The Reserve Bank of India's attempt to squeeze liquidity in the system to shore up the battered currency suffered a setback on Thursday. It managed to suck out just a fifth of what it had planned, raising the spectre of harsher measures. If the central bank still believes that excess liquidity is leading to speculation that the rupee will weaken more, it may raise the cash reserve ratio (CRR), the portion of deposits banks keep with RBI.............
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Friday, July 19, 2013
RBI measures losing steam
..........The most significant factor, they cite, is foreign investors’ faith in the currency and the efficacy of recent measures taken to attract foreign investment. The equity market has suffered due to massive flight of the foreign capital. The brokerages point out the RBI and the government cannot overlook the fact that foreign institutional investors' equity portfolio is at $250 billion which is many-fold larger that $35 billion parked in debt bonds.
How Humble Post Offices Can Save the Rupee - Charan Singh
............One
such avenue could be inflation-indexed small saving instruments (IISSI)
to be sold through the network of more than 1,55,000 post offices, and
bank branches. These IISSI could be an extension of existing instruments
like small savings accounts, recurring deposits or public provident
funds with a regular interest reset clause, as envisaged in the ‘Report
on System of Administered Interest Rates’ (Chairman: YV Reddy, 2001).
Existing national savings certificates (NSC) could have an
inflation-indexed option or even introduction of inflation indexed
special bearer bonds. And more importantly.................
RBI move bad for industry, hopes quick reversal: Naina Lal Kidwai
......."The other side of it is that it makes liquidity tight which means access to funds becomes harder which is RBI's intention. Hence, it is de-facto interest rate rise without being an interest rate rise," she said. "So, to that extent its not good for the industry. So, I hope it does not stay forever," she said, adding, the steps are temporary in nature.......
Story Difficult choice, doubtful outcome
......The central bank has generally followed a ‘hands-off’ approach in the currency market since the bout of rupee depreciation started in May. The extent of currency intervention and other measures has been small, and policymakers tried to explain that the down-move in the rupee is part of a broader emerging-market currency-depreciation story. However, the recent RBI measures present a very different approach to the issue..............
RBI’s Failure to Defend Rupee Calls for a Bazooka
.........Indeed, the spike in interest rates militates against Subbarao’s theory
of ‘Indian exceptionalism’ which essentially is that unlike text book
cases, foreign
flows from equity funds into India rise when interest rates fall
because it would boost economic growth and corporate earnings. “The
recent RBI moves do not ensure an effective curbing in pressures on the
rupee since they can potentially lead to FII outflows, especially in the
current backdrop of a prolonged phase of weak growth,”.............
A govt can neglect growth at its own peril: Naina Lal Kidwai
..........It is a very big fear right now that rates could actually go up. That would be horrible for industry and growth because industry has long been asking (for) interest rates to come down. RBI began bringing down the rates, but unfortunately banks did not drop the rates because of various reasons. RBI’s recent step fell short, fortunately, of putting interest rates up. The effect it has is reducing liquidity in the market, which will bring its own pain. But we have to hope that government and RBI don’t believe putting interest rates up is the only way to stop the falling rupee.............
Gold loan NBFCs plan public offer of nonconvertible dentures
.........At a time when gold loan business is showing a tepid growth with a fall in gold prices, NBFCs have no option but to go for public offer of non-convertible debentures and to list them on stock exchanges to raise money. They have to begin the process of converting their unlisted debentures to listed ones as they mature. .......
Plugging regulatory gaps
..........So now that Sebi has been empowered to act, it needs to be staffed with people with the appropriate level of expertise in different aspects of the law and accounting. It is this that needs to be done to rid India of financial sector scams and not, as the FSLRC report recommended, merging all non-RBI regulators into one.
SC issues notice to Centre, WB, CBI, RBI on Saradha chit fund scam
.......On the chit fund business run in illegal manner in other states, the petitioner said, "Millions of people have been cheated by the chit fund companies. There is no one to regulate their activities in the absence of coordination among central authorities like SEBI and RBI." It requested the court to examine the necessity of banning chit fund business...........
Bank of Maharashtra asked to pay for mediclaim loss
.........., “It is important to note that the cheque, which was issued by Kothari was not for commercial transaction, but for securing his life. Hence the objection raised by BoM cannot be accepted. The case shows the bank’s inefficiency. Kothari is a consumer and is entitled for compensation.”
SBI associate bank unions vow to intensify protests over merger
.........In fact, officers of the five banks under the umbrella of the Associate Bank Officers' Association (ABOA) have their reservations on the issue. General Secretary of ABOA (SBH unit) Harshavardhan Madabhushi said, “When a big bank takes over a small bank, there are natural concerns of step-motherly treatment being meted out to the merged entity's employees.” He reiterated fears of bank employee unions that there will be rationalisation of branches post-merger, possibly leading to job losses..............
C M Vasudev re-appointed as HDFC Bank non-executive chairman
.......Vasudev, who joined the Indian Administrative Service in 1966, has worked as an Executive Director of World Bank, representing India, Bangladesh, Sri Lanka and Bhutan. He served the Ministry of Finance for eight years in various capacities, and was also made the government nominee director on the boards of State Bank of India, IDBI, ICICI, IDFC, NABARD, National Housing Bank and as well as on the Central Board of the Reserve Bank of India......
Thursday, July 18, 2013
Time to cleanse banking in India
......Though the RBI claims that its inquiries did not reveal any prima facie evidence of money laundering, it has not given them a clean chit on this account and added that “any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies”. This is too serious a matter to be foreclosed with mere imposition of fines. The RBI should make its findings public so that people know what is happening in the banks to which they entrust their hard-earned money..............
Banking in hot waters
.............What this episode highlights is that the bond market, in today’s fluid scenario, offers no more certainty than that for ‘risky’ equities. It reinforces the need for banks to set prudential internal limits on their treasury activities, in terms of the extent of their bond portfolios exposed to yield and price swings. For now, signals from the US Fed, rather than the needs of domestic banks or their borrowers, is what is going to influence RBI policy.
Obituary
Shri.N.Venkateswaran passed away in Mumbai on July 13, 2013. He
retired as DCO from DBOD, Bombay and had worked in Calcutta. He
was also a Faculty member of Bankers Training College. He had worked in Thomas Cook ( India
) and Mercury Travels. He was 82 years old at the time of his death. We pray that his soul rests in peace.
- P.P.Ramachandran
My View on "Post Bank of India is Risky"
India Post has, in recent years, taken seriously the idea of infusing professionalism and modern technology into its large banking business (let us accept the fact, though in a restricted way). No one can find fault with them for grabbing the present opportunity to express their wish. Some of the 26 applicants (there could be many who could not make it before the D-day) give a rough idea as to the kind of organisations which are serious about ‘converting’ the ‘money business’ they are already doing, into banking. In some cases, as in the case of India Post, it is not easy to gauge the capacity to do credit business competing with established banks. At least in India, banks have more credibility and now there is a thinking that banking regulation will go into a ‘confusion state’, as some of the applicants would like to get promoted as banks and practically do what they have been doing, to have ‘best of both the worlds’. Every organisation dealing with money need not be a bank. Organizational structure of banks in India needs a re-look in the context of various pending recommendations on financial sector reforms including those made by FSLRC. Bringing new players even before the rules of the game are settled may add to the confusion.
- M.G.Warrier
My View on "How did a former RBI man end up on Yes Bank board?...."
Ideally, appointments beyond certain level should be made with a pre-condition that the incumbent will not accept paid regular jobs in subordinate or associate organisations. Such level could be that of Joint Secretary in central government and Executive Director or position a step or two below that of CEO in large PSUs/statutory bodies and companies. Allow them to grow within the organisation or ‘retire’ with full last drawn salary for life. Just as judiciary has a system of judges not practicing as lawyers in courts up to the level from which they retire, there is need to have some code of conduct for officials at higher levels in government, statutory bodies etc.
- M.G.Warrier
My View on "Contenders for the post of Governor" - A. Chandramouliswaran
There are many reports on who might succeed Dr Subbarao. Some reports are inspired and some are by independent observers giving their views as to who in their opinion are most suitable for the post. In some of the reports, it is mentioned that Government might even be thinking of giving another short extension,say, for an year, to Dr Subba Rao. I remember to have read some reports, at the time of extension of his tenure for a period of 2 years, that Dr Subbarao had made known to his masters in the Government that he would not be interested in any further extension. If his continuance in the post is ruled out on this score, it would be a good idea, as I had mentioned earlier in this Newsletter, to appoint Dr. Raghuram Rajan to the post for some fresh thinking. Economists and bureaucrats groomed in the Indian scenario would find it difficult to escape from the groove to which they are fixed. Anyone who has read Rajan's book "Saving Capitalism from Capitalists" would find ample evidence of his brilliance and we need not, therefore, have any doubt that he would excel in his job. He had differed from Alan Greenspan and had anticipated the adverse fall out of Greenspan's policies on the American economy. As he is young, he should be given a full tenure of 5 years if not a tenure of 6 years as it is in the case of the Chairman, Federal Reserve Board.
I know that I am a small fry and that my views may not count and be heard in any quarter. Nevertheless, one derives some satisfaction in expressing one's views.
- A. Chandramouliswaran
EXcellent info - VITALINFO
Dear Tarambale,
I am a regular reader of your VITALINFO site, which provides me with lots of valuable information and insights into the current banking and financial scenario in the country. You are indeed doing a wonderful job for the benefit of a very large number of ring side viewers (read retired RBI-ites) of the financial arena.
- Prabal Sen
Former Principal Chief General Manager (DAPM, Central Office)
Radkar assumes charge at SPMCIL
P N Radkar has assumed charge of the post of Director ( Technical) in Security Printing & Minting Corporation of India Ltd ( SPMCIL), New Delhi, after having been selected through Public Enterprises Selection Board (PESB). Earlier, he has served as Director (Technical) in Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL), Bangalore, a subsidiary of Reserve Bank of India.
FPJ
New banks might queer the pitch for state -owned ones
........“PSBs are already staring at shrinking margins and rising bad loans due to economic downturn and they fear worse when a new breed of private sector banks mushrooms. Small state-run lenders are worried that new bank licences may make their survival difficult, forcing them to fulfil the government’s wish of consolidating with bigger banks.”.............
Banks that depend on bulk deposits to be hit
..........India's largest lender, State Bank of India (SBI), feels that these measures do not warrant any change in the lending rates, since they are designed by RBI to curb speculation in the market and are not seen as indicative of any systemic problem or deeper malaise. In a statement on Tuesday, the bank stated that it expects the position in the market to stabilise shortly..............
IDBI Bank to draw up 5-year business road map
Noting the missed opportunities in lending to rural and small and medium enterprises, M S Raghavan, new chairman and managing director of IDBI Bank, wants the bank to shed the "arithmetic growth" mindset. He wants the bank to scale up activity in retail and rural lending and financial inclusion, building on its corporate business, once the mainstay of the erstwhile development finance institution. In his address to bank employees, Raghavan, who took charge last week, said the bank had to take a leap and work with a "geometric growth" approach. The bank would soon begin work on a five-year plan........
SBI New Pension Scheme: Kerala High Court reserves judgment
....Staff union’s Counsels, however, submitted that Sections 43 and 50 of the SBI Act cannot run parallel. Any pension scheme formed, amended or altered had got to be in terms of the Industrial Disputes Act 1947. The bank, counsels for the union argued, had given appointment orders to new recruits stating that they were governed by various awards of tribunals and settlements modified from time to time...........
How to easily file I-T returns online, free of cost
........Every year July not only brings heavy downpour but also makes every salaried taxpayer rush to file income tax (I-T) returns. Filing returns before 31st July has now become quite easy, especially with the electronic filing; one can file it online without taking any help from accountants or a chartered accountants (CAs)..............
Reaching insurance to rural areas ‘is most viable through bank branches’
.........The penetration in any branch, which has insurance-authorised personnel is less than 5 per cent today. So, it is impossible for me to find an argument against open architecture as the consumer gets more choices. And if insurance companies have to get into semi-urban and rural areas, bank branches are the most viable way. On banks becoming insurance brokers, there needs to be an alignment between the views of the RBI and the IRDA and there will be several rounds of discussions. However, my view is some progress is better than no progress. It can be a prelude to full open architecture. I am comfortable in any way the regulation comes because it will be a game-changer for insurance distribution in this country........
Speeding financial inclusion in India
.........The Reserve Bank of India (RBI) does this as well in a limited way, so the principle is understood here—this model of letting non-banks lead is not quite anathema to RBI. So what holds RBI back from wholeheartedly accepting non-banks in the payments system? It has to be the concern of the risk of fraud and money laundering, especially given the propensity of market players to bend rules, lax supervision of know your customer norms, etc. The recent guidelines on the risk-based approach to new products and payments services issued by the FATF makes the point that AML/CFT safeguards can end up deterring legitimate consumers from the financial system, pushing them into the informal sector that is not subject to regulatory and supervisory oversight...............
Financial inclusion through the lens of CRISIL Inclusix
..............Till now, most of the measures of financial inclusion have focused on an analysis of either the aggregate amount of deposits or loans in a particular region. Whereas, CRISIL Inclusix uses parameters that focus only on the ‘number of people’ whose lives have been touched by various financial services, rather than on the ‘amounts’ deposited or loaned. This helps negate the disproportionate impact of a few high-value figures on the overall picture. CRISIL has developed this index with support from the Reserve Bank of India (RBI) and the Ministry of Finance. The index is an outcome of nearly two years’ effort in developing the methodology and rigorous analysis spanning over 2,00,000 data points across 165 banks. Data for computing the index was provided by RBI............
Reserve Bank of India penalizes The Nasik Merchants' Co-operative Bank Ltd., Nasik, Maharashtra
....Inspection of the bank with reference to its position as on March 31, 2012 revealed that the bank had persistently violated section 6(1) (j) of the banking Regulation Act 1949 (AACS) as it had set up a trust in the name and style of NAMCO Charitable Trust and the trust had seven Trustees who were also Directors of the bank and the purpose of the trust was to run a medical college cum hospital for general public. Thus there was evidence of recurrence of violation of section 6(1) (j) of the Banking Regulation Act 1949 (AACS).....
Is RBI's navigation system for monetary policy faulty?
Medical science says that poor diagnosis leads to poor treatment. If the data based on which an inference is to be made is either wrongly collected or the sample size is poor, then the inference and recommendation made on it will not have the desired effect. In some cases it can also be counter-effective. India’s inflation data and RBI’s policy based on it also runs on the same logic....................
Banks, corporates rush to withdraw from MFs
The Reserve Bank of India’s (RBI) liquidity tightening is already beginning to show its impact on the mutual fund industry. On Tuesday, the mutual fund industry faced redemption orders of as much as Rs 50,000 crore from banks and corporate, said officials in the mutual fund industry.............
RBI's MF lifeline bit early; rate hike possible: IDFC MF
......Everything that RBI is doing so far is to suggest that after implementing the 75,000 crore on the liquidity adjustment facility (LAF) window, they will progressively squeeze liquidity. Possibly some action on CRR could come about if this doesn’t work. But the thought seems to be to engineer higher call rates.......
RBI to help mutual funds facing surge in redemptions
........The temporary, three-day repo borrowing window for mutual funds will make up to Rs 25000 crore available to asset management companies at 10.25 percent interest, according to a notification issued on Wednesday. Further details will be provided at a later date, the Reserve bank of India (RBI) said. "It seems like a pro-active move on part of RBI, which should help settle some nerves. This move would help mutual funds meet their redemptions and this would also help stabilise the yields in the market," said Ganti N. Murthy, head of fixed income at Peerless Fund Management Co. Ltd..........
RBI shock erases best BRIC gain on $8 billion exit
........“The measures shocked the rates market,” analysts including Mumbai-based Samiran Chakraborty wrote in the report. “The liquidity deficit will likely persist, implying elevated overnight rates and funding costs for government bond investors.”
Could the RBI have waited till Ben Bernanke’s testimony?
..............Did the RBI jump the gun with its tightening measure announced on Monday night or could it have waited for Ben Bernanke do its job? In trying to deal with a crashing rupee caused by poor economic efficiency of the United Progressive Alliance (UPA) government led by Dr Manmohan Singh, a trained economist, the Reserve Bank of India (RBI) was forced to squeeze liquidity. But could it have waited and let Ben Bernanke, chairman of US Federal Reserve (Fed) do its work for it......
Read - Moneylife
RBI’s moves worsen market’s macro ecosystem
......Therefore, were CAD to continue to normalise and inflation continue its downward journey, will the RBI move back to a more accommodative stance? The RBI’s measures are meant to address a pressing need triggered by external and largely exogenous factors, but in the process market conviction stands broken, says Nomura............
RBI tightening move aimed at quelling Re speculation: Raghuram Rajan
........"I think the Reserve Bank decided to intervene earlier this week, basically to convey to the market a very strong sense that it did not like the undue volatility in the rupee. "They are trying to send a signal... This is a measure intended to quell speculation about what the level of the rupee would be and instead make the rupee more stable,".......
India's RBI Engineers a Currency Crunch
Sometimes it seems India is trying too hard to emulate neighbor China. China's central bank recently engineered a cash crunch by tightening its monetary stance, and now the Reserve Bank of India has followed by pulling liquidity from its financial sector. Of course, there are big differences. Where the People's Bank of China aimed to rein in surging credit, the RBI wants to prop up the weak rupee by raising domestic interest rates..........
RBI steps to delay banks' NPA recovery process: BofA ML
... This was our view even before the RBI moves had come in. Basically, my thing is market for the whole year is range bound - that’s what we have been reiterating right through the beginning of this year. As we move to the top end of the range, you need earnings and you need the economy to start supporting that sort of level at the index. Our view is over the next .........
Liquidity problem
...........The RBI needs to have a strategy for meeting the financial problems of both the central and state governments. Just raising the levels of its ways and means advances to them could only be a temporary solution.
False defence for the rupee
.......How will the curbing of liquidity help reduce volatility? Simply put, if the cost of money is low in the system, market participants will borrow to buy dollars and gain from rupee depreciation. By increasing the cost of money in the system, RBI has made this bet expensive. But will the idea work?...........
Ordinance to empower Sebi cleared
...........After the ordinance, the government is planning to bring the Sebi Laws (Amendment) Bill before Parliament, incorporating the changes. The regulator has been pressing for an overhaul of the legal framework to enable the catching of companies taking gullible investors into a ride. The ordinance was formulated after detailed discussions with Sebi by the government. This is the second occasion when the government has opted for an ordinance route before commencement of the monsoon session of Parliament on August 12.........
NSCB Ltd: marked improvement during past few years
....The RBI also warned, that in the event NSCB Ltd failed to achieve the 4% CRAR target, it risked having its banking license cancelled. CRAR is a standard metric to measure balance sheet strength of banks. NABARD and RBI had asked state cooperative banks of Bihar, Goa,Haryana,Jammu & Kashmir, Kerala, Maharashtra, Nagaland, Odisha, Punjab, Tamil Nadu, UP and W.Bengal to raise their respective CRAR to at least 4%..........
Karnataka may order CBI probe into Rs 10 crore scam involving nationalized banks
.........Opposition leader H D Kumaraswamy in assembly and C Puttanna (JDS) in legislative council, who raised the issue, said the authority had kept funds of Rs 9.5 crore in a public sector bank and Rs 40 lakh in a private bank but transferred the amount to another public sector bank which offered a better interest rate but now says it has no such deposits. Since the alleged embezzlement is to the tune of more than Rs two crore, a probe into it should be handed over to the CBI as per RBI norms, the JD(S) leaders argued..........
Inorbit Malls seeks industry status
Inorbit Malls managing director and CEO Kishore Bhatija has sought 'industry status' to malls as this would help them raise capital to fund new projects and cope with challenges. Apart from this, any effort towards earmarking land exclusively for malls would help arrest the rise in land prices thereby aiding sustainable growth in the business. "We have been making representations to the Reserve Bank of India and commerce ministry on according the industry status. Also, we're approaching the respective states on the regulatory delays in the project approvals to avoid cost overruns," ..........
Wednesday, July 17, 2013
Knight in shining armour - A.Seshan
......The RBI Governor has shown that he is no lame duck chief of the central bank. He has proved himself to be a knight in shining armour -- riding a black horse (LAF) with a swinging sword (interest rate) to save the rupee from dishonour at the hands of the villain, the dollar!.............
Conference of Principal Code Compliance Officers
 |
| Inaugural address by Dr. (Smt.) Deepali Pant Joshi, Executive Director,Reserve Bank of India |
.......The codes need to be clearly understood and fairly implemented by Regional Rural Banks. Banks are commercial establishments. They are not philanthropic organizations. However, they enjoy great leverage and an oligopolistic position simply as the borrower in the rural areas may lack choice which his urban counterpart enjoys. This casts a much greater responsibility upon the RRBs. Knowledge and general awareness about the Codes of the BCSBI needs to be increased. Just this morning, Mr Mahajan shared with me that despite valiant attempts knowledge of and appreciation of the BCSBI codes was spreading very slowly and this was a cause of concern. The Chairmen of the RRBs must appreciate that the poor borrower who comes to the door step of the Bank is highly unlikely to meet the Chairman of the bank. For him the frontline manager is the Bank..........
2 Srinagar girls win RBI quiz
Srinagar, July 16: Two girls from Srinagar — Sadia Haneef and Falak Naz— have won the quarter finals of the first ever RBI quiz competition organized at Srinagar on Tuesday. The girls, who are students of Caset Experimental School, Karan Nagar, will now be competing in the Zonal Finals of RBIQ to be held at New Delhi in August..................
Narmada Jhabua Gramin Bank observes 31st anniversary of Nabard
INDORE: Narmada Jhabua Gramin Bank observed 31st anniversary of Nabard by organizing financial inclusion programme on Friday. On the occasion, Regional Director-RBI, P R Ravimohan was present..........
EDB launches RTGS system
SRINAGAR: Ellaquai Dehati Bank Tuesday launched the real time gross settlement (RTGS) system, which will enable the bank to transfer the money in real time without any delay from one branch to another branch, a spokesperson of the bank said. The RTGS was laucned on the 35th foundation day of the bank by the General Manager of Reserve Bank of India, AK Mattu in presence of chairman EDB AK Razdan at its head office here............
Read - Kashmir Reader
Read - Kashmir Reader
Training programme
Imphal, July 15 2013: Manipur Police with faculty support of Reserve Bank of India, Guwahati has organised a one day training programme on Fake Indian Currency Notes (FICN) today at 1st Battalion Manipur Rifles Banquet hall, informed a statement. Director General of Police Manipur, Y Joykumar has inaugurated the training programme and Assistant General Manager RBI Guwahati, N Nagaraj was the resource person, added to the press release. All senior police officers of the Police dept, SPs, COs of MR and other units participated in the training programme.
Source
Source
How did a former RBI man end up on Yes Bank board?
.........Governance Now has learnt that Yes Bank’s director and chairman MR Srinivasan may have once been involved in the process of the bank getting its licence. Yes Bank got its banking licence in May 2004. Srinivasan was then Chief General Manager at the RBI’s Department of Banking Operations and Development (DBOD). Moreover, he was drawing Rs 1 lakh a month as advisor from Yes Bank when he became additional director in 2012 and was later made non-executive part-time chairman. The RBI was told of this before they approved his appointment.................
My View on "Some Surprise Contenders for RBI Governor"
This is with ref to a news item that Raghuram Rajan has
not got sufficient insight of Govt functioning and so he has to wait
and Arvind Mayaram , Secy (Economic Affairs) becomes eligible for the
post of GUV. Nothing can be more flimsy than this.Frivolous arguments by
certain persons to retain IAS monopoly will not do.The entire world is
watching us
and we should select the BEST MAN for the job of GUV. When
the Bank of England got a Canadian for the top job of GUV, did the Govt
object that he wa not familiar with the functioning of complex decision
making process in Govt.When Ben Bernanke was appointed GUV of FED
RESERVE when he was a tenure Professor in Princeton University, did anybody object to his lack of knowledge of Govt functioning? When Pt Nehru
became P.M. of India, did anybody say that he lacked ministerial
experience? Will any body point to lack of experience on the part of
Rahul Gandhi if and when he becomes P.M.Then why raise objections on the
appointment of Raghuram
Rajan as GUV? Half baked IAS do not have monopoly on expertise. We have
better experts aplenty in RBI. Why nobody takes their name for the post
of GUV.
- Sitendra Kumar
Last year’s developments which saw easing out of a Deputy Governor (Subir Gokarn) for no fault of his and compulsions to retain another Deputy Governor for another year calls for a review of the selection and placement procedure at that level and at the level of Governor. GOI generally handles successions in RBI with some deft and care. These and shuttling of Rakesh Mohan between North Block and Mint Road can be considered ‘exceptions’ in the graceful handling of succession plans in RBI, if one looks at the meddling with placements(or withholding appointments) at certain other key positions in government and public sector in India. It would be a wise option to allow Governor Dr Subbarao initially to continue for another year and leave it to the post-General Election team in New Delhi to decide on the next Governor. This will also give some time for formulating and implementing a succession plan for the top job in the central bank which should factor in the need to infuse professionalism and efficiency as also a graceful approach to changes in incumbency at the levels of Governor and Deputy Governors. As the situation in India is not comparable to that in developed countries, there is substance in the argument that Rajan may need a short period of ‘grooming’ before taking up the position as RBI Governor.
- M.G.Warrier
Existing cheque clearing arrangement will continue till year end
.....New clearing arrangements will be put into effect with effect from January 1, 2014, in the three CTS centres – Mumbai, Chennai and New Delhi - for clearing of non-CTS 2010 instruments. This separate clearing session will initially operate thrice a week (Monday, Wednesday and Friday), up to April 30, 2014. Thereafter, the frequency of such separate sessions will be reduced to twice a week up to October 31, 2014 (Monday and Friday) and further to weekly once (Monday).........
Financial inclusion - M.G.Warrier
This refers to the report "No target for number of new bank licences" (July 16). It is comforting to find that "supporting financial inclusion", which was included as an objective for opening new banks when the discussion paper on the subject was released almost three years ago, remains in the back of the Reserve Bank of India (RBI)'s mind...........
Watch Out for the Lurking Devil — Stagflation
Is
India in a stagflationary phase? Chakravarthi Rangarajan, the chairman
of the Prime Minister’s Economic Advisory Council (PMEAC), spilled the
beans in February in his paper titled ‘Growth and Austerity: The Policy
Dilemma’. “It is pertinent to note that stagflationary tendencies
have already reared their head in emerging markets, like India, where
financial intermediation was never a problem,” he wrote, creating quite a
flutter. The paper co-authored with Ashok Sheel was published in ICRA’s
Money & Finance February issue. But the veteran economist and
former Reserve Bank of India (RBI) governor was quick to retract his
position, possibly to calm the nerves of Indian policy makers and ruling
party bosses at a time when elections are just around the corner. In an
interview to rediff.com,
he pointed out that the paper did not say India is facing stagflation.
“The term used is ‘stagflationary tendencies’ in developing economies as
a whole, including India, to describe a situation where growth below
trend and high inflation co-exist,” he said in defence.................
Read - ET
Read - ET
Post Bank of India is Risky
This
refers to ‘Let the Postman Knock Twice’ (ET, July 16). All you have
said on India Post’s eligibility to get a bank licence is correct, but
with a few caveats. It has no experience in lending, and financial
inclusion would only mean a collection of deposits that will build up
the liability side of the balance sheet of the new bank. While India
Post is capable of running on sound commercial principles, it may not be
possible to function at an arms- length from its political masters.
Witness the track record of public sector banks that have piled up a
large chunk of nonperforming assets, courtesy political masters. India
Post, like other public sector banks, may not spread formal credit in
rural areas. So, financial inclusion would be incomplete. The government
may infuse required capital, but that would be done only on its terms.
The relationship would only make the business of banking more
vulnerable.
- KV RAO, Bangalore (ET)
- KV RAO, Bangalore (ET)
We will continue with doorstep banking services: C S Ghosh
.............In 2010-11, the same year the MFI industry suffered the worst crisis ever, then finance minister Pranab Mukherjee had announced the government was considering giving new bank licences. As an institution, we were already reaching the unbanked population, with a client base of 2.3 million people. We thought it made sense for us to be present in the banking space— this would help us expand our operations, as well as reduce costs and interest rates.................
Will microfinance firms make good banks?
One of the qualities the Reserve Bank of India looks for in new banking aspirants is financial inclusion - that 25 per cent of a new bank's branches should be in rural areas. So far, two microfinance institutions (MFIs)-Bandhan and Janalakshmi Financial Services-have applied for licences. However, SKS Microfinance - the only listed MFI-has chosen not to. Are MFIs, which mostly operate in rural areas, best suited for the complex world of banking? Or, as many observers ask, are they to be trusted in the wake of their unsavoury lending practices in Andhra Pradesh, which nearly capsized the sector a few years ago?..........
The Great Bank Race
...........The grapevine has it that many aspirants have already sounded out small banks for a merger! Mint Road has pinned its hopes on ceteris paribus — a bank promoted by a large industrial group or an established NBFC will be able to foster financial inclusion. But its own discussion paper (dated 11 August 2010) had highlighted the pitfalls. A model tilting towards financial inclusion may not be able to provide commensurate returns to banks to enable them to compete with others; cross-subsidisation with other gains is not possible. It will create an uneven playing field vis-Ã -vis existing banks. And, in case .............
Banks under fire. In India, in the UK and the US
....... Ever since Bahal went public with his first tranche of the sting on three private sector banks in March 2013, the banking industry went overtly into outright denial and hair splitting. The more insidious part of the fightback were stories that ascribed motives to the sting operation and the editor of the online magazine. Having tracked retail banking and the rampant use of branches to mis-sell financial products for many years, I know anecdotally that there is muck at the bottom, but the sting not just brought home proof of mis-selling but showed that the problem went far beyond in a systemic way across the industry.............
RBI fine on banks
According to newspaper reports, RBI is stated to have imposed a fine of Rs 49.5 crore on 22 banks for violation of not only KYC norms but also anti money laundering rules. A member of the top management of the Bank had said some time ago that there were no violations of anti- money laundering rules.. I do not know how the Bank would now save itself of embarrassment if someone were to invite the Bank's attention to the contradiction in the pronouncement of the Bank and the action finally taken. It is most unfortunate that the RBI had landed itself in such a situation. The fact that the violation of the RBI rules is so widespread in the Banking Industry is a pointer to the fact that the RBI has not been able to put the fear of God in the members of the industry and its capacity to enforce its rules is suspect. As a retired official of the Bank who gets perturbed if the image of the Bank gets eroded, my humble suggestion to the Bank would be to do a through introspection on its effectiveness and on the steps to be taken to reverse the image of a weak regulator. Recently, in the process of helping one of my friends, I found that even a small private sector bank with its headquarters in down south could not care for the KYC norms and there was clear indication from the records that it had not done any verification needed for satisfying itself of the KYC norms. If this situation is allowed to continue, the situation might go beyond repair.
- A.Chandramouliswaran
When China sends fake rupee notes to a Delhi restaurant
.......All these are sad state of affairs that occur on a regular basis and only a few are caught; perhaps, these are allowed to be ‘captured’ consignments as they may be intended as ‘decoys’ with the main lots escaping the watchful eyes of the security agencies. Such acts by unfriendly neighbours are to be expected but what is more relevant is our action plan to stem this rot from happening. Why is the Reserve Bank of India (RBI) not making public on the progress made, if any, in regard to the introduction of polymer-based rupee currency notes.........
The new reality of monetary policy
................Monetary policy acquired a tighter outlook on Monday when the Reserve Bank of India lifted two money market rates—the marginal standing facility and bank rate—by a hefty 2 percentage points; capped bank borrowings from its overnight window to 1% of net demand and time liabilities; and said it plans to scoop out Rs.12,000 crore of liquidity thereafter. These steps will make it harder and costlier for ...........
RBI ask banks to take preventive measures to avoid frauds
............At a meeting, held between RBI and CEOs of large commercial banks, RBI suggested that Indian Banks Association - the management body of commercial banks- to suggest a mechanism wherein a fraudster could be nailed and punished, said a bank chief who did not want to be named. During the meeting, chaired by RBI deputy governor K C Chakrabarty, bankers pointed out that very often the company officials or their promoters commits a fraud but bank staff are penalised for it since the CBI inquiry is mainly targeted at lenders.........
Chidambaram rules out gold import ban, urges people to moderate demand
........"We cannot completely ban import of gold. There is a long time attachment to gold in this country. I am requesting... can we for sometime moderate the demand for gold? "Can we reduce our appetite for gold? If you are buying, say 20 grams, can you buy 10 grams," he said while addressing a press conference..........
The world is not on the brink of a crisis: Nizam Idris
...........Such flows have been easier to come by in the last few years when the Fed and other major central banks were pumping in cheap liquidity to resuscitate their respective economies. But with the Fed now looking likely to turn the spigot off, some funds are returning to the US. The RBI cannot stem these flows but could utilise some of the foreign reserves accumulated in the last four years as funds flowed into India to cushion the impact on the INR now that those funds are exiting. But this has to be done in moderation as the RBI needs to maintain adequate reserves. ...........
Cabinet likely to take up Sebi Act amendments tomorrow
..............The proposed amendment seeks to bring all kinds of ponzi schemes, which are thriving in various semi urban and rural areas at the expense of gullible investors, are brought under Sebi's oversight, which itself would be made much more effective to safeguard investors from being defrauded. Further, the government has proposed to provide Sebi with direct powers to conduct search and seizure with authorisation from its Chairman............
RBI googly stumps markets
The Reserve Bank of India’s (RBI) move to tighten liquidity to prevent a further fall in the rupee spooked the equity and bond markets as investors feared a reversal of the easy money policy stance of the central bank. Monday’s RBI move (a cap of Rs 75,000 crore on bank’s borrowing from the liquidity adjustment facility (LAF) and increase in the marginal standing facility by 300 bps above the repo rate to 10.25%) delivered only a modest lift in the rupee but shares slumped and bond yields zoomed...........
Reserve Bank should roll back steps after rupee stabilises: SBI
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| ..........."These measures are temporary, to calm down volatility. We are not taking that these measures will be long term. I think once the rupee stabilises, these steps should be largely rolled back,".............. |
RBI won't engineer slowdown to fix rupee: Deutsche Bank
............The July 30 policy statement is too far away, RBI will have to come forward and make some more clarifications in the coming days and weeks long before that policy meeting takes place. This is because the central bank does not want to destabilise growth sentiments at the expense of stabilising rupee sentiments. They are inter-related and you cannot really engineer a massive slowdown in the economy or cause huge amount of negative sentiment as far as growth is concerned. Somehow, I expect rupee outlook to be stable..............
Manmohan Singh government’s inefficiency forces RBI's hand
...........India's growth is already very weak and tighter domestic liquidity will worsen financial conditions for corporates and banks, hurting asset quality and the growth outlook. But the RBI had no choice..........
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