......Making the market regulator responsible for policy lapses is not wise given the backdrop of tough macroeconomic environment coupled with uncertainties looming large. This is not to suggest that the rating agency’s alarm bells on asset quality of banks should be ignored. Both RBI and banks have huge challenges on hand to contain the NPAs to acceptable levels.........
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 21, 2012
Shadow banking: Silent threat to India’s growth story
.....With non-bank companies accounting for almost 40% of India’s financial system, policy makers are struggling to tame inflation and reverse slowing growth, said Ashima Goyal, a Mumbai-based economics professor and member of the central bank’s technical advisory committee. While the Reserve Bank of India raised interest rates 13 times from mid-March 2010 through April of this year, inflation has remained above 8% for 21 of 26 months, according to data compiled by Bloomberg. Having so much money outside government control “stands in the way of smooth transmission of monetary policy,” Goyal said. “This challenge is at the root of India’s struggle to administer policy that will trigger the kind of growth the world is expecting out of India.”........
Rocketting financial Inclusion in India
.......Although there is a long road ahead for complete financial inclusion, the business correspondent model has the potential to be the model of socio-economic inclusion for India.....
Parliament gives final approval to Banking Amendment Bill
........Winding up the discussion on the Bill in the House, Mr. Chidambaram said the modified legislation would help create "world size" banks in India. "We need more banks. Yes, we are opening new branches, but that's not enough... We need two to three world size banks," said Mr. Chidambaram, adding that the new regulation would help achieve this objective.........
Bank licences by Dec-end; FinMin, RBI plan guidelines
............The finance ministry is now preparing a letter that will be sent to the RBI on Friday morning regarding the submission of the final guidelines that will be later considered by the finance ministry. Some of the suggestions listed by the finance ministry include the categorisation of banks banks into three groups - local, regional and national banks and international banks.......
Moves afoot for mergers of public sector banks
.......“The issue of consolidation (of public sector banks) has been taken up by the finance ministry, though it is still at a nascent stage,” said a senior finance ministry official on condition of anonymity.........
Banking Amendment Bill: What are its benefits to the banking public?
The measures contained in the Banking Amendment bill are expected to create more confidence among investors, depositors and the public in the banking system. But a lot more requires to be done in the area of improving corporate governance, better customer service, and more importantly freeing the public sector banks from the political interference and the dual control of banks by the finance ministry and the RBI.....
Shriram splits holdings with eye on bank licence
The Shriram Group has moved its non-financial businesses worth Rs. 4,500 crore to a new holding firm, Shriram Venture, to meet Reserve Bank of India (RBI) norms and apply for a banking licence, a top official of the Chennai-based firm said.........
Govt bank employees strike, residents inconvenienced
Employees of government banks observed a complete strike on Thursday at Sangrur. Protesting under the banner of All India Banks Employees Association (AIBEA) and Banks Employees Federation of India, employees demanded the roll-back of the recent Banking Regularisation Act and slammed the government's move to grant banking licences to big business houses..........
The lure of gold
........As far back as July 1958, I G Patel predicted in an essay titled “Turning Gold into Base Metal”, carried in the Economic Weekly, that “gold bonds would prove unattractive to most people”. This essay concluded that “dethronement of gold from the position it occupies in India — deserves serious consideration”. Well, many Indians continue to want to keep their gold holdings confidential. Consequently, to reduce demand for gold, alternative investment avenues would need to be devised to facilitate anonymous cash purchases of inflation-proof, low-risk and potentially high-return instruments. Clearly, this may not be feasible or ethically justified........
RBI begins check on collateral adequacy for corporate loans
...........A senior official associated with CDR said RBI’s move on checking collateral adequacy made eminent sense, as questions on quality and adequacy of securities were often raised when recast proposals came. The feasibility of restructuring crucially depended on the collateral and securities offered, he added.
Stop resorting to strikes, Chidambaram tells bank unions
Finance Minister P. Chidambaram on Thursday asked bank unions to desist from resorting to protest strikes, stating that such actions were not desirable in an important industry such as banking. The Finance Minister’s advice came on a day when over five lakh bank employees and officers went on protest strike, paralysing banking operations in many parts of the country..........
RBI directive on ATMs
IMPHAL, Dec 20: Representatives of Reserve Bank of India (RBI) today instructed officials of banking institutes to ensure sufficient availability of cash at their respective ATM booths..........
RBI asks payment operators to move to IPv6
.........“The DoT has undertaken the initiative of migration from IPv4 to IPv6... They have expressed that the migration of all payment gateways, banks, financial institutions, insurance companies, etc, including their websites should be completed at the earliest,” RBI said in a notification. Since migration to IPv6 is an eventuality that has to be accepted and manage proactively, government wants it to be done in a planned manner, it added. “We...advise you to initiate necessary action by constituting a special team to complete the migration at the earliest and keep us informed of the progress made by March 30, 2013,” RBI said in a notification.......
Strike hits banking activity
.....Banking activity in the State was hit on Thursday as a result of the strike by employees and officers in protest against the amendments to banking regulations that are aimed at facilitating the entry of Indian corporate groups to venture into banking.......
On strike: Why bank unions are opposing banking bill
...........The passage of the bill will be a giant step towards de-nationalisation of the PSU banks that have played a pivotal role in the growth of India’s economy........
ATMs, e-payment options take sting out of bank strikes
....Compared to earlier days when bank strikes had brought the normal financial world of the public to a halt, bank-strikes these days seem to be a non-issue for many, thanks to technology. The increasing presence of ATMs, usage of Internet banking and e-payment gateways are obviously working in favour of bank customers these days. “I think technology made bank-strikes irrelevant for many because of increasing use of alternative channels,’.......
SBM in your pocket
State Bank of Mysore has embraced mobile banking and internet banking to serve its customers. The bank, through this medium, has found an alternate delivery channel for the customers’ banking needs. This is just like having the bank in your pocket or at your house/office..............
CanMobile - banking while you are on the move
....While some banks launched mobile banking at an early stage under different SMS and GPRS-based platforms, Canara Bank worked hard to introduce a strong and secure solution for mobile banking to facilitate its customers.......
Karnataka Bank opens new delivery channel for customers
....“To begin with, our bank is proposing to have over one lakh customers subscribing for ‘KBL-Mobile’ services.” Karnataka Bank wants to make use of mobile banking services as a financial inclusion platform by reaching out to large section of people across India,........
Banks take deposit route to cross-sell products
The latest entrants in the banking sector are focusing on retail liabilities, which in turn are used for cross-selling products to boost fee income. These are looking to grow their customer base by first offering a savings bank account and then cross-sell loan products........
As bad loans rise, rival banks share info on clients
With bad loans turning an increasingly heavy millstone, it’s time for enemies to turn frenemies on Banking Avenue. The Reserve bank of India (RBI) has ordered banks to mandatorily share information on borrowers and public sector players have kicked off the process in right earnerst............
Takeover news false: Karnataka Bank MD
The Karnataka Bank Ltd (KBL) is not facing any takeover moves and reports to that effect are all “rumours”, according to managing director and CEO, P Jayarama Bhat. According to him, the bank is, in fact, looking at increasing its export credit from the current Rs 1,500 crore to Rs 2,500 crore in the current financial year (FY13). “The Reserve Bank of India (RBI) said it was advisable to have export credit at 12 per cent, and we were planning to achieve that. We have a target to reach about Rs 2,500 crore of export credit. We are at around Rs 1,500 crore now, so there is a Rs 1,000-crore gap. We are planning to cover this in 2012-13,” said Bhat..........
Thursday, December 20, 2012
RBI to organise financial outreach camp in Assam
The Reserve Bank of India will organise a financial outreach camp later this month at Assam’s Darrang district as part of its initiative to bring the people of remote areas under the ambit of the banking structure. The camp would be conducted on December 22 at Gharowa Sonapur Village in Darrang district, an official statement said. RBI Executive Director Deepak Mohanty will formally inaugurate the camp............
RBI to expedite new bank licence process: Chakrabarty
 |
| “Time we cannot say but the process will be expedited... I don’t think it should take much time,” |
SBBJ seeks virtual banking licence
..The customer will not walk into that branch at all. So, everything will be done either online or through mails,” said Shiva Kumar, managing director of SBBJ, an associate of the State Bank of India. Kumar is hopeful to get a virtual banking license but the banking regulator may be conservative in granting one. RBI had rejected such applications in the past citing norms that need modifications to allow virtual banking. There are other hurdles too. For instance, even though most transactions can be carried out online, cash deposits still need to be made at the bank branch. “In future, there will be Automated Teller Machines that will allow customers to deposit cash as well as withdraw. There will not be any need for a home branch then,”..........
Conciliation meeting
As already intimated, the Bank is contemplating closing down the public
counters in the Banking Hall at all centers from 1st January 2013.(from
2nd January 2013 wherever 1st is a holiday for New Year). In protest thereof, the AIRBEA and AIRBWF has decided to go on A DAY's STRIKE on 1st / 2nd January 2013. The Officers' Associations have decided to go on Mass Casual Leave on the same day. The
Association and Union at Chennai gave notice to the Bank for the Strike
and also submitted a copy thereof to the Regional Labour Commissioner. Today the Regional Labour Commissioner has issued notice to the
Unions not to go on strike and the Bank not to implement their decision
to close down the counters on 2nd January 2013. They have invited the
Bank and the Unions for a conciliation meeting to be held on 28th
December 2012.
- B. Chandraiah, Chennai (Via e-mail)
Grameen Bank holds awareness programme at Pangali
........Suchitra Bhattacharya from RBI also highlighted the policies and programmes of RBI and threw light on ICT enabled financial inclusion in village Pangali. Earlier R P Sharma, Senior Manager, Microfinance and Financial Inclusion apprised the gathering about the various lending schemes of the Bank for providing credit to agriculturists, business community, transporters etc. Romesh Kumar, AGM NABARD acquainted the gathering about the concept of FI, self help groups and Farmers Club and other programmes of NABARD to generate the income of rural people..........
My View on "Dr. Sandip chosen for "HR LEADERSHIP AWARD"
“A large part of the productivity and quality movement in Indian Industry has been achieved on the shoulders of outstanding HR professionals, which have gone unacknowledged.”(Business Manager, December, 2012).
Seen in this context, any honor conferred on those who ‘live’ HR management is worth celebration.
Best of luck in all your endeavors.
Warm regards
- M G Warrier, Thiruvananthapuram
PSU bank unions to go on strike today
..........Besides All India Bank Employees Association (AIBEA), Bank Employees Federation of India (BEFI), All India Bank Officers' Association (AIBOA) and National Union of Bank Employees (NUBE) are participating in the nation- wide strike. The unions claimed that about 7 lakh employees of various public sector banks would participate in the strike.The strike follows Lok Sabha clearing Banking Laws (Amendment) Bill after the government dropped controversial provisions relating to allowing banks to trade in futures.......
IT would like RBI to look at interest rates: Infy
IT industry would like the RBI to look at the interest rates though such a momentum is building up, Infosys Co-Chairman Kris Gopalakrishnan said today. "There is no conflict," he told reporters here when asked whether he sees any conflict in a scenario where reforms bills are being passed in Parliament on the one hand and the RBI is keeping interest rates unchanged.......
No support
.......It appears that the RBI has taken the decision to avoid surprising the markets, even positively. Past governors of the RBI have been known to deliver positive surprises that can shift the markets, and initiate pre-emptive or anticipatory moves to deal with negative developments on the horizon. It appears the current dispensation in the RBI underestimates the usefulness of such actions. It is far from certain whether that is the correct approach at a time when India should be worried about an “investment cliff” — the fact that investment has collapsed, that there are no orders in the pipeline, and that manufacturing has essentially stopped expanding. The full effects of this freeze have still not played themselves out, and counteractive action from the RBI to support the private sector in advance might have been indicated.........
The banking win-win
The year-end holiday spirit will certainly be missing this year at the Reserve Bank of India’s ( RBI’s) headquarters on Mint Road. For Finance Minister P Chidambaram has just taken away the RBI’s last reason to delay the final guidelines for new banking licences. In fact, the Banking Laws (Amendment) Bill, which the Lok Sabha passed on Tuesday and the Rajya Sabha is due to vote on Thursday, has given the central bank everything it asked for: greater regulatory oversight over banks, the ability to overrule boards and the power to inspect the books of associate companies of the promoter group — its preconditions for new licences. Though it’s debatable whether power to supersede bank boards can adequately safeguard against the problems created by banks promoted by those with interests in other industries, the finance ministry has at least shed its reluctance to bulldoze the RBI......
Read - BS
Issuing new licences will add to competition, grow banks and improve services
....Licensing of new banks has
always been a contentious issue. The RBI has issued only 12 new bank
licences since the beginning of reforms, even while the number of
commercial banks has declined sharply from around 301 to 169 over the
last decade. This has curtailed expansion of banking facilities, leaving
more than 40% of households without a single bank account even now.....
All eyes on RBI for final banking guidelines: Aditya Birla
.........In the first option, NBFC would convert itself in to a bank; this route was also open in the earlier guidelines as well. Second, just apply for bank and continue to keep an NBFC. I think both options remains open in the last set of guidelines that we saw...........
NBFCs open to both organic and inorganic route to set up banks
....If permitted by the RBI, the NBFCs are likely to consider banks at the holding company level and may not convert the NBFC into a bank, according to brokerages. “If they were to convert to an NBFC, they may need to contend with issues relating to concentration risk (for NBFCs doing specialised lending), the impact of statutory liquidity ratio and cash reserve ratio on their existing borrowings. Hence, from an investors’ perspective, we believe the upside (from a bank licence) may be through the SOTP (sum of the parts) route, assuming the holding company were to hold both the bank and an NBFC and is listed,”.......
We Need Larger Banks, not Necessarily More: Kidwai
....The
larger issue is whether our banks are growing fast enough to support
trillion dollars of investment in infrastructure. There’s no way our
banks can support it at their current level of growth. We need larger
banks, not necessarily more banks. To get larger banks, we need to allow
them to go out and get equity. Government-owned banks will have an
issue, as by virtue of their ownership, they have to get funds from the
fisc......
Much more to account for
Banking in India remains a service in acute short supply both in terms of the people it reaches and the amount of credit that passes through the system. Close to half the country’s population have no access to a bank. Indian households park less than half their savings in the financial system. And banks lend just over a half of the national income. India is thus doing a lot of its business without banks. This reflects in the stature of our banks on the world stage: not one, including the state-owned behemoth State Bank of India, figures in international banking’s top league........
RBI’s decision to keep policy rates unchanged evokes criticism
.........“It is ridiculous to keep the policy Repo rate under the liquidity adjustment facility (LAF) unchanged at 8 per cent even after the Headline WPI (whole price index) came down to 7.2 per cent in November. The same RBI, during the last revision in October, cited higher inflation as the reason for not lowering the Repo rate,”..........
Pakistan pushing fake currency into India
....."The security features in the high value currency notes are being constantly upgraded," he said. "The RBI (Reserve Bank of India) has also strengthened the mechanism for detection of counterfeit notes by the banks."
The missing growth push
.....The RBI’s policy statement itself states that time has now come to tilt a little towards growth in its balancing act between growth and inflation. It observed: “In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards.” However, when it came to taking action on this observation, the central bank sought to play it safe and keep its options unutilised. This will harm the growth spurts and the green shoots that are visible and have been referred to in the mid-year economic analysis of the Finance Ministry..........
How RBI’s policy actions affect you
....Where does the CRR fit into all this? While loans are not directly linked to CRR, changes in the ration may impact interest rates. When the CRR is raised, banks have to increase the funds they keep with the RBI. As the CRR earns no interest, banks may have to recoup costs through other lending. They may also have a lower amount available to lend. This may result in interest rates going up. Remember, a CRR change does not always warrant a change in a bank’s base rate.....
Co-op banks told to bring in fresh capital
Kerala State Cooperative Bank (KSCB) and district banks have been asked to mobilise additional capital to comply with licensing norms on a sustainable basis. The directive has come from the regional office of National Bank for Agriculture and Rural Development (Nabard)...........
Karnataka Bank gets NPCI award
Karnataka Bank has received the ‘Operational Excellence’ award instituted by NPCI (National Payment Corporation of India). A bank release said here on Tuesday that the award is in recognition of the bank’s performance in ATMs and switch connected to NFS (National Financial Switch) ATM network.......
Supreme Court Corrects Itself after 14 Years
..........The Court concluded that there was no real or qualitative difference between a case where default has been committed and prosecution launched immediately and another where the prosecution was deferred until the cheque presented again got dishonoured for the second or successive time. As a result, the Supreme Court overruled its decision in the Sadanandan Bhadran case and held that prosecution on the second or successive dishonour of the cheque was also permissible as long as it satisfied the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act.
Wednesday, December 19, 2012
Dr. Sandip chosen for "HR LEADERSHIP AWARD"
Dr. Sandip Ghose
Head – Human Resource Management Department
Reserve Bank of India
Mumbai
Dear Dr. Sandip Ghose ,
Greetings!
I am pleased to write to you about
the 2ND INDIA HUMAN CAPITAL AWARDS is scheduled on 21st December, 2012 at
Indira Group of Institute, Pune at 2:00 pm
The Awards is organized for a Professional cause and is not – for
– profit event. Your leadership and contribution is well known. The position
that you occupy in the fraternity is strategic and iconic. As a thinker and
doer you are a role model and a believer in change. On behalf of the Jury, I am
pleased to write to you that we wish to confer you "HR
LEADERSHIP AWARD". This is an appreciation for good work & contribution to
HR.
Yours Sincerely,
Brett Jhonson
Chairman
| India Human Capital Summit 402, Savoy Chambers, Dattatraya Road, Santacruz Jn., Santacruz (W), Mumbai - 400 054 | |
Outreach programme by RBI, Corp Bank held at Nadora
PANAJI: An outreach programme was organised by Reserve Bank of India, Panaji in association with Corporation bank in Nadora on Sunday. Mr G Gopalakrishna, Executive Director, Reserve Bank of India, was the chief guest on the occasion. Other dignitaries who attended the function included Mr Shripad Naik, MP, Mr Kiran Kandolkar, MLA, Mr J B Bhoria, Regional Director of Maharashtra and Goa, Ms R Sebastian, Banking Ombudsman, Mr B B Tejappa, circle general manager, Corporation Bank, Mr Kamlakar Gawas, sarpanch, Nadora Panchayat, Mr Satish Harmalkar, sarpanch, Revora Panchayat and regional heads of various banks operating in the district..............
RBI Workers Union may go on strike on Jan 1
Jammu, Dec. 17: The local unit of RBI Workers Union and Reserve Bank Employees Association served a notice to the management for going on a Strike on January 01, 2013. The notice was served to the Officer-in-Charge in the presence of a large number of staff members. The protesting staff is demanding immediate withdrawal of the decision to close down exchange counters. The trade unions hoped that good sense would prevail on the management and that it would come forward with a proposal for meaningful dialogue on the issues. Earlier, a massive lunch hour protest demonstration was held at the gate of the RBI building at Jammu by the staff members under the aegis of Jammu Chapter of United Forum of Reserve Bank Officers and Employees. The protest demonstration was addressed by the leaders of the constituents of the United Forum which is the representative body of the entire staff of the RBI. The speakers highlighted the importance of continuation of this important function being rendered by RBI since inception. The agitating staff warned the management of dire consequences if the decision is not withdrawn immediately. All the classes of staff across the spectrum of grades participated in the programme. M.Y Tarigami, MLA also joined the protest and spoke at length about the importance of this service to the public at large and expressed grave concern over this decision of the management that would seriously harm the public interest. He assured the protesting employees all support in their struggle.
‘RBI plan to distribute coins only through banks may lead to shortage
.......“It is our endeavor to shift all our retail business to commercial banks. We had announced our intention in our annual policy for 2012-13. We have, however, not decided a date for its implementation,” RBI spokesperson Alpana Killawala said. Traders claim that the RBI is planning to implement the policy from January. “At present, 90 to 95 per cent of the purchase of small notes and coins is being done through the RBI centres. Any move to shut these outlets will cause a shortage of coins in the market in the short term,” Confederation of All India Traders general secretary Mahesh Bakhai said........
Ill advised and unfortunate
RBI reported decision to close the cash counters/exchange counters is ill advised and unfortunate. It runs contrary to RBI's concern for customer service. It is common knowledge that despite having given full powers to commercial banks/public sector banks for exchange of notes under the note refund rules, the banks have been found wanting in exercising those powers and the hapless customers have to visit RBI counters for such exchange. When RBI is having in place the vast infrastructure as also the man power for manning cash counters, it is incomprehensible why the Bank should abandon this job putting the public at disadvantage and deprive it from availing the services of RBI which have been rated as best all along. We request the concerned DG /Governor to have relook in the matter and rescind the decision in the large public interest.
- M.L.Mahajan, Ex-General Manager (via -email)
Reserve Bank may close its counters for exchange of currency notes, coins
........... the Union Forum of Reserve Bank Officers and Employees said, "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........''
Traders opposes RBI's plan to close exchange counters for small notes and coins
Mumbai: Confederation of All India Traders (CAIT), Maharashtra Unit has informed Reserve Bank of India that its move to close exchange counters for small notes and coins from new year will cause tremendous hardship to public in general and to traders and hoteliers in particular. Kirti Rana, president of CAIT said, "At present 90 to 95% of small notes and coins are being supplied from more than 100 counters of RBI through out India...........
Technology enabled transformation in the financial sector
Keynote address by Mr G Padmanabhan, Executive Director of the Reserve Bank of India, at the GM/CIOs Conference of the Institute for Development & Research in Banking Technology (IDRBT), Hyderabad, 17 December 2012
....Take the case of payment systems, an area which I am familiar with and where technology has brought in a sea-change. Till 1990s, one could make payments in this country through two predominant means – cash and cheque. Today, a tech-savvy customer is empowered to choose a desired service from slew of products – card payments, NEFT transfer, RTGS transfer, ECS/NECS payments, mobile payments etc. Further, after using any of these payment methods, the first instrument he turns to is his mobile phone for confirmatory messages, a feature unique to India. What would you imagine as the future scenario? ........
Public sector banks, consolidate now
.....The emerging scenario is also turning favourable to the process of consolidation. Mounting pressures to issue new bank licences, which will induce enhanced competition from foreign banks getting full bank licences, and entry of a new set of private sector banks, will also precipitate the PSB consolidation. The Reserve Bank (RBI) has already set the process of new licences in motion by approving the Dutch banking major Rabo Bank’s application for a full banking licence. Goldman Sachs was also given a licence to undertake primary dealership business in debt a few months back. The biggest whale in the Indian banking waters, State Bank of India, is considered to be small fry in the global banking ocean......
Lok Sabha passes Banking Bill, clears way for new banking licenses
...........Although there have been no recent public comments from the Reserve Bank of India on this issue, the RBI had earlier objected to futures trading, saying it could add to the speculative activities of banks. The Competition Commission clause in the Banking Bill has also been modified. This allows the RBI to remain the banking regulator, while the Competition Commission of India (CCI) will regulate mergers and acquisitions........
Banking bill: ‘ Game changer to achieve financial inclusion’
....The passage of the Bill, Shinjini Kumar, Director PWC India said, " Creates necessary condition for some of the important steps forward, the sufficient conditions will be known after RBI issues final guidelines". The Banking Laws ( Amendment) Bill, 2011 will now be taken up for discussion in the Rajya Sabha. " Since the bill is too important for me to pass, therefore I am bringing the Bill dropping the controversial clauses," Finance Minister P Chidambaram said.....
Rupee rise, softening commodity prices to help ease rates: Subir Gokarn, RBI Deputy Governor
MUMBAI: RBI Deputy Governor Subir Gokarn today said the appreciation of the rupee and softening of commodity prices will give the central bank more leg-room to ease the monetary regime going forward. "If commodity prices and rupee appreciation continue we will be more comfortable. This also increases the space for us to reduce rates," Gokarn, incharge of the monetary policy department at the Reserve Bank, said at a function at St Xavier's College here......
RBI policy review: D Subbarao leaves CRR, repo rate unchanged
Highlights from RBI's policy review:
- RBI keeps interest rate and cash reserve ratio (CRR) unchanged
- The biggest risk to growth stems from politico-economic considerations: RBI
- With inflation easing, the monetary policy will focus on removing threats to growth: RBI
- Inflationary pressure moderating but high food and commodity prices continue to remain a risk: RBI
- RBI says it is closely monitoring the evolving growth-inflation dynamics.
- RBI to update formal assessment of its growth and inflation projections for 2012-13 in January.
- With inflation pressures ebbing, monetary policy has to shift focus and respond to threats to growth from now on, says RBI.
Read - Business Today
RBI gets its priorities right - A.Seshan
The Reserve Bank of India (RBI) should be congratulated for its standstill policy of not making any changes in the cash reserve ratio or policy rates. It is clear that it is concerned more with inflation than growth. And if the Government wants to walk the path of growth alone, the RBI too can do so in its anti-inflation drive! It is indeed surprising that, unlike in the past, there were no sound bytes from the Finance Ministry as to what the RBI should do in the policy review. Probably, it is the realisation that the central bank has the courage of its own conviction and not that of the Finance Ministry. The RBI can get autonomy by exercising it in policy making. When asked about monetary easing, the Chief Economic Adviser is reported to have said: “You will know from RBI’s credit policy tomorrow. We have entrusted the central bank to look at the monetary side; let it do its job.”......
Graphic explanation
Unlike in the previous years, the cover of the government’s Mid-Year Economic Analysis booklet had a line graph showing how inflation and the repo rate have moved. The graph clearly indicated that though inflation had shown some signs of moderation, interest rates remained high. A subtle message for the Reserve Bank of India, given that the analysis came just a day before the mid-quarter monetary policy review? Chief Economic Adviser Raghuram Rajan countered that too much should not be read into the diagram. “We were looking to create some vibrancy beyond the standard colourless front page. There were two options. One was to put a photograph of a bank teller or a lady buying vegetables in the market. The other was to present a graph... There is no message. I have been very frank about what I think about monetary policy and don’t send sub-texts,” he said.
BS
RBI likely to lock step with the govt from January
...........In its policy statement today, the bank said that it is "closely monitoring the evolving growth-inflation dynamic and will update the formal numerical assessment of its growth and inflation projections for 2012/13 as part of the third quarter review in January 2013". All eyes are now on the quarterly review in January. If there is a softening of interest rates, it will come as a big relief for both corporate entities and retail borrowers.........
RBI holds out promise of lowering rates while keeping powder dry
The Reserve Bank of India (RBI) has done well not to be swayed by subtle and not-so subtle messages from its political bosses. The governor knows the best support for growth comes not from quick fixes, but from a sustained and low rate of inflation. So even though Tuesday's mid-quarter review of monetary policy, 2012-13 was announced against the backdrop of a rare confluence of marginally better news, the Bank has rightly opted to hold its horses..........
A disappointment from Subbarao For Good
.............By holding both the repo rate and the cash reserve ratio, the governor has established his credentials as an inflation fighter no matter what the investing world thinks of him. Indeed, at a time when faith in many institutions is waning, the central bank's stature is rising in doing the right things for the long term health of the economy........
Read - ET
RBI is focusing on combating inflation: Rajan
Chief adviser to the finance ministry Raghuram Rajan said on Tuesday that the Reserve Bank of India (RBI) had left interest rates unchanged in its mid-quarter policy review keeping in mind its main function—that of price stability. “It is clear they have taken a decision keeping in mind that their main job is combating inflation,” Rajan said after RBI’s announcement of its monetary policy review...........
Just a little bit longer please, Subbu tells Chidu, India Inc
.............Though there will be some immediate howls of protest that the governor didn’t even do anything on CRR, the RBI’s words of comfort on a more-than-likely policy easing come January should provide relief to a corporate sector clamouring for rate cuts since long. Significantly, despite the lack of action from RBI’s end, the BSE Sensex remained flattish and didn’t show any panic or downturn after the statement from RBI was made public. For Finance Minister Palaniappan Chidambaram despite the long wait for a push from RBI’s end, the latest policy statement could signal that in January, New Delhi and Mint Road may finally end up on the same page on how to steer the economy forward.
RBI credit policy arbitrary and anti-growth: CREDAI
......Blasting the status quo in RBI’s monetary policy review as “arbitrary” and “anti-growth”, developer’s apex body CREDAI has called for opening a dialogue with all stake holders before taking policy decisions that impact a cross section. “It is sad and unfortunate to see RBI taking such a stubborn stand, despite economic realities of the day,” said CREDAI national president Lalit Kumar Jain. “We wonder if the RBI policy of causing liquidity crunch leading to short supply and resultant price rise is good for the economy or increasing liquidity and pushing supply to bring prices under control is better,”..........
Global economy still fragile, says RBI
.............With mixed bag of policy actions from different central banks of large economies across the world RBI observed that country growth trajectories appeared to be de-coupling. While in US the revised GDP estimates for July-September of 2012 indicated a pick-up in growth, Euro area growth contracted for a second successive quarter. In Japan too, GDP growth tapered in the same quarter. "Lead indicators point to a modest firming up in the momentum of global growth over the rest of 2012 and in 2013 if there is firm policy action in the euro area and the US. The biggest risk to the outlook stems from political economy considerations that could impede, delay or erode resolute policy action," RBI said..........
True to Form : RBI holds out constructive inaction, while keeping the powder dry
...Even
so, for now, the Governor has earned the right to stay the course and
persevere with his chosen strategy of not easing up on the monetary
front. Not until he sees firmer evidence that the ghost of inflation has
been laid to rest!......
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RBI has taken cautious stand: C Rangarajan
 |
There is a reiteration of the intention to move towards a more easy monetary policy beginning first quarter of the next year |
RBI ready for policy gear shift to enter growth lane
.......“With inflationary pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards,’ the RBI observed in a statement, adding there was a case for reinforcing its October guidance of easing policy in the fourth quarter......
Standstill policy
....Sticking to its guidance in the October policy review, the central bank has indicated “policy easing” in the fourth quarter. This, along with its observation that the focus of monetary policy should now shift to growth from inflation will be heartening news for India Inc. which has been grumbling about the bank’s hawkish policy stance. On the flip side, the RBI may have set off expectations with its guidance and if it is unable to meet them either due to a rebound in inflation or deterioration in other economic variables, sentiment could receive a setback....
The time to act was now
....Time is of the essence and the growth slowdown which began in mid-2011 needs to be reversed fast while nurturing the green shoots of recovery......
RBI’s surprising wait
....we had expected the RBI to reduce the CRR by 25 bps in the mid-quarter review. Given its guidance that liquidity conditions will be managed with a view to support growth, the central bank’s decision to retain the CRR at 4.25 per cent of net demand and time liabilities of banks comes as a surprise.......
Rate cut cues
.....While Tuesday’s ‘non-event’ may have disappointed those who should not have expected anything in the first place, they may still draw comfort from the RBI’s explicit reference to monetary policy likely to “increasingly shift focus and respond to the threats to growth from this point onwards”. Coming from the RBI, it could point to rate cuts happening in next month’s quarterly review, by which time the inflation data for December, too, would have been out.....
RBI stays the course
..................The central bank cannot be expected to follow the diktat of the FM. It has a fair amount of autonomy which must be exercised irrespective of how the FM would like it to act. On Thursday, Governor Subbarao yet again disappointed Chidambaram by keeping all the key rates unchanged. .........
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...........
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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..........
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