.............The government has a major role in getting the economy back on track, but expects the RBI to do the same. While the finance minister may not find a "yes man" in Rajan, the new RBI Governor will find many obstructions and road blocks to implement his "pragmatic" views.
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, August 8, 2013
Is Raghuram Rajan UPA's answer to all economic issues created by itself?
..........It may be too much to expect Rajan, who also serves as Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago, to wield a magic wand to mitigate the crisis, considering that much of the current problems have their roots in a wasteful second term of the UPA government, riddled by corruption, policy inaction and neglect of the industry. But many hail him as the right choice in the present circumstances. C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, said Rajan was an 'excellent choice', since he was now familiar with the Indian economy, and would handle all issues in a "mature" manner..............
Both finmin and RBI may be wary of Raghuram Rajan
..........On the downside, he has never made policy. Unlike D Subbarao, YV Reddy and Bimal Jalan – his three immediate predecessors at RBI – Rajan has not had the experience of taking large macroeconomic policy decisions before being crowned king of Mint Street. Administering macroeconomic policy, with its huge overall impact, is an art in itself. This means he won’t have an old-boy network of IAS officers to lean on. If anything, they may already be looking at him as an adversary, having usurped their job. Heading the RBI comes with another challenge. It is an institution with vast and deep experience and often has a mind of its own. Its arch adversaries in the finance ministry accuse the institution – in private, of course – of stubbornness and of fighting turf wars in the guise of public interest. I don’t think these are entirely fair accusations to be made of the RBI, but the perception is important..............
Back to encounter with ‘starved lions’
........North Block and Subbarao had not seen eye to eye for quite a long time. Subbarao refused to toe the finance ministry line that economic growth should be the RBI’s top priority. Instead, he argued, that inflation remained his primary concern, prompting him to delay rate cuts and soak up liquidity from the financial markets to check the wobble in the rupee. If Rajan and the finance ministry see eye to eye, the government may not need to accept the recommendation of the Justice B.N. Srikrishna report on financial sector legislative reforms which had said that a monetary policy committee ought to be formed to take policy decisions as in the West. The recommendation seeks to dump the current practice where the governor — and the governor alone — takes the final call.............
The promise of change
...........What is needed is a combination of monetary loosening and fiscal tightening, in the form of redirecting government expenditure towards investment in railways, roads and other infrastructure, to revive the stalling growth engine. This requires coordinated action from the RBI and the Finance Ministry and a change from the virtual breakdown in communication between Mint Street and North Block over the past couple of years. The Government couldn’t have chosen anyone better than Rajan as RBI Governor; but its responsibility does not stop just there.
Raghuram Rajan on central banking—in his own words
...........Well, with a plunging GDP, the plummeting rupee, a yawning current account deficit, deteriorating asset quality in banks and stubbornly high retail inflation, Raghuram Rajan couldn’t have wished for a bigger crisis. We wish him the best of luck in coming out of it.
Rajan has tough job in hand, warn IIM-A faculty
.......An IIM-A alumnus, Barua has been taught by former RBI governor C Rangarajan at the campus. In turn, Barua went on to teach Rajan during the latter's stint at IIM-A campus as part of the 1985-87 batch. "While Prof. Rangarajan taught me, I got to teach Raghuram Rajan years later. I remember him as an outstanding student who could combine rigorous analysis with ability to interpret the results of such analysis for effective implementation. He is an excellent choice as RBI governor," says Barua...............
The promise of change
................ What is needed is a combination of monetary loosening and fiscal tightening, in the form of redirecting government expenditure towards investment in railways, roads and other infrastructure, to revive the stalling growth engine. This requires coordinated action from the RBI and the Finance Ministry and a change from the virtual breakdown in communication between Mint Street and North Block over the past couple of years. The Government couldn’t have chosen anyone better than Rajan as RBI Governor; but its responsibility does not stop just there.
Raghuram Rajan as RBI chief may have some surprises up his sleeve
.....Rajan comes to the RBI governor post with a lot of expectations thrust on him by both the government and the markets. The government will want him to wave a magic wand to bring down deficits, strengthen INR and help the economy grow. The markets will want from him a calm, well thought out approach to handling both the economy and the government. A tough task by any means, as will be vouched by both Dr YV Reddy and Dr Subbarao, the former RBI Governors............
New Indian Central Banker Needs 'Shock and Awe Tactics'
.... “Rajan will face a baptism of fire as he confronts the mounting difficulties facing the Indian economy,” IHS chief Asia economist Rajiv Biswas wrote in a note published today. “However he does still have weapons in his toolkit, although he needs to deploy them rapidly to avert a deepening rupee crisis.” Biswas argues Rajan should embrace “shock and awe tactics” to stabilize the currency..............
Raghuram Rajan is India’s new central banker. God help him
..........By law, India’s central bank doesn’t have much political independence, as Rajan serves at the pleasure of the government and can be sacked at any time. That could deter him from making tough moves against inflation that could have unpopular implications for growth. But Subramanian thinks he’ll have a great deal of flexibility in practice, even if the opposition Bharatiya Janata Party comes to power again. “In practice over time a central bank governor has wielded a measure of independence because people think it’s a very important job and previous incumbents have been reasonably good,” he explains...........
Rajan’s Crown of Thorns
......That’s
a long list of woes. But it is a direct consequence of ignoring
inflation and the RBI’s inability to make government read the writing on
the wall. No wonder the present PM once described his stint as RBI
governor the “loneliest job in India”. Possibly. But as long as
Rajan and all future RBI governors remember that their duty is to the
country, not to a particular government, they will not be alone. They
will have the silent support of a billion-plus people.
Governor's challenge
............The biggest challenge for Rajan — an economist trained in modern finance, who has worked on policy problems of the Indian financial sector — will be macroeconomic management. Monetary policy and its trade-offs will continue to present intractable challenges in the next three years. There is, as Rajan says, no magic wand to spur growth, push inflation and the CAD down, shore up investment or strengthen the rupee. There will be difficult choices and, undoubtedly, Rajan will face political pressures. On the one hand, .............
Five things Raghuram Rajan should not do as RBI Governor
.......... I am tempted to reproduce a text message that has been doing rounds this morning: “Raghuram Rajan’s appointment will usher in Ram Rajya at RBI.”
He must solve a tough 'trilemma'
........Mr Subbarao withstood mounting pressure from the government and industry bodies to cut interest rates. This sometimes evoked unusually firm comments from the government's fiscal managers, who hit out at the central bank's hawkish policy stance perhaps mirroring the growing difference between India's two topmost financial administrators on the optimal way to reverse a sharp economic slowdown. Mr Rajan has a tough balancing act to implement: arrest the rupee's slide, cool inflation and spur growth. Economic theory describes this as the central banks' impossible trilemma. Let's examine each of these.........
Correcting the fault lines
.....The next question is more speculative in nature on how he sees the economy going and the kind of measures that would be taken. On the face of it, so far, the CEA has been in consonance with the moves made by RBI and hence there has never been any overt disagreement on the approach taken by RBI. Therefore, one may expect continuity in approach in general. So far, RBI has a priority list of currency, inflation and growth in the pecking order. Will this change?...........
The Timing Was Right, This Time
.....all of whom spoke on condition of anonymity, said that Rajan’s appointment was all but finalised last week. Last Friday, the finance minister met the prime minister to discuss his selection and soon after discussions with a few top advisors such as C Rangarajan and Planning Commission Deputy Chairman Montek Singh Ahluwalia, the appointment was sealed on Monday. So much so that it just took a few hours for the file forwarded by the finance ministry to be cleared by the PMO. Rajan was sounded about it last week itself and he traveled to Mumbai to meet Subbarao at the weekend, said one persons familiar with the matter. The appointment has, rather unusually, been announced one month in advance, almost reminiscent of Yashwant Sinha’s tenure as finance minister when an extension for Bimal Jalan was granted almost three months before the expiry of his term by the government to stymie attempts at lobbying for the job by some influential bureaucrats............. Can the new RBI chief survive India's 'poisoned chalice'?
....The former chief economist at the International Monetary Fund inherits an economy struggling with the slowest growth in a decade, rising inflation, a hefty deficit and a battered down currency, together with long-standing issues like India's much needed deregulation of its industry. "Rajan can't exactly be said to be facing the easiest of tasks. The words poisoned and chalice spring to mind," said Robert Prior-Wandesforde, head of Southeast Asia and India economics at Credit Suisse bank. "Rajan was wise to point out that he doesn't have a magic wand that will fix the economy's considerable woes," added Prior-Wandesforde.............
Options for India’s New Central Bank Chief
....... “The RBI needs to be more flexible on intervention and use its reserves when the situation calls for it,” says Ashima Goyal, who is a member of an external panel that advises the RBI on monetary policy.
Govt panel reviews potential risks to financial system: RBI
A government-appointed panel on financial stability, including incoming Reserve Bank of India (RBI) chief Raghuram Rajan, assessed risks to the financial system at a meeting on Wednesday, the central bank said, without elaborating on any possible measures. Financial markets have been awaiting word from policymakers on steps to boost inflows and prop up the battered rupee, which touched a record low of 61.80 to the dollar on Tuesday, and stayed within striking distance of that in Wednesday's trade.........
Super regulator panel raises concern on bank credit quality
The Finance Stability and Development Council (FSDC), or the super regulator as it is popularly known in the market parlance, expressed concern on the deteriorating credit quality of public sector banks while deliberating corrective measures to fix the problem..........
RBI needs to come out clean on NPAs
........The RBI Panel under its executive director, B Mahapatra, in its report, observes that restructuring amounts to an ‘event of impairment’ irrespective of whether it is asset classification or not, undergoes a downgrade. It has rightly recommended that all loans that are subjected to restructuring should be classified as NPAs, since they are already Sub-standard. This is particularly true when............
.........If NPAs are not curbed effectively, it will not be long before India heads the Greek route. The Ministry of Finance has to necessarily leave the micromanagement of the banking sector to the RBI. This oversight task is best assigned to Dr YV Reddy, the tough acting former RBI Governor!
Savings Banks can Help Serve the Bottom of Pyramid: Nabard Chief
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Nabard chairman Prakash Bakshi calls for the creation of exclusive “savings banks” to cater to the deposit needs of the bottom of the pyramid that could bring millions of unbanked in the country into the formal financial world. Edited excepts:..............
Montek pegs economic growth at 5.5% this fiscal in line with RBI
.........With no signs of industrial turnaround visible, Planning Commission Deputy Chairman Montek Singh Ahluwalia today projected India's economy to grow by 5.5% for 2013-14, against the Budget assumption of 6.4%. India's economy grew by a decade low rate of 5% in 2012-13..................
RBI wants PF money in rate swaps
.........The working group headed by RBI Executive director R Gandhi had advocated participation of financially sound entities in IRS market so that it may enhance the much-needed liquidity in the market. It had also recommended several measures to improve the interest rate derivatives market. The measures included Electronic swap execution facility (electronic trading platform) for the IRS market, standardization of IRS contracts etc............
Housing finance firms will now have more funds to lend
.........By lowering the risk weights, NHB is signalling that assets (loans) in the housing sector are in good health and the risk perception on the sector has come down. Risk weights for home loans extended by HFCs are now in alignment with those for commercial banks, R.V. Verma, Chairman and Managing Director, NHB, told Business Line. To give a boost to the economy, Reserve Bank of India had in June announced two steps to increase the flow of bank credit to builders/developers and individual buyers. It created a special category-commercial real estate-residential housing (CRE-RH) that attracted lower risk weight and lower standard asset provisioning...........
Food security and empty coffers - Charan Singh
...............The Food Security Bill, 2013 (FSB) has the approval of the Central government and will soon be discussed in Parliament. If press reports are to be believed, irrespective of the fate of the Bill in Parliament, FSB will be implemented in the States in which the Congress is in power. This, indeed, is a unique stance, for in a vibrant democracy such as India, batons change regularly between parties and there are no permanent jagirs.....
Consumers gaining from use of credit scores: Cibil’s Chandorkar
.........“In India, the infrastructure is still in the nascent stages of evolving. But many banks have already started using credit scores. We’ve already heard about instances where consumers have gained from speedier processing and faster approvals, among a host of other non-financial benefits,” ...............
Soon, those paying up in time could get cheaper repeat loan
Here's good news for those who pay their loan instalments on time: the banking industry is mulling cheaper repeat loans for such borrowers, a Credit Information Bureau (India) Limited (CIBIL) official said Wednesday. "With the Reserve Bank of India in its report mentioning the possible introduction of risk-based pricing, its implementation in our country is not going to be far away," CIBIL senior vice president Harshala Chandorkar told reporters here............
Macroeconomic shocks: A Window of Opportunity
While the current situation and the RBI's reaction of raising rates has impacted the bond market all along the yield curve and dampened investor sentiment, a look at the past reveals that there is a big window of opportunity that can be tapped. Staying invested and increasing allocation in duration products at this juncture will likely result in gains once the situation stabilizes.............
NABARD ready to fund ICT solutions
The National Bank for Agriculture and Rural Development (NABARD) is willing to take up with the Reserve Bank of India (RBI) the issue of relaxing the time frame set for the 1,603 Primary Cooperative Banks to move over to the new payment regime, and also fund the development of an Information and Communication Technology (ICT) solution that could address their concerns. Kerala chief regional manager of NABARD R. Amalorpavanathan told....................
RBI imposes Rs 5.6 lakh fine on SBI for violation of norms
......."The Reserve Bank of India has imposed a penalty of Rs 5,62,555 on July 12, 2013 on SBI for violation of the terms of agreement with RBI for opening and maintaining currency chests," the central bank said in a statement...............
Why Reliance Industries, Tata Capital are buying rupee debt
Blue-chip companies have begun buying their own debt, taking advantage of steep price drops since the Reserve Bank of India's cash-draining steps last month and offering a glimpse of hope to battered credit markets as more firms look to follow suit...........
Wednesday, August 7, 2013
Meet Raghuram Rajan, the New RBI Governor
India has named Chief Economic Adviser Raghuram Rajan as the next Governor of the central bank after current Governor Duvvuri Subbarao steps down from the post in early September. Economists and investors welcomed the appointment but they said Mr. Rajan, who took over as chief economic advisor in India’s finance ministry in August last year, will have his work cut out. .....................RBI gets a world-class economist as Governor
Read - TOI
INDIA BANKING ON RAJAN
.....Rajan will be the first central bank Governor who will have the responsibility to regulate not just a bank or bank
group but entire conglomerates that have a bank as part of their
business. The new Banking Regulation Act grants the central bank powers
to regulate corporates that have a bank in their group. This is
ostensibly aimed at preventing risks from other business percolating to
the bank. But Indian conglomerates have extremely complex structures
with presence in several countries and RBI may have to substantially increase its regulatory capabilities..............Right on, Rajan!
......But we also need a macroprudential regulator with overarching powers, whose writ should inform the decisions of the transactions regulator. How precisely these arrangements should be wrought have to be painstakingly worked out. Having someone who understands the high-voltage world of finance at the helm of the RBI would help the government work out the appropriate arrangements................
GUV TALES
...........Rajan
calls himself a 10th class pass in Hindi and wants to improve his grasp
of the language. “I want to develop to a point where I can give a
working interview in Hindi.”...............
Read - TOI
Read - TOI
Baptism by fire
..........Given the old IMF prescriptions of monetary and fiscal tightening, in east Asia and now Europe, have been discredited since—the IMF’s current chief economist did a major mea culpa when he published a paper arguing IMF’s short-run austerity policies in Europe probably worsened growth—it is to be hoped Rajan will be more pragmatic since there is little doubt interest rates play a major role in stimulating growth and, in turn, curbing supply-side inflation. Rajan’s A Hundred Small Steps in financial reform is equally important and suggests a Governor in sync with what real reforms are needed, ................
Ex-RBI guvs give thumbs-up to Raghuram Rajan's appointment
 |
| .............at the moment I think that he will make an excellent Governor........... |
 |
| ...........He knows the global economy; he knows our economy and is an excellent economist. So I am absolutely confident that whatever he can do he will do it........... |
 |
| ..........One advantage Raghu has is that he is familiar with the developments of the world and is extreme knowledgeable and thoughtful so I do think that he is an excellent appointment."............. |
No magic wand to deal with economic woes, RBI Governor designate Raghuram Rajan says
Reserve Bank Governor designate Raghuram G Rajan said on Tuesday there is no magic wand to pull the country instantly out of challenges being faced by the economy. "These are challenging times for the Indian economy. The government and the RBI are working together to address these challenges. We don't have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt, we will deal with them,"..............
A friend of financial innovation, competition
............Rajan’s choice as RBI Governor designate is probably the best decision that the Prime Minister Manmohan Singh took during the last four years, is what many bankers say in private. Rajan is not known to many in the Indian polity could be a plus point for him and the country too...................
What to expect from Raghuram Rajan as RBI governor
..........It is unlikely that Rajan will make any compromises to help the politicians who have appointed him and is likely to make decisions that are best suited for the Indian economy, rather than help him win brownie points with politicians.................
Raghuram G Rajan will be among the youngest to head RBI
When noted economist Raghuram G Rajan takes over as RBI Governor next month, he will be among the youngest to occupy the high chair at the central bank. Rajan, a former chief economist at the International Monetary Fund, will be 50 years and six months old when he takes over as the 23rd Governor on September 5.....................
Taking over at a difficult time for the economy
..........In his new role, Rajan will be tested again and again. He will have to maintain his independence and deal with the Finance Ministry’s pressure even while working in tandem. He will have to spar with some of the key people with whom he has worked closely in the last one year as the Chief Economic Advisor to the Government. Incidentally, the last three Governors had all done stints in the Finance Ministry in various capacities before their appointment at Mint Street...........
Don't get cowed down by govt: BJP's advice to new RBI Governor
Trial by fire, again
......... Dr Subbarao articulated his scepticism about many of the proposals both during the process and after the report was submitted. In fact, several proposals closely follow the recommendations of the Committee on Financial Sector Reforms, which was chaired by Dr Rajan himself and submitted its report in 2007. Does this mean that the significant amendments to the Reserve Bank of India Act, which the new code suggests, will now get the backing of the RBI Governor? Or, as has been seen to happen in the past, does "where you stand depends on where you sit" kick in?.............
New Governor won’t Get to be His Own Man
In
2008, the new RBI Governor, Raghuram Rajan, detailed his idea of the
right agenda for India as head of the Committee on Financial Sector
Reforms. Of its many recommendations, the key one was that RBI should
have a single policy focus — low, stable inflation. Corollary: it should
not focus on targeting the exchange rate or stimulating GDP. Noting
that historically RBI sometimes targeted inflation, sometimes the
exchange rate, and sometimes economic growth, the report said “by trying
to do too many things at once, RBI risks doing none of them well”. Will
Rajan put this vision into practice as RBI Governor? Not a chance.
Indian politics will not permit an inflation only focus for RBI. After
his spell in the finance ministry, Rajan must be well aware of the
limits to the independence of any RBI Governor............
Read - ET
India picked the right man at the wrong time to be its new central bank Governor
It would be hard to name a more qualified candidate to take over the Reserve Bank of India. But despite his long list of career successes, Raghuram Rajan, who takes the helm in September, may do a terrible job—though it probably wouldn’t be his fault. Why?..............
Steep learning curve ahead for next RBI Governor Raghuram Rajan
.....In an era when the credibility of almost every institution here has been eroded, Rajan has the unenviable task of leaning against the government to protect India's central bank. Despite its flaws, the RBI is still seen as an institution that is uncompromising — be it with interest rates, banking regulation, currency or even bank licences. Rajan, who will be India's youngest central bank Governor, will take over at a time when the communication between the government and Mint Street's top man has almost broken down. Only a rupee collapse helped a patch up. Finance minister Chidambaram and Governor Subbarao have had public spats in the past few months, which has not helped anyone's cause. The foremost task is to be on the same page, but that will be inviting trouble for Rajan's credibility if the government continues with its imprudent policies...........
Will Rajan the Intellectual Survive Rajan the Governor?
Most
things that Raghuram Rajan has argued for over the years are contrary
to what the UPA wants in its monetary policy now. That’s his key
challenge................
Rupee makes dramatic recovery on Rajan's appointment as RBI chief
The Indian rupee made a dramatic recovery after the government announced the appointment of Raghuram Rajan, the chief economic adviser in the finance ministry, as the next governor of the Reserve Bank of India. The partially convertible rupee not only erased all losses, but ended higher at 60.77 per dollar as against Monday's close of 60.88. The rupee traded at 61.45 before the announcement of Mr Rajan's appointment...............
Rajan on a High, Re at a Low
.....Rajan
now faces the delicate task of giving a sympathetic hearing to the
government’s growth concerns without compromising RBI’s functional
independence. It is also likely that Rajan may reform the 78-year-old
institution, making it more democratic in terms of monetary policy, as
is the case in developed countries. In the process, he may have to
dilute some of the extraordinary powers of the Governor..............
Sorry and Thank you Mr. Subbarao
I write this with a single purpose in mind - to apologize to Subbarao, present RBI Governor. Though I do not 'take back' or anything I wrote but my perception of his working was clearly wrong, and has been wrong for at least past few quarters. This post in that sense is an acknowledgement of my views offline, into the same pages that I used to disparage him in past. The long story short,.......................
A Bheeshma Facing Abhimanyu’s Fate
.............Though
he has not intervened to stem the slide directly, he had to intervene
by raising interest rates. The measure appears half-hearted. He wanted
rates to rise, but did not say so. A reasonable guess here could be that
he did not touch the repo rate because the government persuaded him not
to do so since it would be seen as a reversal. It is hard to believe
that someone without conviction could bump up interest rates by 300
basis points in the market, but did not want to say so. The absence of
clear communication is a double whammy. It has not helped the rupee, but
damaged the fixed-income market. Subbarao said, “There will be
consequences for this. There will be pain in the economy. Somebody will
have to bear the cost for this. Those costs are inevitable and
unavoidable.” Many of his actions may not have reflected his thoughts,
but most of his thoughts reflected the reality. The 2010 speech shows
that unlike Abhimanyu who was trapped in the chakra vyuha, Subbarao knew
what he was getting into.
Subbarao, man who fell into cauldron of woes
....For Duvvuri Subbarao it was baptism by fire when he took over the reins of the Reserve Bank of India nearly five years ago. As soon as he stepped into the corner office at the central bank headquarters in Mumbai's Mint Road, a tsunami struck the global financial system. The force of the 2008 global financial meltdown meant that RBI had to call on all its resources to shield the economy from being brutalized. ...........
Why does Chidambaram not get Subbarao?
As D. Subbarao begins his last month as the 22nd Governor of the Reserve Bank of India (RBI), it is time to take stock of his tenure. A vital aspect of this was his relationship with Finance Minister P. Chidambaram. The intense media speculation about differences between the two amounts to more than analysing the equation between two individuals. It encapsulates an important challenge India faces in monetary policy making. Two markers will give a sense of what happened during the Subbarao governorship...........
Inter-school quiz
.......Speaking at the inaugural, Dr Sujatha Elizabeth Prasad, Banking Ombudsman for Tamil Nadu, Puducherry and Port Blair areas from the RBI, shed light on the working of the RBI and gave the students a few tips on how to safeguard their bank accounts through fair transactions. Hari Krishnan, General Manager (Banking), and S Venkatesan, Deputy General Manager (Human Resources), from RBI Chennai, were among the dignitaries who inaugurated the quiz.................
Impossible trinity
..........Impossible trinity or trilemma in monetary policy means that a country cannot have a fixed exchange rate, free movement of capital and an independent monetary policy at the same time. As it happened in India, after lowering interest rates over the last one year, RBI went ahead to protect the rupee by sucking liquidity out of the system, which has resulted in higher cost of money and higher interest rates. From a pure monetary policy standpoint, RBI had no intention of raising interest rates. In fact there was a case to cut policy rates to support growth, but while targeting currency it lost a bit of control on the monetary policy,which resulted in higher interest rates..............
RBI is behaving like a football goalkeeper
A former Governor of the Reserve Bank of India (RBI) once told me that in a “moment of crisis the central bank can’t be seen to be doing nothing” even if “do nothing” might be the best strategy to follow. This might well be the spur behind the RBI’s recent defence of the rupee.................The curious case of two indices - Renu Kohli
....RBI is grappling with two issues here. The first being statistical reliability of the new CPI. The second issue is its divergence from WPI. An early adoption raises the probability of policy errors from erratic data points in a short time-series. The latter could potentially shift the yield curve upwards, to the detriment of growth. RBI’s official position on the former is to wait for statistical robustness checks before formal adoption. Its response to the more crucial second issue of WPI-CPI divergence has not been publicly articulated.........
Turkey lira defense a lesson for India
LONDON (Reuters) - If the Reserve Bank of India wants some pointers on how to lift the rupee decisively off record lows, it could try asking Turkish central bank governor Erdem Basci. The rupee tumbled to a new record low against the dollar on Tuesday, raising the stakes for the RBI, whose stop-start currency defense strategy is widely seen as inadequate............
Phishing fraud is back; you have got fake mail from Reserve Bank, I-T authorities
..........Another scam involves the impersonation of outgoing Reserve Bank of India Governor Dr D Subbarao. An e-mail purportedly sent by RBI offers to transfer $12 million (approximately Rs 72 crore) to the receiver's personal account. A Madhya Pradesh resident paid thousands of rupees after hearing that "Subbarao had met United Nations secretary general Ban Ki-moon to release funds". RBI spokesperson Alpana Killawala said they had been running a multi-pronged awareness campaign to alert people to this fraud. "We have messages scrolling on our website www.rbi.org.in and are running four spots on FM radio. We have also inserted advertisements in 13 languages in 800 newspapers," she said............
A Licence to Print Money in Underbanked India
If the Ministry of Finance has its way, and if the Reserve Bank of India does not drag its feet, some time next year, you would be able to choose from a wider range of banks. Will this change anything for customers? Will the new banks succeed? The short answer to these two questions is No and Yes. Here’s why.................
Read - Forbes India
Read - Forbes India
Three questions on India’s economy
........Three questions should be salient right now. First: What is the rate of economic growth that India can currently sustain without sparking off high inflation? Second: Why is the rupee losing value against the dollar? Third: What is the correct level of interest rates given the current economic situation? The answers could help us get a bit more clarity on what the policy response should be..............
Nabard wants co-ops to understand reality
National Bank for Agriculture and Rural Development (Nabard) chief general manager R Amalorpavanathan said here on Tuesday that primary agricultural cooperative societies (PACS) should understand the emerging reality in the banking sector and initiate urgent steps to keep themselves in the mainstream. He told a news conference here that the RBI and the Union government had the responsibility to evolve a safe and secure payment system in the country and the RBI directives were aimed at better services to all bank account holders, including farmers.........
RBI to restructure loans in disaster-hit areas of U'khand
The Reserve Bank of India (RBI) has started taking steps to provide relief to the disaster-affected people in Uttarakhand by restructuring loans for one year period. Confirming this, the Allahabad Bank CMD Shubhalakshmi Panse today said she has received a letter from the RBI for “restructuring” of loans in the disaster-affected areas of the state. “I have received a letter from the RBI regarding restructuring of loans in the disaster affected areas”, she said after handing over a cheque of Rs 5 crore to Uttarakhand chief minister Vijay bahuguna for disaster relief works.............
Tuesday, August 6, 2013
Own goals, broken limbs and band-aids
It has been anything but a boring summer for Indian policy makers. The preference for a desperate orthodox (IMF-style?) interest rate defence of the rupee hints that they have been feeling the heat despite the cooling effect of a good monsoon. It also suggests that they are running out of lasting, non-disruptive and inexpensive options. Ironically, in their efforts to lower speculation, supposedly behind the rupee's recent collapse, poor communication and the convoluted implementation have given rise to higher uncertainty across asset classes. Confusing signals from the government and the central bank have only made the actual defence weaker............
Don’t kill the messenger, read the message
....The NDF markets are outside RBI’s jurisdiction, and no manner of domestic restriction will diminish their existence. Markets are messengers of underlying problems, not the cause. If drastic measures are on the table, why not temporarily ban gold imports instead of murdering the economy?..................
Tightrope over crisis
......The RBI's liquidity stance is a poor response to a flawed need to defend the rupee. But it could prove to be very strong medicine for the banking sector. On the one hand, lack of liquidity would prevent ever-greening of sticky assets and this should flush NPAs out of the system. On the other hand, the tightening would make it very difficult to support any resurgence in credit demand and that is bound to adversely impact growth. And, of course, a combination of low liquidity and falling equity valuations makes recapitalisation almost impossible in the short term. Every bank will have to contend with higher rates, sluggish credit growth and dodgy asset quality; but public sector banks will be especially stressed given their much higher exposure to bad loans..........
Economy Mimics Parliament, it Goes from Bad to Worse
.........“All
policy announcements made in the past year have not added any material
impact to the actual activity on the ground. The situation is dim and
there is no reason for optimism, be it in consumption or investment,”
Sabnavis said. Leif Eskesen, HSBC’s chief economist for India and
Asean, called for pro-growth measures from RBI. “While RBI has to cater
to the currency at the moment, it will eventually need to cater more to
growth as economic activity continues to soften,” he said..........
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