Wednesday, December 19, 2012

RILED FM SKIPS CUSTOMARY STATEMENT

Governor Duvvuri Subbarao’s rigid anti-inflationary stance for more than a year appeared to be easing, even though he disappointed investors by not even reducing the cash reserve ratio (CRR) to ease liquidity pressures. Finance Minister P Chidambaram made no comment on the policy, possibly for the first time in years. In the past, he has publicly spoken of the need for lower interest rates........... 

Read - ET

Behind the curve

......And yet, RBI remained unmoved and refused to lower the policy rate on Tuesday. This despite the fact that RBI itself said the October IIP was a bit of a statistical illusion and “the seasonally adjusted three-month moving average annualised momentum indicator also points to ebbing of inflationary pressures”. ............

Tuesday, December 18, 2012

Up close with Reddy

In September, an Indian newspaper ran a report, titled “If you go by their ad, YV Reddy could become the next governor of Bank of England”. How do you feel after reading the report? Dr Reddy grinned. "Well, the report was actually to describe the process of recruiting the central bank chief in the United Kingdom," said Reddy, the former governor of the Reserve Bank of India. "I think this is important. They make an advance succession plan for important positions.”........

Duo cheated of Rs 60,000 on promise of RBI job offer

AURANGABAD: An unidentified man duped a man and his sister-in-law of Rs 60,000 on the pretext of getting them employment with the Reserve Bank of India (RBI). The duo had deposited the amount in the suspect's bank account after a monk allegedly recommended the duo to do so. A complaint was lodged by the victim on Saturday with the detection branch of the Cantonment police station..........

The ‘new normal’ is abnormal - A.Seshan

.....There is thus not much difference in the economic situation between now and the last occasion, or even earlier, when the Reserve Bank of India (RBI) undertook a review of its monetary policy. There is, however, one significant and dramatic difference in the thinking of the central bank to reveal that times are indeed changing. Due perhaps to frustration, the central bank seems to be throwing in the towel instead of the gauntlet in its battle against inflation. Speaking at a panel discussion recently, the RBI Governor is reported to have said that he was ready to revisit the ‘ideal’ inflation target of 4-5 per cent, which many feel is too low to attain in the current circumstances. He said: “I am not saying that we would definitely change the number, but we will certainly revisit our strategy.” The psychological danger flowing from the change in the official view on inflation is the consequent damaging effect on the price expectations of the public.......

RBI holds Financial Literacy Campaign


As a part of our ongoing financial literacy campaign, Reserve Bank of India, Bhopal put up a financial lietracy stall at Bhopal Haat in Handloom Expo Fair for four days from December 7 to December 10, 2012 to educate the public about RBIs role and functions, basic banking, security features of bank notes, banking Ombudsman scheme etc.........


Kolkata win All India RBI Sports Meet


Bhubaneswar: Soccer lover State Kolkata edged out Delhi by 3-1 goals and emerged champion in the 30th All India Reserve Bank Sports Meet at Kalinga Stadium here on Saturday. Altogether 17 football teams participated. After 16 years Bhubaneswar successful hosted the national meet from December 9 to 15. In which more than 750 players from across 22 branches were participated in four different events in the seven-day-long meet. In which 36 players and three officials of the host team were took part. 
Final Results:
Football: Kolkata (champion), New Delhi (runners-up), Carrom: Men’s; Mumbai, Nagpur, Women’s; Chennai, Patna, Table Tennis: Men’s; Kolkata, Guwahati, Women’s; Mumbai, Belapur, Badminton: Men’s Singles; Rudra Kaushik (N. Delhi), Sanjay Das (Kolkata), Men’s Double’s; Supriya Banerjee & Sanjoy Das (Kolkata), Rahul Sharma & Gurvinder Singh (Jammu).
The Pioneer

Come new year, RBI may shut down counters for exchange of notes, coins

......The United Forum of Reserve Bank Officers and Employees is up in arms against the proposal on the grounds that it would cause inconvenience to the public as there has always been a shortage of coins and the move also works against the staff interests. “This will have a deleterious impact on the staff strength of the banks and their morale as a good-number of employees of all cadres are engaged in this customer-friendly activity…,’’ the union said in a representation submitted to the RBI Governor last week. The union had also slapped a strike notice in this regard, it is learnt. The RBI’s Citizen Charter mentions that it would ensure ‘prompt and courteous service’ in exchange of notes and coins in the denominations of the customers’ choice......

My View on "RBI may shut down counters for exchange of notes, coins"


Height of customer service in RBI is elimination of customers itself. RBI preaches customer service to banks but in practice does not allow customers inside its premises.

- S.G.Shivashankar, Ex-Manager, Bangalore (via e-mail)

I do not know what is the compulsion of the move to close the public counters. This is perhaps the only function of RBI, where direct contact with public takes place and their requirements are satisfied in the minimum of time. In Kochi office of RBI, the main function of the office is to cater to the needs of members of public through the public counters for exchange of notes and issue of coins. Kochi being the prominent and number city of Kerala state, the requirements of fresh notes and coins is quite large. As compared to the main office in Thiruvananthapuram, Kochi office public counters attend to, on an average, about 1000 to 1100 customers every day. When our Governor, Dr.Subbarao had visited Kochi office in March 2011 (just to before my retirement), he was visibly surprised at the serpentine queues at the Banking Hall for notes and coins. In fact, Kochi Office attends to customers nearly 3 times the number of customers turning at TVM office counters.  Promptly,  the Hon. Governor  had agreed with Kochi office proposal to expand the Currency Chest and asked RD, TVM office to follow up the matter closely. I do not, therefore, able to comprehend as to what relief will RBI get from disassociating itself from servicing Public Counters. It is also an established fact that commercial banks seldom extend the service of 'issue of fresh notes and coins' through their banking counters. This has been repeatedly emphasized in the 'incognito visit reports' by RBI officers to bank branches. I am pretty certain that ill-advised move will definitely evoke a huge public outcry not only here but all over India. Common people always look upon RBI public counters as the ultimate place to meet their requirements of fresh notes and coins
- S. Srinivasan, Kochi (via e-mail)

Syndicate Bank opens special counter for exchange of coins


Syndicate Bank has opened a dedicated counter for exchange of coins and small notes on retail basis at its branch located on Mehdipatnam-Mallepally road..............

My View on “Cartelising savings bank rate?”


“Cartelising savings bank rate?” (Business Line, December 14) is disappointing when we consider the customer’s approach to savings bank accounts. All that has been stated by the author is purely from the banker’s viewpoint and not from the angle of customers. Most customers of PSBs use savings bank accounts for transactions or for withdrawals to meet personal expenses. Although there are restrictions (number of withdrawals in a month), PSBs never penalise savings bank customers. Secondly, with most of the PSBs offering automatic conversion of surplus funds in savings bank accounts into fixed deposits, the residual amount is insignificant. Private sector banks that have jacked up savings bank interest rates have not been able to significantly improve their market share of low-cost deposits. As banks have been paying low rates on savings accounts for more than 100 years, individuals have not been attracted to these accounts.
- K. V. Rao (HBL)

Axis Bank offers ‘e-Gift Card’


Axis Bank, India’s third largest private sector bank, will now allow its domestic customers to send an online card with the launch of ‘e-Gift Card’. The card offers customers an alternative channel facility through which they can buy a gift card on www.gogiftacard.com where a customer can buy and send a card of his choice by either e-mailing it or sending it via SMS to their loved ones, the bank said in a statement..........

Won’t Monitor Retail Dollars: RBI to Finmin

The RBI has told finance ministry that it would not be able to monitor the end use of funds brought in to set up foreign-funded stores, according to a person privy to the development..............


RBI ban on border trade restricts growth

...........Confiding that the State Government has been kept in the dark about the circular issued by the RBI, the source revealed that the RBI circular also restricted the barter trade to land route wherein transactions of the trade should take place by way of head load or non-motorised transport system. It has also been reportedly stated in the circular that there would be no monetary transaction under the barter trade agreement while also adding that consignments of imports and exports should be invoiced in USD......

‘RBI norms on foreign banks entry soon’


The Reserve Bank of India (RBI) is soon expected to relax norms for entry of foreign banks into the country, a top government official today said. “RBI is very soon, I believe, is going to announce a very progressive policy for permitting opening of more foreign banks...” Commerce Secretary S R Rao said. He was speaking at a CII function on ‘Driving South Asia Economic Integration’.........

Govt plans gold-linked schemes to curb imports

Attributing the surge in gold imports to high current account deficit, the Government today said it is considering schemes such as gold deposits, accumulation plans, gold-linked accounts and pension products to curb demand for the precious metal. In its Mid-Year Economic Analysis tabled in Parliament today, the government said gold-backed products will help the investor enjoy benefits of investment in the metal without investing in the physical commodity........

Saving for a rainy day

.....Earlier, in March 2012, the RBI issued a discussion paper on the introduction of dynamic provisioning in India. But first, let’s understand what a provision is. In accounting terms, it is an amount set aside from profits to cover a future liability. As the exact amount of the liability is unknown, it is estimated. Now, how do banks make provision for loan impairments globally and in India, and why is the RBI discussing dynamic provisioning?.......

Old habits die hard

The finance ministry may have come up with the idea of a National Investment Board to kickstart stalled projects. But while the Cabinet rechristened the NIB to the Cabinet Committee on Investment (CCI), the finance ministry’s mid-term review of the economy continues to call it the NIB. Perhaps the mid-term review was written before the Cabinet decision or perhaps the finance ministry still yearns for the days when the NIB was a stronger body unlike the watered-down CCI.

FE

My View on "Growth: Lost between RBI and North Block"


The observation, “Continuing with unquestioned faith on the part of the RBI on central bank autonomy, which is illusory; and of the Central Government on austerity and fiscal discipline as a panacea for growth (leave alone distribution) can no longer be trusted as a solution for a revival of the ailing economy” says much more than what has actually been said, leaves a lot of scope for interpretation. It would appear, the writer believes that the present unhappy bickering around North Block and Mint Road is about real differences in policy perception. One wishes, it was so. The fact is that the attempt by Finance Ministry to act as a super regulator over all regulatory bodies in the financial sector is getting more and more exposed in the recent past. This will destabilize the equilibrium deftly built up by eminent persons who headed Finance Ministry and RBI in the formative years of financial regulation in India and consciously maintained by their successors till the recent past.


-  M G WARRIER (HBL)

Five reasons why RBI should cut interest rates



A majority of analysts expect the Reserve Bank of India (RBI) to keep the repo rate on hold on Tuesday. Of 41 analysts polled by Reuters, 37 expect the RBI to keep the policy repo rate unchanged at 8 per cent in December. However, some analysts and investors, though in a minority, have not discounted the possibility of the central bank cutting interest rates for the first time since April on Tuesday........


No-action policy ahead of January rate cut?

....In fact, in the October policy statement, the central bank made it clear that rates may be eased only in the fourth quarter of the fiscal, beginning January. Since the next policy meeting after the 18 December review is in January, RBI is expected to cut rates then, given the fact that wholesale price inflation in Asia’s third largest economy is easing and the government, despite political resistance, is serious about pushing economic reforms—two necessary preconditions for cutting rates......

Nurturing growth


This is with reference to “RBI will likely wait again’’ (Business Line, December 17). The need of the hour is growth. All the sectors have been showing moderate growth or declining growth rates during the last many quarters. It is time for the RBI to take measures like reducing policy rates to provide a positive stimulus to investors. The private investing community and entrepreneurs should come forward for making investment in productive ventures. This will be possible, provided the RBI Governor reduces the policy rates and the CRR by at least 50 basis points. Hence, the RBI need not wait for the Budget to get a clear picture on fiscal consolidation. Once the growth improves, prices will start falling automatically and inflation will be reined in. However, one should remember that there are various reasons for inflation, apart from increase in money supply.
- Nisha Narayanan (HBL)

RBI likely to use CRR tool again


 Faltering deposit growth and an uncomfortable liquidity situation could prompt the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR) by at least 25 basis points at its mid-quarter policy review on Tuesday. Notwithstanding the better-than-expected inflation and industrial production numbers of late, most economists, however, feel that central bank will wait until January to cut interest rates............

Govt Thumbs RBI for a Lift on Road to Growth

 Declaring that the economic slowdown had “bottomed out” and inflation was “moderating”, the government has predicted growth rebounding in the second half and made a pitch to the Reserve Bank of India (RBI), which reviews its monetary policy on Tuesday, for “supportive” steps to keep up the spirits...........

Read - ET

Wrong time for jugaad

.....Prudence, therefore, demands the Governor keep his powder dry. For now ! Indeed, the popular assumption that a rate cut alone is enough to lead to faster economic growth reminds me of the old joke on the uncanny parallels between two years, 1981 and 2005. 1981: Prince Charles got married. Liverpool was crowned soccer champion of Europe. Australia lost the Ashes. The Pope died. 2005: Prince Charles got married. Liverpool was crowned soccer Champion of Europe. Australia lost the Ashes. The Pope died. What’s the lesson to be learned? The next time Charles gets married, someone should warn the Pope! Likewise, don’t jump to hasty conclusions. Quick-fixes don’t lead to quick results !

Read - ET

Inflation and the rate cut conundrum

.....Rising inflation expectations are one indication that people expect high inflation to continue despite what policymakers may say. So RBI needs to win a decisive battle against inflation if it has to maintain its credibility; premature rate cuts could be damaging in the long run. But how can we know if such a victory is round the corner? ......

Which rate to cut?

..... as Bank of America-Merill Lynch points out, a cut in the cash reserve ratio and open-market operations are far more essential than a repo rate cut. That’s because a policy rate cut by the Reserve Bank of India may not translate into a decline in lending rates until liquidity improves.....

Goldman, SBI bet on rate cut; others expect drop in CRR

The Reserve Bank of India (RBI) will spring a surprise on Tuesday by cutting its key lending rate, factoring in easing inflation and slowing growth in Asia’s third largest economy, economists at Goldman Sachs and the nation’s largest lender State Bank of India (SBI), said on Monday...........

Diesel vs inflation

Apart from the headlines of the finance ministry’s mid-year economic analysis (MYEA) lowering its GDP target for FY13 from the budget’s amazing 7.6% estimate to a more sober 5.7-5.9%, there are several interesting points for a larger discussion. On the eve of RBI’s credit policy meeting, apart from talking of the slowing core inflation numbers, the MYEA points to the role of interest rates in cutting corporate profitability..........

Taming Inflation

.......There is no clarity or uniformity in perspective on such things among those who are responsible to prescribe corrective measures. The ‘Inflation elephant’ is perceived as a different monster by scholars from different schools of economics.

Adjudicating NBFC claims


Apropos the report “Provisioning norms to hit profitability of NBFCs” (December 14), the Reserve Bank of India has, at different points in time, promised a level playing field between banks and non-banking financial companies (NBFCs). But it has made no effort to recommend to the government that the recovery mechanism of the Debt Recovery Tribunal, for faster adjudication of NBFC claims against borrowers, be extended to all registered NBFCs. At present, the mechanism covers only notified NBFCs.

Ramakanth Inani Hyderabad (BS)

Cops plan film on chit funds companies

........Besides sensitizing public, police have decided to train their own personnel about the legal aspects and investigation procedures while dealing with such complaints. The Crime Branch, in association with the Reserve Bank of India(RBI), will organize a training programme here on December 21 to teach nearly 40 police officers on prevention and detection of financial frauds. The EOW has also decided to bring two bankers on deputation to assist investigating officers crack cases relating to banking fraud. "We recently hired a chartered accountant for the EOW. Now we will urge the RBI to get two bankers (group-B and C) on deputation for effective investigation," ........

SBI Business Facilitators fight to survive

As per RBI’s Financial Inclusion Plan we were working as Business Facilitator in State Bank of India since 2007 or later. SBI had engaged us on experience basis. SBI’s performance in rural areas was very good with the help of Business Facilitator. We in fact, put our everything to promote and reciprocation.  After joining in SBI all the Business Facilitator’s left their previous job. On the 11th April 2012, SBI has terminated all the Business Facilitator in India without any proper reason..........



Bankers Need To Strike At the Root Cause of Sickness

.... Bankers prefer to  blame interest rate for worsening asset quality or blaming global recession for rise in bad debts or requesting RBI to reduce Repo rate , reduce CRR or  pay interest on CRR to earn profit. It is important to say that even if CRR is removed or government permits payment of interest on CRR or reduce repo rate, corrupt , unskilled officers and incompetent officers cannot ensure safety of their assets.   These banks have already earned huge profit by reduction in CRR rate.  After all, liquidity generated by release of CRR or payment of interest on CRR  provides  relief for few months and for few quarters only.    Even if   CRR is  abolished, bankers will have to accept the bitter truth and will necessarily need to cure the  ills in the  system to keep the asset in good condition. .........

Monday, December 17, 2012

Bank cartelisation: Customers’ response - S.S.Tarapore

.....There are rumblings that the Competition Commission of India (CCI) is looking into issues such as whether the monolith of banks fixing the 4 per cent Savings Bank rate are resorting to cartelisation. The RBI, as the industry regulator, should take a call as to whether this practice reflects cartelisation. The CASAs of individual banks could be examined as part of the bank- wise Resource Management exercise. In the absence of RBI action it would only be appropriate that the CCI should look into this matter. The All- India Bank Depositors' Association (AIBDA) should proactively implead itself as an interested party on the issue of bank cartelisation.......

‘Adopt camp-based model for opening of accounts by SHGs’


Reserve Bank of India Deputy Governor K.C. Chakrabarty has favoured a camp-based model for achieving the ambitious goal of bringing all the self help group members and SHG federations into the ambit of banking services. The model, he said, should be adopted in view of the existing complaints about difficulties faced by members in opening their bank accounts. Conduct of camps will ensure that members gathered at a single venue enabling completion of required formalities under the supervision of the officials of the Government and banks...........


‘Banking being brought closer to masses’


Deputy Governor of the Reserve Bank of India H.R. Khan, while formally launching financial inclusion and literacy programme at Nomula village in Nakrekal mandal said that efforts were being made to bring banking closer to the masses, as 30 per cent of the population did not have access to such facilities. The bank has adopted the village. Mr. Khan said as part of the efforts, business correspondents were being appointed to take banking to the doorstep of people, as opening an account was like ‘passports for financial development’. He conducted an awareness programme for the students of the local ZP High School on identification of fake currency notes........


Public private non-partnership

“I am the least qualified person to talk on capital markets because I am a fixed deposit person and not a fixed income person,” 
Read - BS

Growth: Lost between RBI and North Block

......Continuing with unquestioned faith on the part of the RBI on central bank autonomy, which is illusory; and of the Central Government on austerity and fiscal discipline as a panacea for growth (leave alone distribution) can no longer be trusted as a solution for a revival of the ailing economy.

There is life beyond the RBI

............The Fed said it would allow inflation to run a little faster than its 2% target as long as unemployment remains too high. This is a reversal of nearly 100 years of Fed policy that had accorded paramount importance to price stability at the expense of concerns about shortfalls in employment and growth. Now, the Fed has said that it will give equal time to inflation and growth. Is Mr Subbarao listening or he will continue to go after inflation and capsize the economy boat? But Subbarao may surprise the core inflation gives the Governor some excuse to cut...........

Life exchanged...........




N.R.Iyer, Aged 68 years Retired Assistant Manager, Foreign Exchange Department, RBI passed away on 11-12-2012 after brief illness Will be fondly missed by Shuba, Sudu, Gayatri, Anand, Arjun And Varun. 

TOI

Super regulator

.....Instances of the finance ministry’s attempt to act as a super regulator over all regulatory bodies in the financial sector are becoming increasingly common. This will destabilise the equilibrium deftly built by eminent individuals who headed the finance ministry and the Reserve Bank of India (RBI) in the formative years of financial regulation in India (there were few regulators in the financial sector, almost till the reform days), and consciously maintained by their successors till the recent past........

Candid confessions

Mamta Banerjee Congress, Mamata Banerjee

.... the Reserve Bank (RBI) just won’t let West Bengal develop. “Everything we earn, RBI takes away. What is this RBI? I have empty vessels. What can empty vessels do?” .......

PSB should learn to say ‘no’: RBI

....."Knowingly you give money to some unviable projects. That is a governance issue...In many cases, our public sector bankers have forgotten to say 'no', except to small borrowers. A banker's first characteristic should be to say no," ........

Read..........

RBI's new regime for NBFCs will discipline markets: Purwar

......The new rules by Usha Thorat have put in many onerous capital conditions, the NPL recognition from the current 180 days to 90 days like any bank, whole host of disclosures, not just credit rating, the usual disclosures which banks have to make but also disclosure on credit rating, any penalties by any regulator at any point in time. If an NBFC is over Rs 1,000 crore they must also disclose provision coverage, liquidity ratio, extent of financing of parent company products, off-balance sheet exposures, structured products, that all lot of money. Will NBFCs become weaker or stronger after these rules?.....

‘MFIs not mainstream channels for achieving financial inclusion’




Read - HBL

My View on "RBI received large number of credit card complaints against SBI, ICICI Bank in FY12: Government"


Customer Service Department in the Central office of RBI should ask banks against whom large number of complaints were received, as to the systemic improvements made, where called for, by the banks to avoid such a large number of complaints including action taken against the concerned staff whose negligence had resulted in the complaints.This is necessary as a large number of customers silently suffer and do not write to the Banking Ombudsman in the RBI and action on the lines suggested would take care of the suffering silent majority. Customer Service Department in the Central office should ask for special reports either quarterly or half yearly from the Ombudsmen in the regional offices to help them take action.


- A.Chandramouliswaran

Nagpur Municipal Corporation finally removes 25 pandals

NAGPUR: Acting on the high court's directives to the civic authorities, the anti-encroachment squad of the Nagpur Municipal Corporation and state public works department (PWD) removed pandals erected at RBI Quarters Square in Civil Lines on Saturday. The 25 organizations that were staging demonstrations for their various demands at these pandals were caught unawares by this swift action............



RBI rejects govt cheque over sign mismatch

MUMBAI: A cheque issued by the state government through the Reserve Bank of India (RBI) to a Bombay high court judge recently ended up being dishonoured. That government bungling does not spare even a HC judge was evident when the highest bank didn't honour the cheque, issued for an amount less than Rs 3,000. The reason RBI cited for not clearing it was signature mismatch........ 

BJP to oppose Banking Law (Amendment) Bill

....BJP is demanding that the government either drop the 'contentious' provision from the bill, or refer it back to the standing committee on finance, which had examined the bill. However, the government would like to take forward its long-pending financial sector reform agenda. Chidambaram had conveyed to BJP leaders — Sushma Swaraj and Arun Jaitley — last week the urgency for the passage of the banking law (amendment) bill, which will allow RBI to issue new banking licenses............

Oil cos told to consult RBI before buying dollars

...At a meeting with oil companies earlier this month, ministry officials told a team of senior officials from private and state-owned oil companies to keep the central bank in the loop when they buy dollar. RBI officials were also present in the meeting.  "This could be in the form of an advance notice to RBI which, if necessary and depending on the flow, can sell dollar  in the market to even out swings....This, perhaps, is the best possible option because the RBI has made it abundantly clear that it will not offer a separate window to help oil companies carry out off market dollar purchase," said a person who attended the meetings. ......

RBI policy, US fiscal cliff talks to dictate market trend: Experts

....."Uncertainty will remain on cards initially over RBI's policy and then over the US fiscal cliff," Vikas Jain, MD, Aditya Trading Solutions said. "We should see some correction this week, after breakthrough rally of past few weeks, as the central bank does not seem ready yet to cut rates on Tuesday," ........

A cautiously happy ending to 2012

..Apart from broad considerations of monetary policy, RBI also needs to review bank balance sheets with Basel-III implementation on the cards from January. The sector is under stress, with public sector banks facing serious pressure owing to rising non-performing assets (NPAs) and restructuring requests. Banks will need to raise huge sums over the next five years........



No-action policy ahead of January rate cut?

......If RBI refrains from a CRR cut and chooses to make it a no-action policy on Tuesday, the statement may sound relatively dovish and the central bank can aim at a deeper, half-percentage-point rate cut in January. There could be a CRR cut, too, then.........

Subbarao may have to Keep Rates Unchanged

.......Although the government has said it will lower subsidies through cash transfers, there are doubts about the scale of its operations. Yet another factor that will weigh on Subbarao's decision on Tuesday will be the Federal Reserve launching QE3+, or quantitative easing, ie, printing of more US dollars to buy government bonds. If this stokes commodity prices, including crude oil, it may delay cuts in India. But those worried about economic growth slipping to a decade low of about 5% this year, from 9% a few years ago, believe that it may be too late if the governor postpones a rate cut........

Chidu offers ‘bitter medicine’ but he should try some himself

..............When inflation is still high, the government should curtail its deficits, but Chidambaram has been pressuring the Reserve Bank to cut rates to revive growth. Instead of taking the bitter medicine of cutting non-productive expenditures which will create space for a rate cut, he has been pressuring the RBI to cut rates anyway. Who wants difficult decisions, when easy ones are at hand? Rate cuts are just sugary placebos, and Chidambaram is happy to have that instead of the bitter pill he has been tomtomming.......



PM says inflation at unacceptably high level

Ahead of the Reserve Bank of India’s (RBI’s) monetary policy review next week, Prime Minister Manmohan Singh on Saturday said inflation has risen to “unacceptably” high levels in the past two years, and it needs to be brought down to five-six per cent from over 7.24 per cent in November. However, bankers, including the largest lender State Bank of India (SBI), made a case for a cut in the repo rate................

Premature optimism?

...... All in all, look to tomorrow’s policy statement for what it says on the macro-economy and its global linkages. As for specific monetary action, the betting is on a CRR cut and that too mainly to mollify those arguing vigorously for a rate cut. By January next, the RBI has hinted that it might begin to ease interest rates. Hopefully, it will have clearer economic data to support its action.

RBI will likely wait again

.....Even at the time of half-yearly review of monetary policy in October, RBI Governor D. Subbarao, had mentioned that he did not expect inflation to start easing till the fourth quarter of the fiscal. He had kept his options of acting on the rate front in January if there were other helpful factors. There is some expectation that the RBI will once again tweak the cash reserve ratio to cater to the concerns on tightening liquidity. The CRR was reduced by 25 basis points from 4.5 per cent to 4.25 per cent with effect from November 3. At that time, the RBI had made it clear that the reduction was being done to pre-empt a prospective tightening of liquidity conditions........

Choice is between 25 bps cut in CRR or policy rates

.......RBI may need to shift its bias from inflation to growth this time but may find it tough to defend rate cut delivery against its firm stance of caution against elevated inflation and low real interest rates. While it will be easy and straight-forward for RBI to deliver 25 bps CRR cut to cover advance tax outflows and maintain dovish stance on the way forward, RBI may also consider the other option of delivering 25 bps rate cut with caution on inflation. There are four options before RBI:..........

‘RBI must Cut Rates by 50 bps. A Slump is Easier to Usher in, Tough to Get Out of’

I would recommend RBI to cut CRR and repo rate by 50 bps each. A slowdown is easier to usher in but more difficult to get away from. The best way to bring down prices is to increase supply. 
Read - ET

RBI nod for IFC Code to Kangra cooperative bank


Dharamsala: Kangra Central Cooperative Bank (KCCB) has become the third cooperative bank in the country and the first in North India, to have its own Indian Financial System Code (IFSC). KCCB has been allotted IFS code by Reserve Bank of India, Sandeep Kumar MD of the bank stated. Other two cooperative banks having IFSC standing are are Maharashtra State Co-Op Bank and Bombay Central Co-Op Bank.......


Naina Lal Kidwai is first woman president of Ficci

Marking a distinction of being the first woman and a professional manager to take the charge of the leadership of Ficci, Country Head of HSBC India Naina Lal Kidwai assumed the office of Ficci president on Saturday............

Senior, mid-level executives face high stress

Majority of executives in banking, marketing and media sectors, surveyed by industry body Assocham, have said they face high stress levels, leading to mental and physical fatigue, especially in big cities........

High bad debts temporary: SBI

..........SBI's NPAs rose to 5.15 per cent in the second quarter ended September, from 4.19 per cent over the year-ago period because of deteriorating asset quality.  He said the bank has made adequate provisioning norms. "We have been providing in excess of the prudential provisions. Whatever Reserve Bank asked us to provide, we have been providing that, plus a little more." Gupta said..........

PSU bank employees’ strike on Dec 20

Employees of public sector banks will observe one-day country-wide strike on December 20 in protest against the government’s move to place the Banking Law Amendments bill in the current session of Parliament..........

In a first, SBI takes its officers' body to court

......The SBI brass has been in talks with officers’ representatives on service conditions, including working hours. SBI officials maintain an agreement signed in 2003 provides flexibility for changing the banking hours. “Seven-day banking does not mean the bank would ask employees to work on all seven days,” an official said. The SBI chairman and top officials held negotiations with the office-bearer of the association on October 4 but the talks did not yield fruit. After officers in some circles held demonstrations on November 30, the management moved court for action. An office-bearer said the move for seven-day banking was at odds with unions fighting for introducing a five-day week for bank employees. Meanwhile, SBI has sought an explanation from the association for allegedly instigating officers to protest against the management. It also issued chargesheets and showcause notices to some leaders.....

Saturday, December 15, 2012

Pinnamaneni award for former RBI Governor


......Dr. Rao said that Dr. Reddy was being conferred the award for his role in “Quarantining the Indian Economy from the domino effect of the global financial crisis.” The 13 Governor of RBI, M. Narasimham, was also in the list of several stalwarts who received the award, and Dr. Reddy was, therefore, the second RBI governor to receive it.......

Direct cash transfer can help control inflation: KC Chakrabarty, RBI Deputy Governor

MUMBAI: Describing the government's ambitious direct cash transfer scheme as a "powerful tool", Reserve Bank Deputy Governor K C Chakrabarty has said the initiative will help reduce fiscal deficit, which in turn will also bring down inflation if implemented well. "The direct cash transfer scheme will reduce the fiscal deficit, which in turn will facilitate inflation control," Chakrabarty, the senior-most of the four deputy governors at the Mint Road, told PTI in an interview...............



Nomination facility also available for joint account holders: RBI

....The banking regulator said has noticed that sometimes customers opening joint accounts with or without "either or survivor" mandate, are dissuaded from exercising the nomination facility. It clarified that nomination facility is available for joint deposit accounts too and advised banks to ensure that their branches offer nomination facility to all deposit accounts including joint accounts holders. In a note to regional rural banks issued earlier this week, RBI has once again focused on this issues. "Banks are advised to ensure strict compliance of the instructions," RBI Chief General Manager C.D.Srinivasan said. .....

‘Education loan can be obtained from any branch’


G.H. Rao, Assistant General Manager, Reserve Bank of India, has said that there is no restriction on service area for banks to extend education loan to eligible customers. The service area limitation is applicable only to government-sponsored schemes. Speaking at the district-level bankers’ committee meeting here on Friday, Mr. Rao said that people could obtain an education loan from any bank branch of their choice, irrespective of the location of their residence. “No bank can reject a loan application on the grounds that the residence of the applicant is out of the bank’s service area,” he reiterated...............


Now, you may use your old cheques till March 2013

Banks will have to roll out cheques compliant to CTS-2010 standards from April 1 next year

.....RBI in its circular to the banks also said, “Residual non-CTS-2010 standard cheques that get presented in the clearing system beyond this extended period (March 2013) will continue to be accepted for the clearing but will be cleared at less frequent intervals." This means the non-CTS-2010 compliant cheques will take more time for the clearing beyond March 2013. The central bank, however, indicated that it might impose some kind of fees for such cheques after March 2013........

Read - BS 

Surmounting the insurmountable

........Of late, there is a clear recognition of the magnitude and dimensions of the inadequacies in credit flow to weaker sections and sectors with low individual credit needs at higher levels in GOI and RBI. Perhaps, rural credit is the most talked about and studied subject in our country since late 1950’s and from the establishment of SBI to the current efforts to develop MFIs, there have been a number of fresh initiatives to support rural development. Last July, while speaking on ‘Challenge of financial inclusion’ RBI Governor Duvvuri Subbarao referred to the magnitude and dimensions of the inadequacies in credit flow to weaker sections and sectors with low individual credit needs. Such recognition of the need for action, at the highest level, is comforting. ..............

Bitter medicine needed to get back to high growth path: Chidambaram

...........“Some bitter medicine has to be taken this year. We have to take some bitter medicine. There is no other way...this bitter medicine is good medicine. It will restore the health of the economy and next year we can look forward to much higher growth,” ..........

Moderation in inflation a very good signal: Montek

...........“I don’t regard seven plus per cent inflation as comfort zone. But the important thing is that if you think it is heading down, then may be the time has come to recognise that inflation is clearly softening and growth is weak and I am sure that RBI knows what to do,”........