........As and when any bank comes across any prohibited transaction undertaken by its credit card or online banking customer, the bank will immediately close the card or account of the defaulting customer, the Reserve Bank said in a notification. If it is observed that the bank concerned has failed to carry out the measures as outlined above, RBI may proceed against the defaulting bank, it said...........
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, September 18, 2013
Standard method to determine value of gold accepted as collateral: RBI
Now, non-banking financial companies (NBFCs) offering loans against gold jewellery would have to follow a standard method to determine the value of gold accepted as collateral, the Reserve Bank of India (RBI) has said. On Tuesday, the central bank introduced new norms for lending against gold jewellery, following the recommendations of the K U B Rao committee, which studied the issues related to gold imports and gold-loan NBFCs in India. "Currently, there is no standard method for arriving at the value of gold accepted as collateral and the valuation is arbitrary and opaque," RBI said........
'Funding for lending' scheme in works to make home & auto loans cheaper
NEW DELHI: Waiting for the Reserve Bank of India (RBI) to cut interest rates before deciding on buying that home or a car? You may not need to! According to ET Now the RBI is planning a 'funding for lending' scheme, under which the central bank may lend money to banks at a 1-2% cheaper rate. This in turn will allow banks to lend to potential consumers at a lower rate................
Tuesday, September 17, 2013
Damodaran Committee slams panel interview-based selection of regulators
........The government adopts different mechanism for various watchdogs from time to time. For instance, banking regulator Raghuram Rajan's name was forwarded by Finance Minister P Chidambaram to Prime Minister Manmohan Singh who gave his nod, those in know of the development said. However, at the time of Damodaran's exit in 2008, an interview was called and C B Bhave was selected as the Sebi chairman. The committee said the practice of inviting applications from interested candidates and subjecting them to a process of interviews by a panel comprising persons with no familiarity with the regulatory organisation, is the surest way to cause loss of public confidence not only in the process but also in the organisation............
FSLRC members handsomely “compensated” for their “contribution”
...........The remuneration, fees and compensation is just one part of the expense paid to these members. We also found out that the FSLRC spent huge amounts of money on ferrying members to and forth, feeding and providing them with food/accommodation, reimbursement of office expenses and conveyance and “other assorted expenses” (whatever this means).............
RTI Judgement Series: Citizens have the right to know about irregularities in banks
.........The Central Information Commission (CIC), while allowing an appeal, directed the Central Public Information Officer (CPIO) and chief general manager (CGM) of National Bank for Agriculture and Rural Development (NABARD) to provide copies of inspection reports of apex co-operative banks. The CPIO had denied the information citing exemption under Section 8(1)(a) of the Right to Information (RTI) Act.............
Tax passbook
The income tax department is finally moving towards a system which could allow taxpayers to keep a tab on their tax payments, tax due and refunds online through tax e-passbooks. In simple terms, managing income tax liability would become as simple as managing individual bank accounts—the only difference would be that transactions would not be possible on this platform, but that, in any case, can be done through registered bank accounts........
A day is incomplete without VITALINFO................
A day is incomplete
without reading VITALINFO.
-
K.Kanagasabapathy
Mangesh
Heartiest congratulations! As one who has been open in defending RBI and Dr Subbarao in the media and as one who has himself received encouraging response from Dr Subbarao for expressing views on issues like Financial Inclusion, I am very happy to see these words of encouragement showered on VITALINFO and you, by a person who was leading RBI for 5 years with courage and conviction.
Heartiest congratulations! As one who has been open in defending RBI and Dr Subbarao in the media and as one who has himself received encouraging response from Dr Subbarao for expressing views on issues like Financial Inclusion, I am very happy to see these words of encouragement showered on VITALINFO and you, by a person who was leading RBI for 5 years with courage and conviction.
- M.G.Warrier
Heartiest
congratulations. It is indeed difficult to acknowledge your effort and got a
very deserving appreciation who will do anything from his heart.
– Yerram Raju
Dear Mangesh,
It is really
ultimate................ No words beyond this..................
- K.S.
WADHWA, Lucknow
Dear
Mangesh,
You have earned all
the accolades that possibly can be earned. The last one from 'Subba' is
the jewel in your richly studded crown. Congrats. Keep it up.
- B. K.
Kamath, Retd. CGM
Dear Mangesh ji,
It is certainly a richly deserved honour from the highest office. God
bless!
– V G Sekar, General Manager, RBI, Jaipur
You deserve it........great remark.
- Stacy M, Asst Manager, RBI Bangalore
Dear Mr. Tarambale,
Congrats. Very happy
to read the appreciation message of the Governor.
– P.Thangam, PS,
Mumbai
Never heard this type of appreciation before ! BRAVO !!! KUDOS !!!
– Vivek Maindargi, AGM (Rajbhasha), Pune
My heartiest Congratulations.
– Ashutosh Raravikar, AGM, Mumbai
You really deserve
this. I am very very happy. Have a wonderful day ahead.
– Sushama Dhawde,
PS, Mumbai
Dear Tarambale,
This is the highest reward which you truly deserve, all the very best
for your future endeavours.
- Rama Nabar, Manager, Pune
A very well earned valuable commendation Mangesh!
- Kamala Rajan, CGM, UBD, Mumbai
Changing role of women in India
......There is certainly a case for cheap and accessible credit to women by public sector banks. But this concept of a women- centric bank has sometimes been viewed as an extreme case of inclusion by exclusion. There has also been a greater awareness of the need for inculcating confidence among women, generating awareness about their rights and privileges and training them for economic activity and employment. The benefits of development must extend to women both qualitatively and quantitatively...............
An ideal person to be emulated...........
I felt deeply sad to know of the demise of Mr Kalyanakrishnan. He was
A.O., DAD in New Delhi when we were posted to that office as S.Os Gr 'A'
(DR) on probation. He was a gentleman to the core and very friendly.
Ever smiling, he always encouraged all of us and appreciated whatever
little we did for completion of the Department's work on time. I had not
heard him talk ill of anybody or lose temper with anybody. Truly an
ideal person to be emulated. RIP.
- C.S.Murthy
An important message to the Government from RBI History volume 4
.........This history volume in particular conveys the message that RBI Governors never go wrong in their policy judgement and it is for the Government in power to evaluate the message and act decisively to save the economy from all impending dangers. This is what Dr Subbarao also did but unfortunately his advice has been not only ignored but also has been openly challenged and condemned inviting all troubles to the economy...................
Appointment of Director, NIBM
.......The key requirements for the position are exceptional leadership and institution building skills and a commanding strategic vision; the ability and drive to further the Institute’s mandate and the ability to enthuse, inspire and motivate the staff and students. A seasoned banker or an accomplished academician-administrator will be the ideal candidate............
Building a cadre of young economists
...........What is the difference between a doer and an advisor? Take a look at Raghuram Rajan and you will know what precisely differentiates the two. In about a year that Rajan functioned as chief economic advisor or CEA in the finance ministry, he looked a man with good intentions, but showed little firepower to make a difference. However, Rajan looks a different man now after taking charge as Reserve Bank of India (RBI) Governor last Wednesday, taking actions where necessary without mincing words.............
A silver bullet
................In sum, the RBI putting its weight behind m-commerce is a welcome development, since this could indeed be a game-changer in many ways. The devil will be in the details of the technical delivery system and the regulatory overview. The structure must be designed to guarantee uptake by those in the most dire need for access to the formal financial system. ........
Rupee, inflation to weigh on RBI policy: Rangarajan
 |
| ........" All that I can say is that the RBI, I believe, will take into account the behaviour of inflation as well as what is happening in the foreign exchange market and take a decision,"......... |
Too early to lower guard
..........It is probably too early to expect growth-stimulating cyclical monetary policy, but without growth, it is often difficult to tackle India’s other macro vulnerabilities. The focus is therefore likely to be on policies to promote financial development (a road map for liberalizing the banking system and opening up the capital account), which will in turn stimulate growth. Market is looking forward to Rajan’s openness to change things and the September policy could be the curtain-raiser.
Focus on transparency
..........As the new RBI governor, Raghuram Rajan, prepares his first monetary policy review statement, he should keep this confusion in mind. It has always been Dr Rajan's stated belief - and the consensus in the macro-economic profession - that central banks should focus on one instrument to control monetary policy, and that good communication and transparency are crucial to achieving a central bank's ends. The RBI's recent actions have not been satisfactory when judged from that point of view. A plethora of confusing and contradictory instruments have been used, some of which have unknown consequences; and transparency has suffered alongside............
What Rajan had that Summers didn't
.....There’s another major difference: Summers was on the wrong side of one big question, while Rajan was on the right side – and that’s on whether the increasing financialisation of the US economy that began in the late 1990s posed a systemic risk. Rajan, famously, warned a gathering of central bankers in 2005 at the height of the Alan Greenspan era that modern finance had made the economy more vulnerable. In response, Summers snapped the way he would have in a seminar room – Rajan’s views where “slightly Luddite”, he said. Summers had, of course, led the drive towards deregulation in the Clinton Treasury. But he was wrong and Rajan was right..................
Advice for the guv'nor
..........If you can save the rupee AND keep some vapid starlet’s face off the front page by taking his/her place, you’re okay in my book. Which by the way is an economic tome called “The 7 Habits of Highly Effective eBay Discount Voucher Users.” I’ll be sure to send you a copy.
The Root of Stagnancy
..... Take the decision of the new RBI Governor, Raghuram Rajan, as a contrast. A brilliant visionary as he is, after assuming office he passed a decree that any bank could open a branch without RBI clearance — only the usual rules would be followed and the clearance issues would come up later on. This is a smart and neat way of doing things in the era of liberalization. .............
Forex policy: RBI's change in stance
..............“What if the Fed tapers more than $ 20 billion? This should trigger RBI FX intervention to prevent sharp depreciation, although the INR will likely still pierce Rs65/$ again,” Indranil Sengupta, India Economist at Bank of America Merrill Lynch said. If the tapering is deferred, then RBI is expected to withdraw the liquidity tightening measures that it had started since July 15.
Zero balance - Zero presence
Following pot nationalization reforms, banks were quick to close down the 'loss-making' rural branches and the RBI encouraged them to do so. In the fifth year of financial inclusion quite a few banks closed down the accounts with zero balances in rural areas and asked the BCs to chase them for viable business. Now, in this eighth year of financial inclusion, banks are expected to open 25% of the new branches in rural areas although such directive did not deliver results thus far. Banks that are keen to participate in the inclusive growth agenda would do well to simultaneously invest in social infrastructure - primary and middle schools to qualitatively upgrade and primary health clinics to up scale when the staff posted there in their youthful careers would find worthwhile to stay there and pursue the financial inclusion agenda wholeheartedly.
- Yerram Raju
RBI and Inflation
.... It is for the Government and not for the RBI to seriously ponder over the whole issue of inflation control at this critical juncture where the failure of the government is predominant. RBI's balance sheet expansion is also a direct reflection of Government"s poor finances.
Vegetable prices and inflation
.........If one carries Rs 500 note, one can have vegetables and one or two fruits for a day for a four member family is the ground reality. The economics practiced by the Government cannot be understood even by the economists is not an exaggeration. .................
Rising WPI inflation could tie RBI’s hands
.......In his inaugural address to the media, Rajan emphasised RBI’s role in ensuring monetary stability, suggesting that he would not adopt any softer stance on inflation in favour of growth. “Ultimately, this means low and stable expectations of inflation, whether that inflation stems from domestic sources or from changes in the value of the currency, from supply constraints or demand pressures,” he said............
Limited policy options
......But all this should not warrant any thought that the economy was back on the growth path. It is not. Fortunately, most economic players do not expect that Rajan has too many options to effect major changes in the monetary policy. A survey of economic pundits by a pink paper revealed that there is near unanimity that the time is not ripe for a reduction in the policy rate. Inflation, especially food inflation, continues to hover close to double- digits. Besides, the modest currency appreciation does not in any way suggest that the pressure on it is off..........
RBI may unwind some cash tightening steps: experts
India's headline inflation rose at the fastest pace for six months in August, driven by an 18% jump in food prices, a reminder of the economic pressure new Reserve Bank of India (RBI) governor Raghuram Rajan faces ahead of his first policy meeting this week............
The malaise that drove down the rupee
........The flurry of policy announcements in recent weeks is based on the diagnosis that the relentless slide of the rupee, attributed to the widening Current Account Deficit (CAD), can be arrested if and when capital inflows — as investments or borrowings — fill the gap. Reserve Bank of India governor Raghuram Rajan’s recent announcement allowing banks to borrow from global capital markets at a time when interest rates are rising because of the expected reversal of the United States Federal Reserve’s easy money policy is tailored to this logic.............
Forex counters in Duty Free Area
In order to provide money changing facility to non-resident Indians to convert unspent rupees with them, the Reserve Bank of India said Foreign Exchange Counters can be established in the Duty Free Area/Security Hold Area beyond the Immigration/ Customs desk in international airports in India by entities authorised to deal in foreign exchange........
Banks Yet to Take Up New Guv’s Offer on Easier Global Funding
It
is more than 10 days since RBI governor Raghuram Rajan eased overseas
fund-raising for banks, but hardly any bank has moved. Bankers are
worried about the reaction of regulators overseas and the use of funds
when there is not much demand for loans. There is also apprehension that
the cost of fund may be on the rise after the jump in the US treasury
yields to 3%...........
Read - ET
Read - ET
Temples now the only hope for gold industry?
.....“ If the temples release some of their gold, the country need not import this for another four- five months. It will be win- win situation for both the government and the temples. The government will save a lot of foreign exchange," he added. All this is predicated on building consensus between the temples on parting with some of their gold. There were reports that the RBI had sent a circular to some of India's prominent temples seeking details of their gold stocks.............
RBI tightens rules on lending against gold jewellery
............The new rules include strict documentation for high value loans against gold and prohibition of misleading advertisements by NBFCs such as offering availability of gold loans in a matter of 2-3 minutes.The guidelines are broadly based on the January recommendations of an expert panel set up by RBI, headed by K.U.B.Rao. The RBI, however, did not accept the recommendation of the panel for higher loan-to-value (LTV) ratio on gold loans. ...........
We pointed out our exclusion to RBI in 4-6 days: Prem Pal Gandhi
.............RBI said it 'inadvertently' missed out the company's name while releasing the applicants list on July 1. Did you pointed out to RBI about the exclusion? If so, when was the communication made? Why do you think RBI took close to three months to rectify the mistake?..............
First Leasing moves court against RBI order
CHENNAI, SEPT. 16:
The Chennai-based First Leasing Company of India has approached the Madras High Court following the Reserve Bank of India order stopping it from transacting any further business, according to Farouk Irani, Managing Director, First Leasing. The RBI directive on Saturday said the decision follows an inspection of the company’s books of accounts and related documents as of March 31, 2013. Irani said the company does not agree that even regular expenses should require RBI’s clearance, and “hence we have approached the court”...........
YES Bank becomes first lender to use new swap rules
YES Bank, the country's youngest private sector lender, has become the first bank to take advantage of the Reserve Bank of India (RBI)'s new swap rules. The bank has raised $255 million via a dual currency, multi-tenor syndicated loan facility. The move comes barely days after RBI allowed banks to raise money (above 50 per cent of their tier-I capital) from foreign markets with a minimum maturity of three years and swap the borrowings with it at a subsidised rate for one to three years............
RBI must consider giving new bank licences on tap: Rangarajan
The RBI should consider giving new bank licences on tap, C. Rangarajan, Chairman to the Prime Minister’s Economic Advisory Council, has suggested. This would mean a system wherein the Reserve Bank of India awards licenses throughout the year to those entities who fulfil specified criteria. Currently, the RBI follows what is known as a ‘stop and go’ or a ‘block’ licensing policy for banks, where it periodically issues new banking licences. The RBI is in the process of selecting candidates from the corporate sector for the award of new licences. India Inc has been lobbying for an ‘on tap’ bank licence policy, something which the RBI has so far resisted.........
Why there is a need to put an end to 'Banana Banking'
.......“For the umpteenth time, I reiterate that the reason for NPA is non-performing administration…What is really puzzling is why this affects the Public sector banks the most… In our assessment, the project appraisal and the decision making in public sector banks has been more impressionistic rather than being information based. How else does one defend the eagerness of some banks to fund power distribution companies with negative net worth!.".................
Foreign banks to provide upfront loans for Indian dollar deposits
......Foreign banks will finance the bulk of these dollar deposits. This is likely to be welcome news for Indian authorities because it could avoid the need for a sovereign bond or special government-backed deposit schemes to attract dollar inflows to support the rupee...........
Will ensure depositor’s money is safe post-NSEL crisis: Pilot
.......“the idea is to make sure we can detect things before they occur as we have technology to ‘red flag’ such cases. We are in the process of plugging the gaps in regulations between authorities such as Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI) and the Ministry of Corporate Affairs as we all have to work together to prevent wrongdoing”..........
SBI expects Rs 4,000-cr capital infusion from government this financial year
.........."We have requested the government for Rs 4,000-crore capital infusion (in the current financial year)," SBI Chairman Pratip Chaudhuri said here on the sidelines of a function to launch an Air India-SBI co-branded credit card. When asked about his expectations from the coming RBI policy review, he said the bank had recommended a cut in the cash reserve ratio (CRR), as well as in repo rate..............
Ex-SBI MD Divakar Gupta to join Aditya Birla Group firm
...........Diwakar Gupta, former managing director and chief financial officer (CFO) of State Bank of India (SBI), is set to join Aditya Birla Finance, an Aditya Birla Group company, as consultant and guide the company for its planned entry into the banking sector. Aditya Birla Finance is part of Aditya Birla Nuvo, one of the 26 companies that have applied for new banking licences. Earlier, Aditya Birla Group had roped in A K Khound, former chief general manager of the Reserve Bank of India (in charge of the department of banking development and operations), as advisor.............
Monday, September 16, 2013
History of economic crisis and reforms: Deja Vu?
..........The fourth volume of RBI’s history (1981-1997), the outcome of three years’ work by current and former officials of RBI, and guided by an independent advisory committee under the chairmanship of former RBI governor Bimal Jalan, is much more than the story of central banking—it’s the economic history of India during that period....................
Good governance, policies will aid recovery - DR. N. A. MUJUMDAR
......Thus, the slowdown was exacerbated by structural bottlenecks and governance issues. Recovery is possible given good governance, removal of supply constraints and abandonment of misconceived policies. Growth is forecast at 5.5 per cent in 2012- 13. With the right policies, revival of growth is possible. For instance, the RBI’s decision to lend dollars to oil firms came as a breather both for the rupee, and the stock markets. The rupee, on August 10, rose to 66.51 per dollar and the Sensex rose by 405 points. This cannot be a false alarm. In fact, the measures taken are not adequate.............
Raghuram’s handsomeness averts India’s crisis
.....Middle-class
parents wanted a son like him, their daughters wanted
husbands/ boyfriends like him, and their sons wanted to be like him. This
influential section of society soon took to
organising societies, Facebook groups and concerted campaigns to do all
they can to help this man, this Dark Knight that India needs. ‘His face
shall not get wrinkled, his hair shall not get greyed. Not on our
watch,’ being their motto. Every pronouncement of his was seized and acted upon with messianic zeal.............
Obituary
I regret to advise you of the sad demise of Shri.K.N.Kalyanakrishnan in Mumbai on September 13, 2013. He was 91 years old. He
had served in RBI for over three decades and worked in Madras and
Bombay and retired as Joint Controller, Exchange Control Department.
Shri.Kalyanakrishnan was a highly respected Officer and an authority on ECD matters. May his soul rest in peace.
Shri.Kalyanakrishnan was a highly respected Officer and an authority on ECD matters. May his soul rest in peace.
- P.P.Ramachandran
Shri K.N Kalyanakrishnan was in-charge of DAD New Delhi in early 70s. Although he was novice for DAD, yet due to his superb understanding & handling of human relations ; he was a great success in NEW Delhi. My respect & admiration for his understanding & involvement with RBI continues. My Prayer to GOD.
- Ranjit Kumar Rehan
Shri K.N Kalyanakrishnan was in-charge of DAD New Delhi in early 70s. Although he was novice for DAD, yet due to his superb understanding & handling of human relations ; he was a great success in NEW Delhi. My respect & admiration for his understanding & involvement with RBI continues. My Prayer to GOD.
- Ranjit Kumar Rehan
Complaints against banks on the rise
.....Patrick Barla, OBO General Manager of RBI Patna, said as against 2,718 complaints received during July 2011-June 2012, as many as 2,785 complaints were received during the period 2012-13 of which 1946 complaints were received from Bihar, 613 from Jharkhand..........
Money garlands, it’s a ‘crime’
............ A social activist from Kottayam had sent a complaint to the RBI regarding the use of such garlands at the yatra. “I had sent a complaint to the RBI with photographic evidence of Mr. Chennithala wearing the garland. This was not meant to be a personal attack against him. It was to send a message to all leaders. Note garlands are still used by most parties, even though there is an impression that the practice has waned of late,”.......
For the falling rupee
.............The children at Atharva Bal Mandal surprise you with their maturity and understanding of current affairs. They are well-aware of the happenings in the world and are trying to come up with possible solutions. The recent topic that is bothering them is the weakening rupee. Fourteen-year-old Akash Kharade shared how they picked India’s current economy as their topic this Ganeshotsav............
Ra Ra One !
.......But Ra Ra is a hero, remember? And just a week after he took over as Governor, the man’s magic seemed to be working wonders — the sensex posted the sharpest rise in four years — the rupee is not behaving like a runaway horse and industry is promising to hire more and is looking forward to a better net quarter. None of this surprises a lot of people who know him. But for those who don’t know about him, here are some interesting facts...............
Of RBI governors and spinners
...In the 1970s, it was the justly famous spin quartet—Bishen Singh Bedi, E.A.S. Prasanna, B.S. Chandrasekhar and S. Venkataraghavan—who took Indian cricket to new heights and brought it international recognition. Two decades later, from the start of nineties up until now, it has been the governor quartet—C. Rangarajan, Bimal Jalan, Y.V. Reddy and D. Subbarao—who have changed the face of monetary policy in India. While they succeeded each other as governor, they have also been working together in different capacities all these years............
FROM PROFESSOR TO SAVIOR
And you thought your first week of work was tough. Imagine taking the helm of the central bank of the world’s second-most-populous country and its 10th-largest economy at a time fraught with economic peril. Or perhaps more vividly: imagine helming a huge, leaky ship as it sputters toward a maelstrom. That’s precisely the burden Raghuram Rajan, a 50-year-old University of Chicago professor, bears. On Sept. 5, he assumed the position of governor of the Reserve Bank of India for a three-year term.........
An economist-manager at the helm of RBI
A large number of economists, political pundits, business leaders and journalists are pre-occupied with unravelling the mind of the new Governor of Reserve Bank of India Raghuram Rajan. He is different from all the previous Governors, who have either been economists or bureaucrats. Here you have a person who has not only global experience but also a “systems” perspective. You need to read his extremely readable two books to note that he brings in a historical, management and economic grounding to his job............
Poster Boy Rajan’s Report to be Lynchpin of Financial Reforms
..........The
plan to kick off the process, stalled for many years, was discussed in
the run-up to the appointment of Raghuram Rajan as Reserve Bank of India
governor and has the highest political sanction. The reforms blueprint
will lean heavily on the two high-profile reports already available with
the government, one of them authored by Rajan himself. “We will have a
framework ready soon and will take it to the Financial Stability and
Development Council (FSDC) for deliberation before the measures are
rolled out,” a senior finance ministry official told...........
Read - ET
Rajan's policy will not have false optimism or pessimism
I think Raghuram Rajan had alluded to the impending September 20 monetary policy meet. The RBI’s number one priority could be to just dispel some of the excessive doom and gloom which prevail. He mentioned it, the Finance Minister also mentioned it in Parliament. Very clearly, the financial markets have got to the man on the street, the business man, the consumer, the investor, the saver and everywhere. So, what we might get at the policy date is a communication of the Indian economy going through a difficult time and there can’t be any false optimism. However, we certainly should not have false pessimism either. That will be the overall construct in which the policy will be made..........
RBI should train guns on inflation
............How best can monetary policy be conducted in this scenario? This is probably the most important and difficult challenge confronting the new RBI Governor; more so as he has articulated that the RBI has to go back to the basics — its core job being to ensure that the rupee’s purchasing power is preserved internally. That focus on a core “monetary stability and internal purchasing power preservation” objective is laudable, as monetary instability is arguably the root cause of so many other imbalances — for instance, in our external accounts and banking system. Budget deficits per se are not evil at all; more so in the developing and poor economies where governments have to take up large social commitments...........
Not at this rate
....Even with a high weight on inflation and a lower weight on employment, a Taylor rule says that current levels of interest rates are too high. The RBI needs to note that while it must target the consumer price index, it will find it hard to do so until it solves the question of whether monetary policy affects food prices, or whether inflation targeting involves a policy of manufacturing price deflation..........
Reforms: clear the clutter
.... A refreshing contrast comes from the new banking reforms of Raghuram Rajan, the new RBI Governor. He has decreed that any bank can now open a new branch without RBI clearance. Earlier, the RBI viewed every new bank branch as a special dispensation, to be approved only after long scrutiny. Indeed, the RBI once wanted to approve even individual ATMs, viewing these as bank branches of a sort! Rajan has jettisoned the approach of everything being forbidden till approved. By freeing banks to expand as required, subject only to the usual rules, he has produced clean, uncluttered liberalisation.........
The situation is grave but hardly hopeless
Listening to Reserve Bank of India (RBI) Governor Raghuram Rajan's refreshing speech, I was reminded of a 1970s French satire about the Chinese invasion of Paris in which a sombre protagonist declares reassuringly to panicked colleagues: "la situation est grave, mais pas desesperee!" Indeed our situation today is serious. But it is, as the governor implied, hardly hopeless. In fact, as I argue below the situation is quite salvageable but will require determined action...............
Keep up with the 'out of box' thinking: Shubhada Rao
.....Fortunately, policy focus has now shifted towards attracting capital flows, through a mix of conventional and unconventional measures. However, we need more out of box solutions to enable RBI to reverse its recent tightening measures without compromising rupee stability. In this context, the option of a partial switch in the composition of government borrowing from long-dated securities to bills can be explored. This will have the dual benefit of lowering long-term yields, while enhancing the attractiveness of T-Bill rates for foreign portfolio investors. It is, however, critical for RBI to continue with strategic intervention in the forward market, to ensure hedging costs do not dilute this yield premium..........
Contradictory actions
.........The government and RBI have to control inflation. Analysts think it unlikely to moderate very much despite the good monsoon, because of rising energy prices. In recent months, the RBI has put pressure on liquidity, and maintained high interest rates. The RBI might now, and frequently, increase and reduce liquidity while holding on to interest rates...........
Devaswom rejects RBI request to furnish gold stock
........“The RBI had requested the GDMC to provide details of the gold stock in its possession as part of collecting gold assets of places of religious worship in the country,” Devaswom administrator K.Muraleedharan said. The Devaswom has already communicated to the RBI its inability to provide the details as it was impractical to assess the gold stock correctly, he said on Sunday. A decision in this regard was taken at the GDMC meeting here yesterday, he said..................
Finmin to RBI: Stop Banks from Bidding for PSU Bulk Deposits
.......“Banks
are forced to offer a higher rate because of the bidding process, often
done informally,” a finance ministry official said confirming that the
issue has been raised with the RBI. The central bank is aware of the
problem and had said even in its 2012-13 monetary policy statement that
there was a wide variation in banks’ retail and bulk deposits, which is
unfair to retail depositors...............
Mandya district may soon get State’s first all-woman bank
.................The actor-turned MP was in Mandya on Wednesday to lay the foundation stone for a commercial complex on RAPCMS grounds, off Bangalore-Mysore Highway, here. After the programme, Ms. Ramya said she had requested Minister of State for Finance Namo Narain Meena to set up the bank branch in Mandya. She had got a positive response from the Union Minister. The district was likely get the bank by November. Its location, however, was yet to be identified, she said..................
Banks scurry to expand presence in non-urban areas
........Of this, a large number are in metro and urban areas. Though the rule that banks set up at least 25 per cent of the total branches in rural areas has existed for decades, not many banks have followed this diktat. This has lead to an uneven spread of banks. “Notwithstanding the development of various types of banks, the Indian banking sector is yet to meet the desired banking penetration and inclusion as witnessed in most advanced and some of the emerging economies,” the RBI said in a report recently............
Country bank
.......... If the villager has any money, he can open a savings account and create a variable recurring deposit, or ask the teller to make an electronic bank transfer to his girl friend; otherwise he can use the same account to take an overdraft. The Indian villager is a lucky man — at least in the view of the RBI.
Bank Licence Hopefuls Scramble for Clearances
Banking
aspirants, including Shriram Capital and Religare Enterprises, are
running from pillar to post to get clearances from a plethora of bodies
such as the Central Bureau of Investigation, the income-tax department,
as the Reserve Bank of India accelerates processes to grant new licences
by January. The central bank, which is in a hurry after Raghuram
Rajan took charge, has sought details of the ultimate beneficiary
shareholders in some of the group companies and more details about
finance beyond what appears in annual reports.........
Read - ET
Read - ET
RBI must come clean on why it took so long to acknowledge its mistake
......‘Inadvertently’? It’s been more than two months since the Bank released the list of 26 applicants! So why did it take it so long to realise it had made a ‘mistake’?............
Read - ET
Maharashtra’s Rs 545 crore is locked in land leases
.........The leased lands, located at prime spots, house offices of corporate companies such as Reliance Industries, Jet Airways, public institutions Indian Oil Corporation, Reserve Bank of India as well as elite recreation clubs like Hindu Gymkhana, Islam Gymkhana, Bombay Gymkhana, Wodhouse Gymkhana and Willington Sports Club. The Maharashtra Opposition has alleged that the government did not renew the land leases to give an undue benefit to those who possess the lands...............
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