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| ......."If we don’t have a simultaneous movement on structural issues; steps that are actually addressing the causes of the problem, will peter out over a period of time,............ |
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.
Monday, July 22, 2013
Is RBI unwilling to raise rates to strengthen rupee?
Unified Regulation for Modern Finance
.........The
way forward is to have a unified regulator spanning the entire
financial sector, after first unifying the financial sector itself as a
formal, inclusive sector amenable to regulation. Till that is achieved,
we will have to make do with piecemeal empowerment of segmental
regulators. It is time the government and the RBI stopped dither on
creating banking inclusion via Aadhaar-enabled no-frills accounts. That
is the first step to effective regulation of finance.
Transition Trauma
.......................Amid all the discussion on the challenges new banks will face in coming years, one important issue has skipped attention. India already has close to 90 commercial banks including state-run, private-sector and foreign lenders. The country also has thousands of rural and cooperative banks. Does it really need more banks? No, says KKR's Nayar. "What India needs are big banks which have bigger balance sheets so that they can lend more," he says. That's a point to ponder.
Chidambaram sees no shift in RBI stance after rate move
Finance Minister P Chidambaram has said that the Reserve Bank of India's move to raise two of its interest rates while keeping the main repurchase rate unchanged doesn't signal a shift toward a tightening bias. "What I think the central bank did a few days ago is not to be understood as affecting the policy rate one way or another," Chidambaram said in an interview on Saturday in Moscow, where he's attending a meeting of Group of 20 finance ministers and central bankers. "That decision will be taken separately."......
RBI GOVERNOR SUBBARAO’S UNENVIABLE REPORT CARD
..........But in Subbarao, India has a fickle monetarist, whose fetish for changing goalposts has meant the economy totters with average credit and deposit growth rates falling from 20% plus when he took charge in September 2008 to well under 15% now. During his reign, India’s savings rate fell from 34% of GDP to barely 30%, trade deficit has widened from $120 billion to almost $190 billion and, worst of all, the rupee has depreciated over 35% from 44/$ to nearly 60/$. Subbarao has claimed that monetary policy is the preserve of the RBI and fiscal policy of the government. Should he not, therefore, share at least half the blame for the pathetic state of affairs?...............
RBI Governor’s prescription: Indians deserve the whip
...............On 19 July, Manmohan Singh went before television cameras for what must be the 400th time to claim that he was on the cusp of taking measures which would stimulate growth. Hopefully, the experience of the country will be different from that of the other 399 times, when growth fell soon after the PM promised to boost it. Given that it was Manmohan Singh who gave an extension of tenure to a wrecker of economic growth of the stamp of Subbarao, few will be holding their breath for the economy to turn around..............
All eyes on the Guv’nor
........Overall, the RBI seems to be inclined to go in the direction of tightening, but India Inc hopes the RBI Governor will stand still. Very few are in the camp that see RBI cutting policy rates in the near term. The recent RBI measures that made additional borrowing from the central banks expensive has put some banks in a quandary..........
Bitter pills
..........In other words, the governor has invited the finance minister to a tango which is likely to see some spectacular flourishes. The common man had better enjoy the sight, for the real implications of the RBI’s drastic actions are all dire. Bank credit is about to be curtailed, and with it, business expenditure on investment and inventories. Those big companies that can borrow abroad will still have an option; but it too will begin to sour as foreign financiers look at the prospects of the Indian economy and ask themselves whether it would be wise to sink their money into it. Meanwhile,..........
Collaretal damage
.....In a so-called textbook response, RBI this past Monday increased the penalty rate at which banks that do not have excess government securities borrow from the central bank, imposed checks on inter-bank liquidity and unveiled plans to hold open market sale of government securities to drain out rupee liquidity from the system. The measures had precise objectives: to squeeze liquidity and squash speculation in the forex market and to make domestic bond yields attractive (though the central bank later in the week looked reluctant to let the yields rise, even when the government sounded more willing, offering to even defer its planned borrowing by at least a week). But these measures have much wider ramifications .....
Out-of-step rupee and a fistful of solutions
.........“If the RBI and the Ministry of Finance keep playing their cards to keep the fiscal deficit in control and have the RBI's balance management done, the rupee would slide further down to a level of Rs 65 to a dollar,” ............
Deconstructing RBI's strategy
.......There is perhaps another less technical but equally important implication of these measures. By adopting these somewhat harsh measures, the RBI has signalled its discomfort with the rupee breaching the threshold of 60 to the dollar. It has also indicated that it is willing to pull out all the stops to "defend" this level. This "guidance" from the central bank could itself anchor the exchange rate at this level and even cause it to measures............
RBI Has to Undo Damage Caused in Money Market
.........the
collateral damage is far more than the benefit is becoming clearer. A
day after the announcement, RBI had to open a special liquidity window
for bleeding fund houses, with most liquid funds showing negative
returns following a bond price crash. There are signs the central bank
may be trying to find a way out of the mess that it had possibly not
bargained for. It cancelled treasury bills auction; held back sale of
securities at higher yields in the open market; and, lastly, let the
government bond auction flop, letting a chunk of securities devolve.
These are hints that the RBI is not comfortable with the high yields.
But these are subtle messages that stay within the money markets of
Mumbai. Undoing the damage would call for bolder steps.
Read - ET
Manmohan Singh: RBI steps not to result in high interest rate
The Reserve Bank of India's tough measures to arrest rupee's fall will not translate into higher interest rate and the steps will be reversed with easing of speculative pressure on domestic currency, Prime Minister Manmohan Singh said today. "More recently, it (RBI) took additional steps to raise short-term interest rates. These steps are not meant to signal an increase in the long-term interest rates. They are designed to contain speculative pressure on the currency...........
FDI reforms might not rein in CAD: Former RBI Deputy Governor Subir Gokarn
The government's strategy to bring the current account deficit under control by opening up foreign direct investment (FDI) across sectors is unlikely to work, believes former RBI Deputy Governor Subir Gokarn. India must take policy actions to address the structural root causes that are driving up the deficit, such as poor infrastructure, a static manufacturing sector and Jurassic-age labour laws, Gokarn told............
Beat books to give way to RFID devices
Conventional police beat books may soon be a thing of the past in the city. The city police are likely to replace them with passive Radio Frequency Identification (RFID) devices. The constabulary is also likely to revamp its beat system to include more areas. The RFID devices will replace beat books placed in residential areas and in front of key offices such as the Reserve Bank of India. Policemen and women walking the beat will carry battery-powered devices that will activate the electronic beat books at the press of a button...........
Young Economist Competition 2013 for Under Graduate Students
...........This year they are giving an opportunity to all students irrespective of their discipline to gather together on a national platform to match their talents and accomplishments. You are invited to contribute research based papers to the 8th National level Young Economist contest on the theme: Dynamics of Falling Rupee: Issues and Policies . We invite research based papers on the following sub themes:
• Impact of falling Rupee on Foreign trade and Investment
• Falling Rupee and Financial Market
• Impact of Falling rupee on internal and external debt
• 4.Role of RBI
• Falling Rupee and Inflation ........
Dr Rana Kapoor takes over as Assocham President
....In his statement after taking over his new role, Dr. Kapoor said that he would promote five point agenda on securing sustainable growth for India during his presidentship of Assocham in 2013- 14 which include economic security, livelihood security, energy security, ecological security and national security..............
YES Bank: Selective use of regulations?
...........When a regulator endeavours to establish 'fit and proper' criteria, it finds it difficult to identify the right benchmark. The board process is a cerebral process. In the absence of a mandatory retirement age for professors, in Ivy League institutions in USA (e.g. Harvard University), many academics hold the position till the age of 80 and continue to guide and mentor students in research. There is no reason to believe that an individual who enjoyed a good living during his/her active career loses his/her cerebral faculty at the age of 65. The YES Bank saga reflects the attitude and approach of business leaders. They use regulations to their advantage undermining the spirit of the same..........
Friday, July 19, 2013
Subbarao pitches for greater autonomy for central banks
RBI Governor expresses dilemma on monetary policy forward guidance
..........“We have started the practice of giving forward guidance on monetary policy. Because of its potential impact, we pay much more attention to the language and nuancing of the ‘forward guidance’ paragraphs than other parts of the statement. Our experience in this regard has been quite positive. Nevertheless, we face some challenges,” ...................
RBI to open financial literacy centres
Reserve Bank of India (RBI) Assistant General Manager V. Raveendran has said that the bank will launch financial literacy centres in the State. Delivering the keynote address at a district-level consultative committee review meeting of banks in the district here on Wednesday, Mr. Raveendran said the financial literacy rate was very low among Keralites and the RBI would launch block-level financial literacy centres to sensitize the public to the issue by September end............
Is the Indian economy heading towards stagflation?
KOLKATA: 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...............
Need to focus on employment generation - Charan Singh
.........The high fiscal deficit and current account deficit are a cause of concern and demand a very careful crafted policy environment. In these circumstances, despite the country being in an election year, stretching the policy to exhaust the fiscal space at the Centre and states by announcing new measures like Food Security Bill covering 83 crore people may not be defensible. Rather, measures to firm up expectations and unleash forces that help to generate skills and create employment would be useful.
VITALINFO - 'Re'serve EXpress..............
I have found VITALINFO as one space where we can express our views "WITHOUT RESERVE". I have found A.Chandramouliswaran's views on "Contender
- M.G.Warrier
My View on "How did a former RBI man end up on Yes Bank Board ?" - A.Chandramouliswaran
There is a rule in the Central Government Pension regulations relating to taking up employment after retirement. The government employee is not permitted to take up any employment within a period of two years after retirement without the permission of the Government. The scrutiny of such applications is expected to be done to ensure that the government employee was not in such a position where he had a regulatory role over the organisation offering employment. In the RBI Pension regulations, we have incorporated a similar provision. This is often circumvented by accepting appointment as an Adviser/Consultant and the permission is freely granted. After all, the appointment is cleared by someone who, sooner or later, would be finding himself at the other end and would expect his appointment to be cleared without any fuss. In the case of IAS officers, there is no dearth of such post retirement positions in the Governmental/Quasi- governmental organisations. There were two articles in the "Indian Express" some time ago about the number of positions occupied by retired IAS officers in CAT, as CIC, Principal Information Commissioner, CAG, Chairman of TRAI, members of Boards of companies such as ONGC, HPCL etc etc. In the RBI itself, even Deputy Governors ( not to speak of others down the line) have been allowed to take up positions in the Advisory Boards of Foreign banks, part time Chairman of private sector banks etc after their tenure in the RBI was completed. In this milieu, permission granted to M.R. Srinivasan ( who, incidentally, is a highly flexible person--please do not ask me what flexibility means!!) should not surprise anyone and the rule relating to prior permission for taking up post retirement position has become a laughable one and attracts nothing but contempt. I have known of some dedicated, intelligent and upright former colleagues of mine in the RBI suddenly changing colours a year or two and becoming 'flexible' prior to retirement with an eye on post retirement positions! There is total lack of morality in the offer and acceptance of post retirement jobs by Government servants and members of the top management in organisations like RBI, SBI and other PSUs.
- A.Chandramouliswaran
My View on "Time to cleanse banking in India"
This is a timely caution to government and regulators in the financial sector. Perhaps, confused with the shifting and dodging of responsibility by various authorities including finance ministry in the financial sector, FSLRC went to another extreme of suggesting a single regulator for financial sector. In the Indian context, such an institutional change may not happen that soon. But, regulators and GOI as also state governments should take cognizance of the blatant violations of established law by several agencies and take remedial action by following a coordinated approach. Coming to the limited issue of money laundering, finance ministry should take immediate supportive measures to follow up the symbolic action taken by RBI using its powers categorizing the goings on as a ‘KYC’ issue.
- M.G.Warrier
Beyond banker bashing
...........Instead of banker bashing, it would be more constructive towards mitigating the consequences of future disasters if banking were to be kept simple. Capital requirements could be beyond those prescribed under Basel III. However, this would be of little comfort if capital adequacy norms were not met and yet compliance were recorded through complex fudging..................
RBI’s laughable fines may well encourage banks to flout laws
..........Already, between the regulatory gaps of RBI and the Insurance Regulatory and Development Authority that regulates the insurance sector, banks have ensured that consumers lose Rs 1.5 trillion (that’s Rs 150,000 crore), according to a recent paper by the Indira Gandhi Institute of Development Research. This money has been pocketed largely by distributors in banks. But instead of learning from this colossal loss to many of them in rural areas, and tightening systems, the RBI is cheering the banks on. Unless, RBI changes its philosophy of fines and behaves like the regulator we expect, scams will continue to lurk in dark corners of finance’s first stop.
Passbook pangs
..........Despite the Reserve Bank of India pleading the case for the issue of passbooks, the new generation banks have not acceded to this demand. They have adamantly maintained their stand on issuing monthly statements. In fact, this persistent refusal borders on arrogance...............
PSBs could lose some good talent to new banks
.........."As their model would be technology-based, these banks might not need too many people for their branches. The issue is that all competent people of government banks would leave. Poaching will mainly happen at the level of assistant general manager, deputy general manager, and general manager. These positions will almost get empty,".............
New norms irk aspirants eyeing jobs in 21 banks
Pune:
The Institute of Banking Personnel Selection’s (IBPS) move to change
the eligibility criteria of the common written exam (CWE) for
probationary officers and management trainees at 21 public sector banks
has left several candidates in the lurch. The IBPS is an
autonomous body mandated with conducting the recruitment process for the
public sector banks. The enrolment process for the CWE, to be held in
November, is to commence from July 22...............
Read - TOI
Read - TOI
Tread cautiously prior to issuing new banking licences
........A debate has already begun whether corporate that doesn’t possess any banking experience but huge cash reserves should be issued licences or whether small time players like micro-finance firms and NBFC’s which have financial experience be permitted to make a foray into banking. Banking is a serious business and it involves lending, borrowing, maintaining liquidity, adhering to interest rates and lowering non-performing assets. All these aspects have to be managed amicably and require expertise which directly impacts a nation’s economy.................
SFL chief flays denial of level-field for NBFCs
.........The capital adequacy requirements for all NBFCs had been raised from 12 to 15 per cent, significantly higher than that required for banks, he added. Mr. Viji said based on a detailed analysis of the RBI guidelines, the directors were of the considered view that it was not in the long-term interests of the stakeholders to apply for a banking licence.
Not really; Subbarao is not paying you Rs 2 cr
........The RBI has been very aggressively creating awareness through its advertisements, poster, radio announcements and what not, regarding such fake emails. In fact, the apex bank runs a ticker on its website, urging the public in general to be aware of fictitious offers. Read the RBI notification here. We suggest when you get an email like this, you should simply ignore it.................
RBI ask banks to collect counterfeit notes and give credit to customers
...............According to RBI, reporting and detection of counterfeit notes has not improved on its expected lines. RBI said although 90% of the currency chests are with the public sector banks, they account for reporting of a mere 10% of counterfeit notes, while private sector banks with less than 10% of currency chests are reporting 90% of such cases. The central bank also warned that it would penalize banks that do not report counterfeit notes in its branch or currency chest. Banks would be penalized if found holding counterfeit notes in its branch or currency chest without reporting it to RBI or Police, during an inspection by the RBI. “It will be construed as willful involvement of the bank concerned in circulating counterfeit notes, and appropriate penalty strict regulatory measures against the bank including stringent disciplinary action will be imposed by RBI,” the circular said..............
SBI, Xpress Money launch dual-use remittance card
...........The State Bank Xpress Money Card, which will initially be available in Kerala and eventually cover other states, is a product of partnership between Xpress Money, State Bank of India and UAE Exchange and Financial Services Ltd. The card is a prepaid product which combines features of both debit and remit as it allows users to receive remittances from abroad and can also be used at ATMs and for e-commerce transactions..............
Ezetap takes on peers with low-cost payment device
Bangalore-based Ezetap has launched a new mobile point-of-sale device that will cost a lot less than similar products in the market, while meeting global security standards and RBI guidelines...........
Chidambaram leaving for Moscow to attend G20 ministerial
.....The G20 meeting of the finance ministers and central bank governors beginning July 19 will also be attended by RBI Governor D Subbarao and Deputy Governor Urjit Patel. The finance ministers of BRICS member countries are also scheduled to meet on the sidelines of the G20 ministerial meeting as a follow up of the Durban Summit earlier in March,............
Central bank turns cautious on monetary tightening
..........After some liquidity-tightening measures aimed at increasing borrowing costs, the Reserve Bank of India has turned cautious. Market experts said the central bank did not want interest rate to rise sharply as that could create more problems for the economy...............
RBI strikes fresh blow to worst bond sales in six years
Mumbai: Rupee-denominated bond sales were already having their slowest start to a month in almost six years before India wrecked prospects of a revival by unexpectedly raising interest rates..........
Dalal Street fears CRR hike as RBI manages to sell just Rs 2,500 crore worth of bonds
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.............
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,".......
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