified person.....
Concern in LS over ATMs dispensing fake notes
......Raising the matter during Zero Hour, RSP member Prashanta K Majumdar said circulation of fake currency in the country had grown to such an extent that counterfeit notes were conveniently finding way to banks and re-circulated through ATMs. He alleged that banks could be in collusion and those running the ATMs could also be involved. "The source needs to be checked. When ATMs dispense fake notes, those running them should be held responsible," .........
Simplify ECS, NEFT, RTGS, IFSC
Instead of bland ads RBI and all commercial banks ought to have come out with them much earlier. Most banks have neither issued new cheque books nor informed their customers of the impending change. The cheque books issued by my Bankers - Union Bank already bear this markings. Who says PSB are slow? Instead of discarding the old cheque leaves, the bank should encourage customers to make use of them for cash withdrawals, inter-account transfers within the branch like utility payments/yourselves and to customer within the same branch. The RBI should simplify ECS, NEFT, RTGS, IFSC by merging them with the account number so as to enable the customer to direct transfers to the account instead of having to repeat IFSC etc. for ECS and NEFT remittances. It can make life easy both for the customers and the banks. Can the RBI consider this and come out with appropriate Directions?
- Nagesh Kini (Moneylife)
Cheque truncation system: What is it, how will it benefit you?
......Though the RBI has given clear instructions to all banks to issue only multi-city payable at par CTS 2010 standard cheques , many banks are still issuing cheque books with CTS 2010 standard, but without specifying the fact that they are payable at par all branches. RBI should strictly enforce this basic requirement in the interest of making available this facility to all bank customers as a part of the up gradation of the clearing system in the country. At present a number of banks levy charges for use of cheques beyond a certain number of cheque leaves per month. The RBI should stipulate that the new cheque books issued under CTS 2010 in lieu of the old cheque books should not be charged for, if customers have already been charged for the old cheque books, as this change over is at the instance of RBI and the banks........
Fiscal deficit is likely to stay closer to 6%: Economists
....Reserve Bank of India Deputy Governor Subir Gokarn had recently said that India’s fiscal deficit is somewhere around 5.5 per cent of the GDP and will take time to get back to 2008 levels. “The fiscal deficit was at 2.5 per cent in 2008… Due to build-up of subsidies following high oil prices, it grew to around 6 per cent of GDP and is now somewhere in the region of 5.5 per cent, Gokarn said at an Indo-Swiss Chamber of Commerce meeting. The RBI deputy governor said that the global environment has turned hostile and the markets were not recovering as fast as expected. As a result, the “exports are suffering”.......
BS poll: Street divided on RBI action in Dec policy review
A Business Standard poll, conducted among prominent fund managers and economists, shows that the Reserve Bank of India (RBI) is likely to keep interest rates unchanged in its mid-quarter review of monetary policy, scheduled for December 18. However, the street seems divided on whether the central bank would opt for another cut in the cash reserve ratio (CRR).........
The new normal - A.Seshan
.....The Preamble to the RBI Act 1934 mandates “monetary stability” as its objective. Till the middle of the 1980s, it meant stability in prices or the purchasing power of the rupee. It has since been conveniently distorted to mean the stability of the inflation rate. The difference between the two interpretations, its impact on policy-making and the consequence for the common man can easily be guessed. While the judiciary cannot lay down policy, the interpretation of the law is its legitimate function. It is time for public interest litigation to know the Supreme Court’s views on the interpretation of the Preamble.
What could be the new normal for inflation?
Former RBI Governor Y V Reddy has found takers among economists for his idea mooted recently that the central bank should revisit its normal rate for inflation from the current 4-5% since it was set before India was integrated with the global economy. However, Prime Minister's Economic Advisory Council Chairman C Rangarajan, himself a former RBI governor, favours retaining the current comfort zone in terms of inflation.........
Plea to reschedule loan repayment of MSMEs
....In a letter to the Regional Director of RBI, Chennai, President of VDMSEA M.V. Swamynatthan said the industrial production emerging from MSMEs in the State has shown declining trend in the last two years due to power crisis. As a result, the rank of MSME has slipped from the number one position at the national level as result of higher rate of closure......
Moody’s outlook on Indian banks continues to be negative
Moody’s Investors Service’s outlook on Indian banks continues to be negative against a backdrop of slow economic growth, high inflation, high interest rates and a weak local currency. Moody’s, which had lowered its outlook on Indian lenders to negative from stable in November 2011, said on Tuesday that its view for the next 12-18 months remained negative as it expects “these factors to lead to a further deterioration in asset quality, an increase in provisioning costs, and a fall in profitability”.......
RBI, Bank of Japan agree on currency swap arrangement
The Reserve Bank of India (RBI) and the Bank of Japan on Tuesday agreed on a currency swap arrangement against the dollar for up to $15 billion that will be valid for three years...........
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Why FDI debate in Lok Sabha interlinked to one on FEMA amendments
When Parliament debates the amendments to the Foreign Exchange Management Act (FEMA), it will be taking up five critical changes to the law notified by the Reserve Bank of India (RBI) between May and October this year...........
IDBI deputy MD's selection process under lens
....The ministry was pushing Rego's case after the Appointments Board, headed by RBI governor D Subbarao, marked him as the top choice for one of the two deputy MD posts at IDBI Bank, which is lying vacant for several months. But within a few weeks, the personnel department wrote to the financial services wing pointing out certain shortcomings. It said that during 2007-08 and 2008-09, Rego's work had been praised, but the rating had not been changed. The financial services department, however, upgraded the ratings from "very good" to "outstanding" and gave him a score of 70 instead of 66, which had also been given to another candidate who was a contender for the job........
Gold addiction
RBI deputy governor Subir Gokarn has said that the only way to save the widening current account deficit—and hence the rupee—is to get Indians de-addicted from gold. Referring to it, your editorial “Curing Indians of gold” (FE, November 28) has welcomed RBI’s move for the launch of gold-backed instruments. It is one side of the coin. But we cannot ignore the consumer demand also. Today, ornamental gold sale is thriving and its advertisements are choking the media. Though ornamental gold might have helped people in some way by its ever-increasing value, for raising loans etc, the craze for gold ornaments is in a way also a curse for the Indian society. Besides many risks, it is also the source of dowry evil !
- Jacob Sahayam, Thiruvananthapuram (FE)
Gold Loans Help Aam Aadmi
.....Unfortunately, even a 4% duty has sufficed to revive gold smuggling:
customs seizures are up. Former RBI Governor C Rangarajan has said that
raising the duty further will be counterproductive. Another former Governor, Y V Reddy, has asked, "If Mercedes-Benzes and aftershave
lotions can be imported, why not gold?" I would go further. If Tata and
Birla can use billions in foreign exchange to buy companies abroad
though many acquisitions have been duds — why prevent the aam aadmi from
also using a little foreign exchange to invest in a dollar-denominated
asset like gold?........
Should RBI allow banks to buy back gold?
....The Reserve Bank of India should not allow banks to buy back gold. That could possibly result in currency devaluation and inflationary spikes. While the monetisation of gold assets will boost liquidity in the system, capital market instruments will be better than allowing banks to hold gold assets.....
Tuesday, December 4, 2012
Global environment to get less hospitable for India: Gokarn
The stress in our domestic markets may prevail for sometime as the Reserve Bank of India (RBI) raised concerns that the global environment has turned hostile and our main markets are not recovering. “The global market environment has turned hostile and our main markets are not recovering as fast as it was initially thought, so, exports are suffering,” said Subir Gokarn, Deputy Governor, RBI, at an event on Monday......
Is a foreign governor better for RBI?
........On balance, it may be argued that while the British case has a greater probability of succeeding, the same may not hold true for emerging markets, including India. Governors of RBI have generally had some exposure to working in the government, which is helpful as they are practical and know how policies function. Working of the two arms becomes easier when there is understanding. Having a very independent governor can be an issue, especially if there is intransigence in aligning with other government policies. One must remember that the monetary arm of the government, the central bank, cannot work in isolation as its job is to harmonise the financial sector with the requirements of the real sector, where growth takes place. The situation is akin to a corporate where all departments have to work together in harmony, and a person who is home-grown would have an advantage.........
Vital support..........
I am short of words to express my sincere feelings for the support I am getting from my family in the journey of VITALINFO..........
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...........
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.........
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...........
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......
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.......
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
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........
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.......
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...............
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........
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............
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......
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.....
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......
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.
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........
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.
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