........In short, the present advice of RBI to banks to simply give an acknowledgment to customers when they submit Form 15G/H is just a flash in the pan as it serves a very limited purpose but fails to deliver anything of value to the customers. Whether it is a computer mistake or a human error, banks have a bounden duty to refund the amount wrongly debited by them. While RBI has taken the first right step by asking the banks to issue an acknowledgment, which will serve as a proof for the customers to show that the form in fact has been duly submitted to the bank, RBI should go a step further and ask the banks to instantly refund the tax wrongly deducted, as it is patently a mistake committed by the bank, for which the customer should not be made to suffer..........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Thursday, June 6, 2013
You must obtain acknowledgment of form 15-G/H from the bank
.........There have been number of complaints wherein tax has been wrongly deducted even when Form 15G/15H has been submitted. RBI states that such instances arise because either forms are misplaced or bank branches have lost track. So with a view to protect interest of depositors and for better customer service, RBI has advised banks to give an acknowledgment at the time of receipt of Form 15G/15H. RBI states that this will help in building a system of accountability and customers will not be put to inconvenience due to any omission on part of the banks...............
‘Banks should only be allowed to take deposits
........“Deposit collection by non-banking companies should be gradually minimised, and eventually eliminated. Towards this endeavour, the Reserve Bank has been quite restrictive in authorising NBFCs to collect deposits,”......
Need to minimise deposit mop-ups by NBFCs: Subbarao
In the light of deposit mop-up by non-banking finance corporations (NBFCs) Reserve Bank of India Governor D Subbarao admitted there was a dire need to tighten regulations for financial stability and consumer protection. He stressed that collection of deposits outside the banking space should be minimised and finally eliminated. Talking about mushrooming ponzi schemes that have duped many investors in recent times the RBI boss reminded that its jurisdiction was limited to NBFCs, but admitted there was a need to tighten regulation to check such schemes. Ponzi scheme is a fraudulent investment scheme where the money being brought in by newer investors is used to pay off older investors.................
Internet Banking Invites Fraudsters
......Reserve Bank of Indian has made it compulsory for all the banks across India to spread awareness about internet banking scams and the fraudsters through their websites and mails...........
RBI bars West Bengal Industrial Development Corporation from raising public money
.........In the wake of the Saradha scam, the RBI wants the WBIDC's status as an NBFC converted from deposit-taking to non deposit-taking. The RBI order would also apply to another state government entity, the West Bengal Industrial Development Finance Corporation (WBIDFC), which holds a similar licence to function as a deposit-taking NBFC.................
Banking licences: Why corporates are better placed than NBFCs
.......In other words, very serious players with deep-pockets like corporates are the likely beneficiaries while non-banking financial corporations are the likely losers as they will have to comply with stringent norms such as the cash reserve ratio (CRR), statutory liquidity ratio (SLR) requirements on day one and will need to transfer their entire lending book to the bank itself.............
RBI may issue only 3-4 bank licences; NBFC entry tough: E&Y
......There are two parts to the entire thing. If one were to look at the guidelines, one thing is very clear and that is they have made the clarifications in a very articulated manner. They have come out with all sorts of boundaries. So, as far as the discretion when the regulator is required to exercise whether it comes to the committee which will be formed to do that or the regulator himself the areas of such discretions are reduced through the clarification........
Sorry, We Are Not for New Banks Is RBI’s Message
Thirty four organisations, 443 queries, 165 pages of answers, and one message from the central bank - we are averse to new banks so licences will be at our discretion. The RBI, which has been reluctant to let new banks despite prodding from the political and business class for nearly a decade, has all but made it impossible for anyone to make a quick buck as it happens often with licenses............
YES Bank’s Kapoor explains why getting a bank licence is a long haul for aspirants
.......“I believe in the long run it is also an opportunity if there is application of newer technologies, if there is an outreach, because the reach and depth of Indian banking needs to widen and deepen. New bank models will have to focus on such opportunities predominantly,” Kapoor said. He, however, made it clear that it would be a long haul for the new entrants............
Banks to have multiple structure options to tie-up with insurers
...........In his budget speech, finance minister P Chidambaram had said that banks would be allowed to act as brokers to sell insurance. However, Reserve Bank of India (RBI) has expressed some apprehensions about this model and said that it could lead to 'reputational risks' for banks.............
No leniency for banks that are flouting norms: FinMin official
..."There is absolutely no scope for benefit of doubt to be given to anybody who violates fundamentals like KYC norms and cash transaction limits, does not report suspicious transactions, advise customers to make Rs 49,999 transactions (to avoid quoting PAN and their reporting), and a dozen of them in one day, there is absolutely no scope for that. This is absolutely not done,"..........
India on its way out of the woods: T C A Anant
..... “my perception is that we are making our way out of the woods… but I would say we are out of the woods only when we get back to 7-8 per cent GDP growth annually,”.....
Takru slams banks for lax loan appraisals
The Union finance ministry has come down heavily on banks for a lax credit appraisal process and taking undue advantage of the corporate debt restructuring (CDR) mechanism. “It’s a disgrace that banks have allowed cooked–up balance sheets (of borrowers) to get through,” said Rajiv Takru, secretary, financial services, at a seminar attended by leading bankers.......
Expect a 25 bps rate cut from RBI's June 19 policy: NS Venkatesh, IDBI Bank
......A 25 bps cut can be expected from the June 19th policy because the GDP growth has come down to around 4.8% and inflation has started showing signs of lower trajectory. Therefore, RBI will surely have a room to cut rates which will stimulate the economic growth for the country. .......
Banks not passing rate-cut benefits: India Ratings
Indian banks have not been passing on the rate cut benefits announced by the Reserve Bank of India (RBI). India Ratings put out a research paper on the same which was authored by Anand Bhoumik of India Ratings & Research. Bhoumik told CNBC-TV18 that reliance of banks on short-term liabilities had been increasing which has led to margin pressure..............
Import duty on gold, platinum hiked to 8%
...The Finance Ministry's action to raise duty follows curbs announced by the Reserve Bank on import of gold by banks as well as other entities........
Restriction in gold imports may lead increased smuggling
......."There is uncertainty in the market due to these restrictions. Domestic jewelers will have to pay upfront to the bank which at times become difficult for them. Moreover, they will have to place orders with the banks in advance. If a sudden demand emerges due to falling prices, jewelers will not be in a position to meet it instantly. They will have to wait till banks provide the metal." ............
Wednesday, June 5, 2013
Subbarao, a reluctant warrior on inflation
Too Much of Good Prudence, RBI
Is
the Reserve Bank of India (RBI) seeing all the leaves, branches, fallen
twigs, root system, annual rings, Cambrian structure, etc, of the
trees, while missing the wood altogether, in the matter of issuing new
banking licences? The latest clarifications from the central bank on its
guidelines issued earlier this year would suggest it is. This is
unfortunate..........
Read - ET Editorial
Voila! A demand draft is bounced !
.........Strange as it may sound, but two state-run lenders, State Bank of India (SBI) and Central Bank of India (CBI) had created a new record of bouncing a demand draft (DD). In this particular case, both these banks returned the DD drawn by CBI saying, “Instrument is cancelled”..................
ReTyring appreciation for untiring efforts of VITALINFO............
Dear Shri Mangesh
I appreciate your marvelous efforts in giving the daily news bulletin relating to banking and finance. It is an excellent and matchless effort on your part, which needs a great deal of sacrifice on your personal front, and I am sure, you will be getting the rewards in the form of blessings and deep appreciation from the readers. I had vacated my Office on May 31, 2013 on attaining superannuation, as GM-I/C, DBS, RBI, Hyderabad Office. I would like to remain a beneficiary of your sincere efforts and, if it is not inconvenient, kindly take on record my personal e-mail address as RBI mail connection will be discontinued.
Wishing you all the Best
Warm Regards
D Rajagopala Rao
Change of directorate - Punjab National Bank
.............has nominated Shri B. P. Kanungo, PCGM & Regional Director, Reserve Bank of India, Kolkata, as Director on the Board of the Bank with immediate effect and untill further orders, in place of Shri N. S. Vishvanathan.
Penalties on banks in India 'peanuts', says RBI Governor
In the backdrop of recent violations of banking norms by some public sector as well as private banks, RBI Governor D Subbarao believes that penalties for such offences in India amounted to "peanuts" compared to those in the western countries............
Money laundering: Early action against banks violating norm, says RBI Governor D Subbarao
......."What action? I cannot tell you because action on this has to be taken at lower level at the RBI. So it is premature to conclude that the RBI is going soft or harsh on this. "We got to follow a process. Just because media is investigating today, we can't say the RBI has to penalise tomorrow otherwise it is soft,"...........
Time to trim CRR by 50 bps, says SBI chairman
The Chairman of public sector lender State Bank of India (SBI), Pratip Chaudhuri, pitched for 50 basis points (bps) reduction in cash reserve ratio (CRR), apart from a cut in interest rate on government deposit, so as to pass on the benefits to borrowers.........
Saraswat Bank eager to merge with Rupee Bank
Announcing the willingness to merge with Rupee Bank, Saraswat Bank chairman Eknath Thakur said on Tuesday that the entire process could be completed within two months if Reserve Bank of India (RBI) gives its nod. Addressing a convention of Rupee Bank employees, elected representatives and Saraswat Bank officials organised by Bank Employees Union, Thakur said, “Employees involved in any kind of irregularity would be retrenched immediately during the merger. We have successfully merged seven banks before. Hence, I am confident about the merger with Rupee Bank.”.......
Banking on questions
Banking is a complex business, but even by those standards, some of the clarifications sought by prospective applicants of new banking licences from the Reserve Bank of India (RBI) were decidedly odd......
Banking is Just a Click Away Now, and So is Fraud
.....From
a customer perspective, awareness and education are the keys, which
banks are taking seriously, as mandated by the RBI, through their
websites and mails to clients. Banks are also investing in adding more
security features to customers’ accounts. One of the features that banks
added recently is the ‘digitised signature’. Most frauds occur when
customers show laxity in complying with security. Information for
attack can also be gathered from a bank’s staff. Awareness can act as a
crucial fortress against cyber aggresses. KVS Manian, head of consumer
banking Kotak Mahindra Bank says, “RBI has detailed guidelines on banks’
IT policy which stipulates a board-approved policy, among other things.
Customer education apart, we have to keep investing in upgrading
systems as well.”.......
Financial Inclusion Has Many Rocky Miles to Go
............Hence,
policy should not be formulated on the assumption that growth of MFIs
will lead to financial inclusion. Second, if lack of access to land
constrains progress in financial inclusion then it is a cause for
concern since land is scarce and hence not all rural households will be
able to offer the comfort of having an asset to the lender.
Indian Banks Witnessing a Financial Downfall
..............Things became even more dreadful, when Reserve Bank of India (RBI) posed special rules for all the Indian banks that made it tougher for the banks to come out of the crisis...........
RBI and India’s Villages
The
RBI had more than 400 questions seeking clarifications on new banking
licence guidelines. But there is even more brewing in the minds of
consultants, lawyers and entrepreneurs. Someone wanted to know if the
RBI would display the names of villages with population of less than
9,999. RBI replied saying it “can be obtained from the concerned State
Level Bankers Committees and District Consultative Committees at the
time of opening branches”. It can be done, but will it be based on the
latest census or the current population? As in most cases, reality and
statistics do not agree.
ET
ET
Bank licence clarification: Who gains, who loses
The Reserve Bank of India (RBI) clarification on the final norms on new bank licence has clearly ruled out any benefit to the new players in terms of more time to meet the cash reserve ratio/statutory liquidity ratio. In addition, RBI said the priority sector obligations have to be met and 25% of the branches have to be opened in unbanked areas...............
Shriram Group studying RBI clarification
.........“I think the clarifications are reasonably comprehensive and very detailed. RBI made its stance very clear, both in terms of structure as well as in terms of the business model.”............
L&T Finance may have to tweak its structure for banking foray
.......“Technically, I don’t think L&T Finance Holdings will be eligible to set up NOFHC. However, considering the track-record and diversified shareholding of its parent, RBI may allow it to promote a bank,” a senior partner with a global consultancy firm said, requesting anonymity.........
Gangs of private banks
.....Apropos Debashis Basu's column "Protecting customers from 'banksters'" (Irrational Choice, June 3), the word "banksters" rhymes with another word so well that it takes the meaning from it. While reading the article, I almost thought that the writer was describing my experience with private banks............
Clarity on number of new bank licences by October
................."So you need to wait at least till the interim scrutiny by the first committee of RBI gets over which would be around September-October. By the time they know how many meet the minimum benchmark after scrutinising applicants, we would be able to react to that. Giving numbers prematurely at this time would be silly,"................
Will linkers sustain good start?
...........One big caveat is that these bonds are linked to the Wholesale Price Index. For retail investors, whose expenses are linked to the Consumer Price Index, there is a real probability that these bonds won’t offer much succour. RBI has said that it is still working out the contours of the linker offering for retail investors. That should provide a clearer picture on the success or failure of this new asset category.
First issue of inflation indexed bonds oversubscribed
Government's first issue of the 10-year inflation indexed bonds, which aims at discouraging gold investments, was today oversubscribed by more than four times, though only bids worth Rs 1,000 crore were accepted. As per the RBI, which auctioned the '10 Years Inflation Indexed Government Stock, 2023', there were 167 competitive bids worth Rs 4,616 crore of which only 26 amounting to Rs 985.94 crore were accepted..............
Canara Bank seeds 67,000 accounts with Aadhar
Having already seeded over 67,000 accounts with Aadhar numbers, Canara Bank is making every effort to create awareness among the general public to open their bank accounts and link them to Aadhar mumbers. Towards this, it organised a road show across the 109 branches in five districts - Mysore, Hassan, Kodagu, Mandya and Chamarajanagar - on May 30............
ARCHIVING INDIA’S BANKING HISTORY
After
State Bank of India and Central Bank of India, it is now the Bank of
India’s turn to set up a banking museum to capture its sojourn since
1906. The museum will be built in a 6,000 square feet space at the
bank’s Fort office which happened to be its headquarters once, before
the bank shifted its head office to Express Towers at Nariman Point and
then to the Bandra Kurla Complex. The museum will capture many
innovative banking practices introduced by the bank from the beginning
of the 20th century, says Abhik Ray, who is in charge of the project.
Ray is a retired State Bank of India officer and was instrumental in
setting up SBI’s museum in Kolkata.
ET
ET
SBI sees room for accommodative monetary policy
There is enough room for an accommodative monetary policy when the policy is announced on June 17, believes Pratip Chaudhuri, CMD, State Bank of India. This is a possibility given the present growth of the economy, he said at a CSR event organised in Bangalore by State Bank of Mysore. An accommodative monetary policy is one where the RBI could attempt to expand the overall money supply to boost the economy when growth is slowing...............
RBI allows gold imports only on 100% cash payment
.......“This would make gold import tougher with those with full cash would be able to import the yellow metal. But, there would be no impact on gold availability overall,..................
RBI makes gold import norms tougher to rein in CAD
.........“It has now been decided to extend the provisions (of May 13 circular) to all nominated agencies/ premier / star trading houses…accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewelry,.........
RBI, Finance Ministry and Commerce Ministry huddle over curbing gold imports
........Addressing reporters on the sidelines of a function organised by Assocham here, Commerce Secretary, S.R. Rao said the trade deficit was a matter of concern for the government and that the RBI and the Finance and Commerce Ministries are involved in the issue. ......
Gold rush: World Gold Council seeks RBI help
World Gold Council (WGC), the premier organization that promotes the use of gold globally, has approached the Reserve Bank of India (RBI) to work with it so that yellow metal could be promoted as a financial asset, rather than just a physical asset. The move comes close on the heels of a series of steps taken by the government as well as the central bank, aimed at reining in gold imports which is directly contributing to the rising current account deficit (CAD). ......
RBI tightens gold import norms
..............“It was decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of the exporters of gold jewellery. It has now been decided to extend the provisions of this circular to all nominated agencies/ premier / star trading houses who have been permitted by Government of India to import gold,”..................
What can policymakers do to prevent Indian rupee's drop?
.............The RBI could persuade banks and financial institutions to raise funds in dollars abroad and lend them locally, a measure that has worked in the past when overseas rates were attractive............
Rs 12 lakh seized from Gaya-bound bus
........Police arrested one person and brought him to Barhi police station. After opening the gunny bags, the police team found all the bags and the suitcase were filled with currency notes of Rs 10. The arrested man told police that notes were genuine and he used to carry currencies by exchanging the damaged and soiled notes at the Reserve Bank at Kolkata............
Rupee’s mysterious purchasing power parity
..............Finally, it is not size that matters. It is how the average level goes up. There will be, for all times to come, discrepancies in incomes. But the average must rise - that will mean more Indians will get more income and a better standard of life.
Tuesday, June 4, 2013
Silence is golden, dear governor
Customer service in banking is not negotiable asserts Dr Chakrabarty
............"Customer is the most important part of a banking system and it is necessary that the bankers does not ‘squeeze’ customers. However, after saying this, we must understand that banking is not just a service but it is also a business and banks need to levy charges on services in order to survive"..........
With new banks, customer service all set to improve: K C Chakrabarty
........The Reserve Bank of India today said customer service would be better once new banks come in. K C Chakrabarty, Deputy Governor, RBI, today said "if new banks come in, then many of our problems will be solved." Chakrabarty's comments assume significance as RBI is allowing new banks in the private sector, for which it has issued clarifications on the guidelines today..........
Rush in banks for new format cheques
...........This is not a stray incident these days; bank branches are flooded with thousands of customers to give cheques in the new format to replace the older ones. The situation will become worse as majority of the customers are yet to receive an intimation from respective banks regarding giving cheques in the new format.............
Soon, cheque bounce won’t be a legal offence
The
government will soon bring an amendment in the Negotiable Instruments
(NI) Act that will restrict banks from dragging a person to court for an
offence like cheque bounce. All such cases, after the changes are
affected, will have to be decided only through arbitration, conciliation
or settlement by Lok Adalats.............
Read - TOI
Read - TOI
HDFC Bank to re-examine KYC details of pre-'08 a/cs
HDFC Bank, the second-largest private sector lender in India, has started re-examining the know-your-customer (KYC) details of accounts opened more than five years ago. The move comes after Cobrapost, an online magazine, alleged that HDFC Bank was one of the private lenders that violated KYC and anti-money laundering rules.............
Unified regulator may take time: FSDC
A unified financial regulator is unlikely anytime soon. The Financial Stability and Development Council (FSDC) today said major recommendations of the Financial Sector Legislative Reforms Commission (FSLRC) would take time to be examined and taken forward. FSDC, which met today under the chairmanship of Finance Minister P Chidambaram, said while some of the major legal and institutional reforms suggested by the commission would take time, action on other recommendations could be taken up separately, in consultation with various stakeholders............
Read | Business Standard
Punjab & Sind Bank - Change in Directorate
......... has nominated Shri Pradipta K. Jena, CGM & Regional Director, Reserve Bank of India, Patna, as Director of the Bank in place of Shri B. P. Kanungo, until further orders, vide ............
Obituary
Mr. A. Sitaraman, Retd. Staff Officer, RBI passed away on 01.06.2013. Z-74, Anna Nagar, Chennai. Mobile: 94446-88826.
Income-Tax department to put salary slips of top India Inc executives under TDS scanner
Income-Tax department has decided to scan the salary structure of top India Inc executives of large corporates and PSUs to examine hidden tax opportunities in the perks and reimbursements made to them.........
How long the stake holders of banks and taxpayers tolerate the menace of NPAs and cross subsidise them ?
......The rating should be made transparent through various ways by RBI, SEBI, and the Govt. Corporates should be made to indicate the rating given by banks in their Balance sheets and the rating has to be certified by the Accountants and Auditors and this rating should be taken as an important yard stick by the Govt and all other agencies to provide concessions and benefits.......................
The Bypass Banking
......“We have limitations and we can not say banks what to lend and how to lend?” RBI governor D Subbarao told reporters on May 9 during his second visit to the state in last 15 months. “We invoke a moral authority to tell them that they should raise their (credit deposit) ratio.” That is exactly what the regulator has been doing...........
Can't bank on it
........When the RBI central board met in Srinagar on May 9, one would have expected the board to take some decisions to look into the issue of KYC regulations. At the very least, the board might have asked for a report on the enforcement of KYC regulations, or a review of the audits carried out on banks by the regulator. Alternatively, the management of RBI would have informed the board of the steps to be taken to review the working of the KYC regulations. The board might have highlighted the need for better regulatory oversight........
New bank licence norms get tougher as RBI clarifies at length
.......Commenting on RBI clarifications, Ernst & Young India partner and national leader banking and financial services Ashvin Parekh said: "Today's clarifications have rendered a lot of clarity to the whole process and makes even more difficult for many to finally get the licence. "The best part is that it has considerably reduced the element of discretion at the hands of the regulator and thus leaving limited rooms for disputes,"........
Not possible to give bank permits to all eligible seekers: RBI
........."There is no predetermined number. RBI will be very selective while considering the applications for new bank licences. It will look for very high quality applications," the RBI said in a notification elaborating its response to the queries raised by various stake holders. "It may, therefore, be not possible to issue licence to all the applicants meeting the eligibility criteria," it said..............
No threat of stagflation: Subbarao
..................."There is a threshold level of inflation. If inflation is above that level, it is inimical to growth. If inflation is below that level it is possible that you can bargain for higher growth, tolerating a little higher inflation,".............
RBI not targeting any particular exchange rate: D Subbarao
With rupee hitting 11-month lows against dollar, Reserve Bank Governor D Subbarao on Monday said it is not targeting any particular exchange rate or any band. "We do not target an exchange rate. We do not target an exchange rate band. And I believe that our actions or inactions have been consistent with our policy," he said in an interview in New Delhi........
Tough but necessary
.......The new norms do show some consideration for the impact of extraneous factors on a borrower's ability to service his debt. For infrastructure projects as well as for other investments, delays resulting from lack of clearances and other policy and administrative bottlenecks can be taken as mitigating factors by banks, thus exempting these exposures from parity with NPAs. This is not necessarily consistent with best practice, but it simply accommodates the legacy of banks having lent heavily to infrastructure projects a few years ago, when these sectors boomed and other sources of long-term finance were not in place. Importantly,..........
Sahara’s Subrata Roy wants bank licence
.........“The Sahara group deserves a permit because its companies have provided financial services to many Indians who didn’t have access to banks, though the disputes with regulators make it unlikely that it will win a licence,” Roy said in the interview. .........
Here's why Shriram group may stay away from banking biz
Chennai-based Shriram group, the parent company of Shriram Transport Finance - the largest financier for small-time truck operators, may stay away from entering into the banking business due to stringent Reserve Bank of India (RBI) guidelines. However, it will take its final decision by the third week of June this year..............
RBI clarifications can be interpreted subjectively: Parekh
...............“Given that it is not going to be an unlimited number of licenses, clearly there have to be a sliding scale of what the RBI thinks are good entities” ............
RBI clarifications are on expected lines: Indiabulls
........The idea is for RBI to ensure that you don’t have any dominant shareholding structure, it should have a well-diversified shareholding structure and also it should be consistent with the Shyamala Gopinath committee's guidelines with regards to banks being held by the NOFHC's...........
Did RBI just make bank licence very, very difficult?
The Reserve Bank of India (RBI) seems to have quietly rolled a grenade at those aspiring for a bank licence. In its clarification to queries on new bank licence guidelines on Monday — to the final guidelines issued in February — the apex bank has said the promoting company aspiring for one must have at least 51% public shareholding. Yes, “at least 51% public shareholding”..............
RBI Fails to Clear Air, Won’t Issue Bank Licences to All
.........
The regulator declined to say by when the next bank will be born. The
central bank has also poured cold water on hopes of regulatory
forbearance on liquidity requirements for finance firms such as IDFC,
which are planning to convert into banks. The 165-page clarification on
new bank guidelines posted on RBI’s website failed to define the two
key measures on which it would grant a bank licence — ‘fit and proper’
persons, and businesses ‘misaligned with the banking model’..................
Field to be levelled for all on PSL, rural branch norms: RBI
The Reserve Bank today sought to allay apprehensions over the lack of level-playing field on issues like rural branch presence and foreign holdings between the existing lenders and the new ones who are to be granted licences. ...........
Read - ET
Read - ET
High CAD a matter of concern: RBI Governor
Calling current high CAD as a matter of concern, RBI Governor D Subbarao Monday said this would be factored in the monetary policy review later this month to contain the deficit. "CAD is a matter of concern and this is something which we will take into account in our monetary policy decision," he said in an interview...........
Future answers
..........Thus, it promises vaguely to disclose the product structure of the bonds later in the year. Apparently, it does not even know what the valuation of the bonds will be. The value of a bond is normally the price at which it is quoted in the market. But the RBI does not expect that its innovative bonds will be traded soon in the market; it hopes that some valuation guidelines will be issued by the Fixed Income Money Market and Derivatives Association of India. This vagueness may not bother the personal investor unduly, for he may well keep away from indexed bonds until some market experience of them accumulates. But banks will be concerned, for the RBI has made them eligible for investment in inflation bonds..........
Inflation-indexation bonds: Not much for retail investors
With the first tranche of inflation-indexation bonds (IIB) going to be on Tuesday, retail investors would be expecting to finally earn positive real returns (above the rate of inflation) from their debt investments. To encourage retail participation, the Reserve Bank of India (RBI) has also increased the non-competitive portion (read portion earmarked for retail investors) from the existing 5 per cent to 20 per cent............
Deflating gold
..........So, if the government were to dramatically increase the amount of inflation-indexed bonds available for the retail sector, chances are a large number of investors may be tempted to choose these instead of gold. Keep in mind that, over the past 3 months, gold has delivered an inflation-adjusted return of minus 46%; over 6 months, the returns are bit better, but still at minus 34% on an annualised basis. Even over 2 years, the inflation-adjusted return is under 1%, certainly lower than............
Govt mulling steps to check huge gold imports
.......The Financial Stability Development Council (FSDC), chaired by Finance Minister P Chidambaram, met and discussed the issue. For May, the import of gold was 162 tonnes, Chidambaram said after the meeting. "The Council noted with concern the significant increase in gold imports in recent months and deliberated on the issues involved in this regard," the Finance Ministry said in a statement after the meeting.......
Non-bank agencies keep gold tap flowing
...........To beat the curbs, banks imported heavily and the central bank decided to tell them to stop from May 13. After that, non-bank nominated agencies have become very active under this route, something RBI has been silent on. The World Gold Council has estimated total imports in the April-June quarter to be 300-400 tonnes. In April-June 2012, net gold import was 153 tonnes, it has said.............
RBI releases quarterly statistics on deposits
............The data was classified according to states, districts, centres (top 100 and 200 centres), population groups and bank groups. RBI stated that the top hundred centres, arranged according to the size of aggregate deposits accounted for 68.3 per cent of the total deposits and the top hundred centres arranged according to the size of gross bank credit accounted for 77.4 per cent of gross bank credit...........
Ponzi Schemes are Cows for Concern
.....Milking
the exchequer to milking the public is but a short step, so, the
formulators of this alleged “cattle-and-ghee” scam cannot be accused of
originality. Indeed, if more investors read relevant cautionary tales
from the Panchatantra — one appeared in Speaking Tree last month — they
may be warned off by déjà vu feelings when being fed such
ghee-cattle-profit spiels.
Amway imbroglio stirs up a fresh debate
.......“The crackdown (on Amway) should have happened much earlier. One has to unearth all wrong committed by companies operating Ponzi schemes. They have to be regulated by the Reserve Bank of India. Time has come for the RBI to step in. There should be a global ban on chit funds or companies running ponzi schemes,”............
Govt, RBI cannot protect the rupee and they should not try either
.......... The government and RBI should let the INR run its course rather than taking knee jerk actions at lower levels. The economy will benefit from an INR that is behaving in line with current fundamentals and there is no reason to believe that the INR will not rise going forward as the economy corrects and stabilizes.............
Monday, June 3, 2013
IIBs and the common person - S.S.Tarapore
When role models fail - Dr.Subir Gokarn
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