............A special resolution in this regard was passed at the 86th Annual General Meeting of the bank held here today, bank sources said. Equity shares of 10.5 lakh, 12.5 lakh and 52.5 lakh would be allotted to investors B K Raveendran Pillai, Mohanachandran Nair B and and N V George respectively as per rules of the Securities and Exchange Board of India, Capital and Disclosures Requirement, Reserve Bank of India, Union Finance Ministry and other relevant statutory authorities...........
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.
Wednesday, August 28, 2013
Tuesday, August 27, 2013
Anchors aweigh!
Christening by fire
............Going by his amazing credentials, there could hardly be anyone better equipped to take on this challenge; moreover, he has also authored a full-fledged report on the Indian financial sector reforms that would have given him a first-hand feel of the issues, challenges and reforms for the banking and financial sector. There are not too many people who are given the opportunity to implement what they have preached. And so the Governor should simply go for implementing his own recommendations and liberalise the banking and financial sector; introduce an arm’s length regulation with a lighter touch; make RBI a more market-friendly regulator; and consolidate fragmented capacities that presently characterise this sector. These reforms have long been in waiting and need immediate attention..............
Bank complaints dip
............According to Banking Ombudsman S. Chattopadhyay, the regional office was conducting visits incognito at various branches to ensure proper banking services. She said banks were urged to increase its compliance with the regulations in the Banking Codes and Standards Board of India (BCSBI). An increase in the awareness among customers about the proper use of the banking ombudsman scheme also attributed to the decline in the number of complaints................
Financial inclusion is possible when the policy, mindset, philosophy and frame work are established
........Expressing his view on event theme ‘Journey Ahead: Tie-in Social Obligation Business Opportunity’, Mr. B.A. Prabhakar-Chairman Managing Director of Andhra Bank said, “RBI wants financial inclusion for inclusive growth but 50% of the villages in the country do not have any financial services. Banks must use ICT enabled services to reach out to rural masses to increase financial literacy. Banks must conduct camps / set up more centers in villages to reach out to common people.”..............
.....Other eminent speakers present at DB Financial Inclusion Conclave were A.D.M.Chavali, Executive Director, Indian Overseas bank , Mr. R.N. Dash – GM, RBI, Mr. V.B. Bhgavathi –GM- Andhra Bank, Mr. Alok Prasad, CEO-MFIN, Mr. G.S. Iyer –GM-Canara Bank, Mr. Kumara Swamy – DGM-SBH, Mr. Guru Harinadh Rao-DGM Corporation Bank..............
Inadequate storage, a major challenge for foodgrain management: RBI
..........To increase availability of food, the Reserve Bank of India suggested that the Government should take steps to create a market at the doorstep of the farmers, both for input supplies and marketing of the product. The central bank also flagged the issue of uneven distribution of warehouses and storage capacity relative to the population as well as the volume of foodgrains production across States in its annual report. With the diversification in agricultural activity as also the continued pressure on food prices, the RBI observed that there is an urgent need to address supply chain and marketing inefficiencies...............
Surrender their gold, country will prosper......
A couple of days back, the TOI carried a news item that gold plating is done extensively in the houses of Mukesh Ambani and Shah Rukh Khans. These are just two cases reported. In India, so many such individuals are living. It is reported in the article that about 25000- 30000 tons of gold are hoarded in India. If the above examples are any indication, the gold hoarding in India is a classic case of following Pareto's Principle with 80% of the gold wealth in the hands of 20% of the people in India. In reality, it may be 90-95% of gold will be just in the hands of 5-10% of the people in the country. So, target them and make them surrender their gold, country will prosper. Suggestion to increase investment climate and provide real and reasonable rate of return on savings will help to a great extent. In the long run, if we allow Islamic Banking with suitable checks and balances, it would increase the flow of foreign investments particularly from the UAE countries.
- S.Santhanam
The domestic household stock of gold in India estimated at over 25,000 tons, the country’s annual purchase of over 30 per cent of global gold purchase leading to an estimated cumulative demand of 1200 tons by 2020 and low share of gold in country’s forex reserves as compared to other countries and not always economic and prudent handling of this precious metal, all these and more point to the urgency in having a national policy for gold management. The economic and technical policy aspects highlighted in the article should get the attention they deserve from GOI. The policy should look at a strategy that will encourage transparency in transactions, elimination of wastages, standardization of valuation norms and facilities for gradually converting even the existing stock of gold with individuals and institutions to conform to internationally acceptable standards. RBI and Centre, in the early 1990’s actively considered setting up a Gold Bank with a mandate to do real gold-related banking, also taking care of the forex dimensions of the idea. However, the project was a non-starter presumably for profit-related reasons and possibly, external pressure. Perhaps the time is opportune to reopen the debate on professional management of India’s gold resources. Authorities should think in terms of dedicated professional institutions at regional/state level which will handle gold from a banking angle equipped with linkages for import and export of gold and gold products with borrowing and lending capabilities. The initiative has potential to take India out of the balance of payment and CAD problems the country is facing now.
- M.G.Warrier
Accounting gimmicks
This refers to the editorial "Non-performing managers" (August 26). The Reserve Bank of India (RBI) deputy governor's remarks on the reasons for the unabated growth in non-performing assets (NPAs) of public sector banks is true and this callousness gets accentuated when the slowdown of the economy also becomes handy to justify the non-performance. ..........
History Of Indian Banking Industry
.......The banking sector in India functions under the umbrella of the RBI—the regulatory, central bank. The Reserve Bank of India Act was passed in 1934 and the RBI was constituted in 1935 as the apex bank. The Banking Regulations Act was passed in 1949. This Act brought the RBI under government control.Under the Act, the RBI received wide ranging powers in regards to establishment of new banks, mergers and amalgamations of banks, opening and closing of branches of banks, maintaining certain standards of banking business, inspection of banks, etc. The Act also vested licensing powers and the authority to conduct inspections with the RBI. The Indian Banking system consists of different types of financial institutions which are responsible for the development of the country’s economy...........
RTI Judgement Series: CIC cannot abdicate its responsibilities to an expert body like RBI
...........While giving this judgement on 1 November 2011, Shailesh Gandhi, the then Central Information Commissioner said, “The Commission cannot abdicate its responsibilities under the RTI Act to RBI on the ground that the latter is an expert body. If the position of the Full Bench is to be accepted, it would lead to a situation where RBI would have the final say in whether information should be provided to a citizen or not. Extending this logic, all Public authorities could be the best judge of what information could be disclosed, since they are likely to be experts in matters connected with their working. The Commission cannot rely solely on the decision of the public authority and must look into the merits of the case itself. It must determine, on its own, whether the denial of information by the PIO was justified as per Sections 8 and 9 of the RTI Act.”.............
Command Responsibility - A Must For Banking Sector
....My mind stops working when I try to probe as to whether our CMDs and EDs en masse are so dumb that none of them could visualize the problems that can be faced by India on the current account deficit due to mass level encouragement of sale of gold? Is each one of them is such a big fools that none of them could feel that KYC norms are being flouted under their very nose, and finally on the expose of Cobrapost, RBI had to slap almost each one of them with penalty running in crores? Why RBI and MoF are silent on this incompetence of bank chiefs. What has gone wrong with their selection of CMDs and EDs that has led to a situation where non of them is competent enough to see through such lapses at such a mass and national level? I will call this the biggest failure of MoF / RBI in choosing such dumb people to head PS Banks..............
Despite 1/30 marks, four bankers set to be EDs
New
Delhi: Can you get a job after securing one mark out of 30 in an
interview? Yes, if you are an aspirant for the job of an executive
director in a public sector bank. The finance ministry has
recommended appointing four general managers of state-run banks as executive directors, on promotion, despite the candidates managing to
barely open their accounts during an interview conducted by a panel
headed by financial services secretary Rajiv Takru.........
Read - TOI
Read - TOI
His Master's Voice..............
My View on "Non-performing managers":
This is a balanced view of the present position of the top management of PSUs and PSBs in general. To comment on the non-performing administration in the public sector and government-owned bodies, these days, no deep research is needed. PSUs in India including Public Sector Banks have become whipping boys of government, regulators and the new generation advocates of privatization. Government (some officials and ministers) think they are the owners of PSUs and PSBs (in a way, they are!) and use them for carrying out their agenda and for milking them dry to quench their thirst. These institutions (and government) get the private sector-rejects or retired/retiring government officials at their top who carry out the wishes of their masters in government. It is not that these organizations cannot compete with their private sector counterparts. They will outperform them, if a level playing field in terms of skill, technology, opportunities and autonomy in management (including freedom in managing HR) is assured.
But, to make this possible, the selection procedure, at least from middle-management level and compensation package will need an overhaul. Career progression with appropriate provision for inter-mobility within the organization and at higher levels within the sector will have to be planned with the ideal age profiles at various levels and the need for a minimum tenure of 5 years for those who reach that level.
- M.G.Warrier
The more things change, they actually change...
..........A quick look at why the base rate mechanism is relatively more transparent than its predecessor (PLR) would be in order. Banks are not allowed to lend below their base rates to any borrowers. Hence, if market rates dip below the base rate, they have no choice but to drop base rates to get consumers. Base rates of banks currently range from 9.7 per cent and upwards. On top of the base rate, the bank charges a spread...........
Govt banks will find it difficult to raise equity
........Public sector banks are reeling under asset quality pressure, that has impacted their share price, analysts said. “It may sound alarming, but the market fears the bulk of the public banks’ net worth might get wiped off if they fully account for their non-performing assets,” .........
A common currency for South Asia to end rupee’s woes
............The falling rupee is treated as a problem of the finance ministry and the Reserve Bank of India, and not as a national crisis; not as an issue that affects India’s self-worth and standing abroad. Foreign policy and diplomacy are increasingly driven by economic objectives. Curiously, the Indian rupee’s fate never figures in our ‘External Affairs’. The government is able to do nothing to raise the strength and stature of the rupee to match India’s international profile. At the least, the government should be able to make one other country feel affected by the rupee’s fortunes. Far from that, even Indians are sold on the dollar when they see no future for the rupee. Yet, this crisis could be an opportunity for India to re-float the idea of a common currency in South Asia..................
Why you need to be doubly careful with Rs 1000 notes
.............But unlike in the past, this time it was the bank’s note sorting machines which were able to detect the fake currency notes in the system. Banks have been warned by the apex bank to impound and report all fake notes detected by them. So, what happens if you are at a bank branch to deposit some cash and the banker (or the counterfeit note identification machine) spots a fake note?..............
New notes
A new series of currency notes in different denominations with the rupee symbol should be issued in smaller sizes to save on printing costs. The size of currency notes was last reduced about half-a-century ago when notes of Re.1. and Rs.2 were in circulation. With Rs.5 and Rs.10 coins already introduced, the Reserve Bank of India should discontinue printing notes of these denominations. Since the life of lower denomination notes is quite short, it is senseless to waste public money on printing notes of up to Rs.10.
- Madhu Agrawal, Dariba Hindu
How a communication gap made the rupee crisis worse
......."The problem is that the RBI is trying to juggle too many balls, which sends confusing signals and damages its credibility," global brokerage Nomura's India economist Sonal Varma wrote in a scathing report on Wednesday....................
Raghuram Rajan to force RBI focus onto Indian rupee, but analysts see plunge to 69
.........."Raghuram Rajan could streamline the RBI's focus to stabilising the currency and inflation while being supportive of growth," said Nizam Idris, head of FX strategy at Macquarie Bank in Singapore. "The RBI must realise it cannot control the Indian rupee, rates, capital flows and inflation all at the same time." Most of the RBI's moves to break the Indian rupee's fall so far have not helped............
‘ Interest Rates Should be Brought Down to Stimulate Growth’
..........The
Reserve Bank of India has dried up liquidity from the banking system to
stem the rupee’s fall, which is having an adverse impact on interest
rates, thus hurting growth prospects. What is your view on this
scenario? .................
Short-term interest rates to stay firm
...........On August 23, the RBI had conducted an open market operation of government securities of Rs 8,000 crore as part of its plan to prevent the hardening of long-term yields which had recently hit a five-year high. Interest rates at the shorter end have remained firm because of the liquidity tightening steps taken by the RBI. For instance, the inter-bank call money rate (at which banks borrow from each other) continues to remain above 10.25 per cent...........
Can RBI tame rupee speculation?
..........There could be two motives behind these explanations. The first could be to explain the RBI’s rationale behind the recent moves to curb speculative activity in the foreign exchange market. The other more significant object seems to be to explain why, despite all its measures, the rupee continues to run amok. There is no disputing the fact that the RBI has a tough fight on its hands, curbing the volatility in all the three rupee markets – the inter-bank spot and forward market, exchange traded currency futures and options market, and the offshore NDF market for the rupee. The task is made more difficult by the inter-linkage or the price transmission between these markets...........
Why most economists did not see the rupee crash coming
Economists and analysts have turned bearish on the future of the rupee, over the last couple of months. But very few of them predicted the crash of the rupee. Among the few who did were, SS Tarapore, a former deputy governor of the Reserve Bank of India, and Rajeev Malik of CLSA. Tarapore felt that the rupee should be closer to 70 to a dollar. As he pointed out in a column............
Banks may extend edu loan repayment period
With
the rupee continuing to hover near 64 to a dollar and 100 to a pound,
many banks are contemplating extending the repayment period of
educational loans taken by students to pursue higher studies abroad.
“This would result in the EMI (equated monthly installment) coming
down,”.................
Read - TOI
Read - TOI
Banks slap charges on phone banking
.........However,
those who opt out of SMS alerts will continue to get alerts that are
prescribed by RBI. For instance, RBI insists that banks send SMS alerts
for withdrawals beyond Rs 5,000. But many banks have kept this as a
negative option, which means that unless customers specifically ask for
the free alerts, they will be billed Rs 60 for all alerts.
Ratnakar Bank will absorb most RBS staff on equal terms: Madan Menon
.........In India, RBS has signed an agreement to sell its credit card business, mortgage portfolio and banking business for smaller companies to Ratnakar Bank, subject to approval of the Competition Commission of India. This is in line with our plans for retail and commercial banking we had announced in November 2012. The deal comprises about 1,20,000 retail customers; Ratnakar Bank also plans to absorb the employees of RBS associated with these businesses. ............
RBI allows Jharkhand to run Cooperative Banks
........मुख्यमंत्री हेमंत सोरेन ने पद की शपथ लेने के बाद सहकारी बैंक का लार्इसेंस प्राप्त करने की दिशा में अधिकारियों को तेजी से प्रयास करने के आदेश दिये थे। मुख्यमंत्री की सक्रियता के कारण राज्य बनने के 12 वर्षों के बाद झारखण्ड को सहकारिता बैंक शुरू करने का लार्इसेंस प्राप्त हो गया है। आर बी आर्इ के प्रतिनिधि ने सहकारिता मंत्री हाजी हुसैन अंसारी की उपसिथति में मुख्यमंत्री को लार्इसेंस सौंपा..................
Coop. bank employees criticise RBI move
......The federation has planned a country-wide demonstration in front of 375 Central Cooperative Banks and 12,340 branches of District Central Cooperative Banks on September 18; rallies on September 30 in major centres of the State and a protest on October 25 all over the country.
Farmers, co-op employees to protest against Bakshi panel report
..........Setting the tone for an elaborate discussion on the report of the expert committee constituted by Reserve Bank of India under Nabard Chairman Prakash Bakshi, N.G. Ranga Kisan Samastha General Secretary Ch. Seshaiah said that it was unfortunate that the Nabard had lost its original focus on promoting agriculture and rural development.............
eMudhra launches India’s first path breaking digital security center
...........eMudhra Consumer Services, a leading provider of consumer financial services inaugurated India's first Digital Security Center (DSC) in Bangalore. This center will provide customers with a secure comprehensive solution - ‘TRUSTFACTOR' for online banking transactions......................
Monday, August 26, 2013
Paradigm shift in gold policy - Dr.S.S.Tarapore
Taper tribulations - Dr.Subir Gokarn
Economy hit by European crisis: Jadhav
Non-performing managers
......... Dr Chakrabarty did full justice to his reputation at a gathering of bankers recently when he said that the reason for higher NPAs in public sector banks was "non-performing administration": poor project appraisal techniques, herd mentality, lack of accountability, post-disbursal supervision, etc. In short, decision making in public sector banks has been impressionistic rather than information-based. ........
'Note' - coming days will be tough
My View on "The new note on Mint Street":
This is an excellent role analysis for Dr Rajan, the RBI Governor-Designate. RBI has been functioning in an uneasy environment for some time now mainly because FM and some officials in his ministry have been asserting GOI’s ownership rights on the central bank. RBI’s work culture and the maturity shown by the RBI Governor and his team, in a way, avoided an open clash in the recent period. The coming days will be more tough from the relationship angle for Mint Road and North Block, as the new RBI Governor has not been through the ‘IAS’ diplomatic experience. Dr Rajan’s challenges lie in (a) how fast he will be able to ‘unlearn’ the IMF lessons and (b) how quickly he will get convinced about the historic dual role of RBI to ensure distributive justice and supporting economic growth and will be able to reframe his arguments to convince North Block that after all RBI has been on the right path and get the necessary support from GOI.
-M.G.Warrier
Subbarao and the hot seat
Usually, most people think they are stepping in to end a crisis. But the self-effacing outgoing RBI Governor D. Subbarao hopes the end of his tenure will make a difference to the state of economy. Speaking about the macroeconomic environment at a public meeting in Hyderabad recently, Subbarao said: “Many people ask me when the economic crisis will end. Actually, the latest round of crisis began when I took over. Hence, it should end when I demit office in September.’’ But, then, economics works in mysterious ways. Subbarao is all set to move from the hot seat, but is the economy ready to change tack? Doesn’t seem so.
History would etch his name in gold
The well-deserved appreciation of Dr Subbarao’s tenure as RBI Governor in this article echoes the sentiments of thousands of RBI-watchers. Coming from a person who has been breathing, drinking, talking and writing monetary policy, inside and outside RBI for about half a century now, this is a well-deserved honour, which will add strength to Dr Subbarao’s convictions, making him fit and confident for further valuable contributions which will guide India’s economic development when the country is crossing through a tough transition. The mention of the purchase of 200 tonnes of gold in 2009 to diversify the forex reserves as one of Governor Subbarao's outstanding achievements and the assertion that ‘history would etch his name in gold’ will remain as a Guru’s guidance to future RBI Governors.
- M.G.Warrier
If Dr Reddy, his predecessor from the same cadre has attracted global attention, Dr Subbarao, like none of his predecessors has been attracting the columns of the media domestically. Unfounded criticism of his policy pursuit that happens to be the basic vanguard function of the RBI against rising inflation is highly regrettable. The falling rupee is in fact, a market correction and it is very likely to stop at the current level of Rs.65 a dollar even amidst the real of Brazil similarly performing among the BRIC nations and even China showing decline in growth rates against not so rising interest rates or inflation. In fact, Dr Subbarao's regime faced both policy paralysis of the government and unstable global financial situation accentuated by the huge sovereign debt of Europe and Greece furthering the recessionary impact. His posture of upholding the independence and autonomy of the RBI as the regulator would be remembered in the economic history of India as only a savior.
- Yerram Raju
D. Subbarao’s mixed record at RBI
...........Subbarao has been in charge at a very difficult time, with global instability as well as growing domestic economic problems. Our view is that his record has been a mixed one and has to be understood against the complicated times in which he was managing the monetary affairs of the nation.
Transparency in policy - Its Subbarao's legacy
It is too early to pass judgments on Dr Subbarao’s tenure as RBI Governor. Former RBI Deputy Governor S S Tarapore described the purchase of 200 tonnes of gold in 2009 to diversify the forex reserves as one of Governor Subbarao's outstanding achievements and said that ‘history would etch his name in gold’. Initially, it is common knowledge that, he was picked up under the presumption that he would be “North Block’s representative” at Mint Road. But he quickly started talking with elegance and dignity that have got deeply scripted in RBI’s tradition and did not hesitate to change his own views which were based on the information given to him by ‘Babus’ in North Block. The academic background coupled with IAS grooming helped him have his way when intuition told him that the central bank’s policy has implications much beyond immediate political gains or the 2014 Election prospects. Among other things his tenure as Governor will be remembered for the transparency in policy perceptions, the message that government and central bank can have different perceptions on inflation and growth and still co-exist, bringing back the focus on financial inclusion and ‘knowing when to stop’.
- M G Warrier
The talent pool in Macro and Finance
.....Dr. Subbarao's appointment as RBI Governor shows up, unfortunately, the bankruptcy of a bureaucratic career system that permits outstanding IAS officers like him -- an accomplished urban economist -- to be parachuted into a situation which requires a lifelong acquired feel for monetary policy and the numbers behind it. From the many central bankers I have known around the world and in India (many of whom I had the privilege of working with, and others whom I came to know socially), and have observed closely over the years, I conclude that central banking is still more an art (that requires extraordinary prescience, instinct and judgement) than a precise econometric science........
Central banking turned upside down
..........The author acknowledges the "rare clarity" in Raghuram Rajan's presentation at the Jackson Hole Conference of 2005. He "had an astute understanding of the ways in which the financial industry, with misguided compensation policies that encouraged risk taking, was making the world a more dangerous place." The author has done a comprehensive survey of all the developments during the crisis, including what happened in confidential negotiations to resolve the problems facing the US and Europe...............FAULT LINES - Review of Dr.Raghuram Rajan's book
India finds economic leader in Chicago
........... Though the Chicago School of economics generally frowns on government intervention in the marketplace, Rajan contends that deregulation went too far in recent years. That enabled financial powerhouses to promote their interests at the expense of free-market competition. Rajan is taking a leave from his tenured post at Chicago's Booth. We expect his message from India will be the same as it was from Chicago: Sober up.
With Rajan at Mint Road, is sovereign bond option back on the table?
..........Rajan, the governor-to-be, has always considered sovereign bonds as one option to finance the widening current account deficit (CAD). A change of guard at Mint Road on September 5 might reflect this new thinking at RBI, which is considered orthodox in its approach on such issues..................
The missing dream team
.............First, let us look at the common players in key policy-making positions then and now: Manmohan Singh, who was then the finance minister, is now the prime minister; P Chidambaram - commerce minister then and now the finance minister; C Rangarajan- deputy governor of the Reserve Bank of India (RBI) and a little later RBI governor then and now the chairman of the prime minister's economic advisory council and; Montek Singh Ahluwalia, who was then secretary in the commerce ministry and later in the finance ministry and is now the deputy chairman of the Planning Commission. Even Duvvuri Subbarao, at present the RBI governor, was a joint secretary in the finance ministry then, though he was not seen as part of the top policy-making team dealing with the 1991 crisis...............
Bank staff wage revision V/s Central Govt staff wage revision........................
...........For updating bank staff and negotiating team we are providing here some banking professional projection of salary based on 4440 point DA (60.15% means 401 slab) merger and gin of central govt staff in 6th pay commission. We also obtained projected gain in 7th Pay Commission..........
Bank unions call for all-India strike on September 25
..............“It is naked double standard and dichotomy that while private sector banks are being encouraged and allowed to be expanded, public sector banks are sought to be consolidated and merged. “This is totally against the objectives of public policy under the nationalisation of banks envisaged and committed by the Government,” ....................
Public sector banks faces shortage of 56,000 employees
............"This year, public sector banks are expected to add 10,000 branches of which 2,000 are to be by Regional Rural Banks. Correspondingly, there will be recruitment. In fact, all the banks put together are expected to recruit some 50,000 persons in the current year,..............
Banks plan to open 2,361 branches in next 2 years in Odisha
The domestic scheduled commercial banks plan to open 2,361 brick and mortar branches in Odisha during 2013-15. As per Reserve Bank of India (RBI), the number of functioning branches of scheduled commercial banks in the state is 3,472. "As reported by the State Level Bankers' Committee (SLBC), banks plan to open 2,361 of brick and mortar branches during 2013-15," informed Union Minister of State for Finance Namo Narain Meena...........
No intention of grabbing private land: CM
........"There is no intention of the State Government to grab private lands in Mantripukhri for the purpose. The officials of RBI did arrive here at Imphal to check suitable site for setting up a branch. The RBI officials along with the State Government officials inspected some of the areas to the north of the IT Park at Mantripukhri and had asked whether it could be feasible to open a branch of RBI in the area. But there was no discussion among the officials to confiscate the land of the area..............
Inter-State counterfeit currency racket busted
...........Explaining the modus operandi, the police said that the accused would open an account using fake documents in various banks and push fake currency in bulk in the form of deposits during peak hours, to avoid undue attention of the bank staff. The accused would deposit less than Rs 50,000 since any deposit more than Rs 50,000 would require PAN card details from the depositors, as per the RBI norms. Once the money was deposited in the account, the accused would withdraw the amount and escape, the police said.............
Getting rid of golden fetters
.........There are other options that RBI could consider to make the GDS more attractive for the banks, allowing them to use gold deposits to fetch dollars. Gold holdings with the private sector are estimated to be in the range of 7,500 to 10,000 tonnes. Even if a small part of these reserves are channelled into the banking system, they could help bolster RBI’s foreign exchange reserves and increase the pool of financial savings..................
White-label ATM rollout in a limbo
.......“In-principle approval to 12 others does not mean much. The idea is to trigger them into action. Maybe, they are waiting to see whether Tatas white-label business makes money and then start their operations,” the RBI official said. However, these companies have another grouse – the RBI has not yet granted them their demand to extend the licence period to 5 years from the current one year. The companies say this initial authorisation of one year is too less to plan long term and attract equity...............
ATM challenges in India: power, environment and security
......We also do cash management. We have tools, which help us identify what amount of cash is required to be put in each ATM based on data that we collect from ATMs. It is not efficient to have a large network of ATMs stacked with cash without transactions. The data helps banks take a conscious decision on how much cash to put in a particular ATM so that it neither reaches a cash-out situation, nor does it remain stacked with idle cash. We also coordinate with cash-in-transit agencies, which put cash in the ATMs whenever required.............
Finance Ministry all ears as banks line up plans to boost forex inflows
..............While the dollar supplied by the banks would add to RBI's forex reserves, the arrangement would entail RBI bearing the exchange rate risk and offering a cheaper hedging arrangement than what banks have to otherwise pay if they cover the exchange fluctuation risk in the open market. "This would be attractive for banks which can use the money to buy government bonds and lend. Also, their overseas branches can offer leverage to NRI clients," said a treasurer with an MNC bank...............
Food security plan to increase govt's fiscal stress: Bimal Jalan
....Jalan, who spent time in Parliament as a nominated member after stepping down as RBI governor in 2003, said that while the food security idea was noble and had his support, it was important to launch it when the government can manage the large costs associated with it. "If he (finance minister P Chidambaram) is trying to contain the fiscal deficit and control expenditure, it is important to look at the costs of financing such a programme, especially when the economy is not in a good shape,".......
Govt appoints panel for land deals under FEMA
........The committee would be chaired by joint secretary debt management unit, government of Goa while member secretary would be state registrar-cum-head of Notary services and members are officials of Reserve Bank of India, under secretary revenue and debt management unit and deputy collector North and South Goa..............
The joke is on the rupee
....“The dollar is on an escalator and the rupee is on a ventilator” goes one witticism. “I heard the rupee is falling, please tell me where I can collect it?”, one network user wants to know. “Finally it has happened…After decades, beer is now cheaper than petrol! There will be a new slogan: Just Drink, Don’t Drive!” and “A kg of onions can now be bought at the Dollar Store.”...........
Rupaiah goes for a song
When I see the rupee tumbling, I turn nostalgic and try to hum Kishore da’s song in Chalti ka Naam Gaadi, “paanch rupiah baara aana”. I used to wonder why only “paanch rupiah baara aana” when our rupee was trying to stand on its own feet against the adolescent dollar in the 1950s? The rupee those days was coy and kept a distance from getting weak-kneed by outside cupid currency overtures and held its ground.............
Rupee Was Bound To Fall
The Indian rupee has been driven to a new low of Rs 65 to a dollar, largely by the uncontrolled current account deficit
and the decline in economic growth. RBI and the finance ministry are
now running helter skelter. But their attempts at controlling the
exchange rate appear to be measures that treat the symptoms rather than
the disease...........
Read - TOI
Read - TOI
Fears for the rupee hold back tears for the onion
...........As the Nobel prize-winning economist Robert Mundell pointed out a long time ago, a government, through its central banks policies, could either control the quantity or the price of its currency but not both. A central bank which fixes the price of its currency in terms of one or a basket of foreign currencies, in other words, operates a fixed exchange rate system, loses control over the quantity of money that circulates in the economy and, therefore, loses control of the inflation rate..........
My View on "The fallacy of 'dollar = rupee' in 1947"
In 1947, India had surplus sterling balance which ,unfortunately, we soon frittered away. Although hints were dropped to Shri B.K.Nehru, then Under Secretary in Ministry of Finance by the Treasury of England that "If we (INDIA) shift our forex balance to US$account as we (England) may devalue its £ or words something to this effect I do not remember" (Ref Nice People finish second by B.K.Nehru). The net result was our Re weakened vis-a-vis $, currency of predominant power whereas £ was continually on decline due to ravages of war. B.K.Nehru says he was given training in ECD, RBI, Mumbai in 1940 (He was 1935 batch ICS) and he took up the matter with Finance Secretary who failed to understand anything. However, the net result was we lost considerable amount of forex reserves.
- Sitendra Kumar
Rupee slide temporary: Adi Godrej
.....“The rupee going at 65 is ridiculous. But it doesn’t mean a collapse of the system. I am glad that the Reserve Bank of India has intervened. There should be more interventions . If we do that, and with the good monsoon, the economy will return to 8 per cent growth in the not-too-distant future,” .......
Why Indian rupee will go to Rs19 vs Dh1
.......At least two major global investment banks are maintaining that the beleaguered Indian rupee, which is already down about 15 per cent since the beginning of 2013, could see a further deterioration of about 10.5 per cent in the near future and slump to Rs70 against the US dollar. That would equate to a level of Rs19 against the UAE dirham, and if attained, this exchange rate is likely to prompt a surge in remittances by expat Indians in the UAE and across the Gulf and indeed the world............
Want to save rupee? Think outside the box, say experts
The rout of the rupee has caused angst and panic in the country. The many measures announced by the Government and the RBI seem to have barely worked. Are there out-of-the-box solutions that can support the currency?............
Inside Information behind the collapse of rupee
........According to the research done by an analyst and his associates of sensitive data, "The run on the rupee began four months ago after market players got private assurances that neither the Finance Ministry nor the RBI would react vigorously to a steep fall in the value of the rupee." Since then, the officer alleged, "These speculators have been in daily contact not only with intermediaries but often with policymakers themselves to get inside information on measures to be followed." But officials of the Finance Ministry, RBI and the Commerce Ministry are clear that this charge is false, and that "no senior official would ever leak sensitive information except to an authorised source"........
Light at the end of the tunnel?
........At a time India’s policy-makers are clutching at straws, the news that the rupee has some good company in its decline, can be considered a positive. Albeit in a cynical way, currencies of many emerging markets, the Malaysian Ringgit, the Indonesian Rupiah and the South African Rand — among others, have been battered along with the rupee. The common factor behind the decline — fears that the U.S. Federal Reserve would soon indicate the phase out of its stimulus programme.........
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