RBI cautions co-op banks against lump sum disbursal of loans to builders

Builders and real estate developers may no longer get large sums of money as loans at one go from the government. The Reserve Bank of India (RBI) has advised the state and Central urban cooperative banks to link the sanctioned individual housing loans to construction stages, interest/EMI etc before disbursing such loans to them. Known as "innovative housing loan schemes", banks generally disburse sanctioned individual housing loans to builders as a lump sum instead of linking it to the stages of construction...........

Read - IE

RBI reviews norms on urban co- op banks’ unsecured lending

The Reserve Bank of India on Thursday said unsecured loans worth up to Rs. 10,000 sanctioned by urban co- operative banks would be exempt from the aggregate ceiling on unsecured exposure of 10% of total assets as per audited balance sheet as on Mar 31 of the previous financial year. Earlier, the said limit was raised to 25% of the bank's total assets with the permission to grant unsecured loans of up to 20,000, with prior approval of the central bank, to individual accounts.........

Read - FPJ

RBI grants infrastructure NBFC status to IIFCL

New Delhi: The Reserve Bank of India (RBI) has granted the state-owned India Infrastructure Finance Co. Ltd (IIFCL) the status of an infrastructure non-banking finance company (NBFC), but with relaxed capital adequacy requirements—a move that will allow the company to lend more to infrastructure projects and also not require the government to recapitalize it to meet capital requirement norms prescribed for infrastructure NBFCs.......

Read - Mint

24 months a bit too long?

Reserve Bank of India Deputy Governor K C Chakrabarty said on October 5 that new banks would take 24 months to be operational after getting licences. But a look at some of the key steps to be taken after securing bank licences shows the process should not take more than a year. ...........

Read - BS

New banks: More the merrier but will they be better?

......Therefore, having more banks is definitely a good idea as it will usher in more competition which will probably mean better services. In terms of spread of inclusive banking, one may not be too sure as the question is that if there were opportunities, the existing banks would have already been there. But quite surely the RBI will ensure that branches come up in these regions. Employment will increase and there will be better choice for the customers and..........

Read........

Kotak Bank plans to double branches in three years

....."The critical point has been RBI's decision to free up licencing of bank branches" said Kotak, referring to the RBI governor Raghuram Rajan's decision to allow banks open branches freely as long as they were within the parameters prescribed by RBI. Kotak said that the bank would add another 100 branches before the end of the current financial year. .........

Read - TOI

RBI concerned as credit growth outstrips deposit mobilization

..."Our problem is that banks are giving too much loans compared to the deposits they mobilize. Their credit-deposit ratio is 78% and their incremental CD ratio is more than 80%. Our concern is that if banks are not able to mobilize deposits, so how will they be able to grow their loans," said KC Chakrabarty, Deputy Governor, Reserve Bank of India speaking at an event to launch a financial inclusion programme by Kotak Mahindra Bank to cover milk producers in Gujarat and West Bengal.........

Read - TOI

Finance Ministry asks public sector banks to ramp up rural ATMs

The Finance Ministry today asked state-run banks to expedite installing automated teller machines (ATMs) in rural areas, which is falling short of the budget target. Against the target to install 34,668 by the end of March 2014, the public sector banks have put up only 5,726 ATMs by end of August, Snehalata Srivastava, the additional secretary in the Department of Financial Services, said.......

Read - ET

Do-it-yourself becomes new banking norm

...."Most online transactions are real-time and do not involve paper-based transactions , thus saving customer time. We are witnessing rapid customer adoption for net banking over and above their normal account related transactions. They are now viewing net banking as a single stop for all their banking requirements,"...........

Read - TOI

Bigger, better, safer! RBI's new move to improve mobile banking

.......The committee shall examine the how practical it is to use encrypted SMS-based funds transfer. The operation is executed by using an application that can run on any handset. The committee set by RBI shall lay a road map for the implementation of the concluded solutions and other options for the mobile banking..........

Read.........

Six banks sign up for Aadhaar-based remittance

Customers of six banks will now be able to transfer money from one bank account to the other by keying in the receiver’s 12-digit Aadhaar number. The National Payments Corporation of India (NPCI) launched the Aadhaar-based remittance system in association with Unique Identification Authority of India (UIDAI) and six banks..........

Read - HBL

Plan panel officials disagree with Rajan panel report on state funding

.........Planning Commission officials, who do not wish to be identified, spoke against replacing the Gadgil-Mukherjee formula; they say it is a time-tested one. Doing away with the existing classification of special category status to remote and hilly states, as recommended by the Rajan panel, needs approval from the National Development Council (NDC, comprising Centre and states), they contended. “Any move to alter the time-tested Gadgil-Mukherjee formula could open a can of worms,” a key Planning Commission official told Business Standard........

Read | Business Standard

Rajan's growth report on states is flawed: Bibek Debroy

..........Assuming it was a criterion, the present exercise isn't particularly easy to understand. It smacks of arbitrariness and subjectivity.  Having said this, is there any neat way to figure out why Gujarat does relatively badly in the Raghuram Rajan report? Not really, because the report doesn't give raw data. In sum, this entire report is rather cavalier in approach.  

Read - Business Today

When policy interventions go wrong

When the Andhra Pradesh government sought to restrict microfinance institutions' (MFI) activities in December 2010, it was with good intentions. But the results were bizarre: "The average household expenditure dropped by 19 per cent, and the largest decrease was observed in expenditure on food," says The real cost of credit constraints: Evidence from micro-finance, a recent paper from the Indira Gandhi Institute of Development Research (IGIDR) written by Renuka Sane and Susan Thomas.............

Read | Business Standard

Bank cap infusion likely to go up by Rs 5,000 crore

.....Last week, a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram had decided that there would be sufficient fund infusion in the banks to enable them to extend loans to select sectors. The Finance Ministry had said the step would revive consumer demand and in turn economic growth. But the measure was later criticised by RBI Deputy Governor K C Chakabarty as being imprudent. “It is not a very prudent measure to increase consumption by lowering interest rates. If the rate goes up it will become NPA,” Chakrabarty had said soon after the government decided to prop up consumer demand through lowering of rates......

Read - Deccan Herald

Banking on festival cheer

.............This anxiety forced Finance Minister P. Chidambaram to announce that banks would offer cheaper loans to stimulate demand for two-wheelers, cars, and consumer durables. Significantly, Mr. Chidambaram’s hint to banks came after a meeting he had with the RBI Governor Raghuram Rajan. He also indicated that banks would be provided extra capital to execute his `pump-priming plan’...........

Read - The Hindu

Taxpayers still face IT department’s computerization hurdles

........While taxpayers have so far been patient, looking at the long-term benefits that computerization would bring, how long can they be expected to put up with such new problems arising every year? While one understands that all bugs in a system cannot be completely eliminated, the tax department needs to be much more proactive and needs to take steps to ensure that taxpayers do not suffer because of the department’s shortcomings.

Read - Mint

EC eyes black money flow, asks banks to scan deals

............As per the guidelines issued to the banks, any unusual transfer of money through RTGS ( Real Time Gross Settlement) system during the poll process without any precedent of such transfer will have to be reported. Further, any deposit of cash or withdrawal of cash exceeding Rs one lakh from back account of candidates or spouse or dependents as mentioned in the affidavit filed by candidates, which is available with the commission, should be reported.........

Read - FPJ

Axis Bank to pay Rs 66,000 for denying credit cards to cops

.The New Delhi District Consumer Disputes Redressal Forum observed that the bank had "deliberately declined" to grant credit card facilities to the officers, of SHO/Inspector rank, despite RBI guidelines and held the bank guilty of "unfair trade practice". "We have gone through opposite party's (bank) reply and evidence and noticed the bank had taken entire salary account of Delhi Police officials assuring all of them to provide credit facilities as per RBI guidelines. The opposite party deliberately declined complainants' credit card applications arbitrarily despite RBI guidelines. ..........

Read - ET

All about closing credit cards!

Enough can’t be said on the diligent care one must take when handling a credit card! Sometimes, you may feel that a particular card is not of much use to you, or you may realise that you are holding several credit cards and many of them are not getting used. So you may wish to cancel your credit card. However, you may sometimes realize that despite taking the initiative to cancel the card, you continue to receive statements from the bank declaring that you have unpaid dues in your account. What is the reason behind this?.....

Read - FE

THE CURIOUS CASE OF RAGHURAM RAJAN

........However, the “man of the moment” has his plate quite full and absolutely scrambled. Though his intention to further open up the financial sector is in consonance with his academic and professional credentials, he also now has to reconcile with the existing focus on inflation in the central bank. Last three Governors of the RBI (D.Subbarao, Y.V.Reddy and Bimal Jalan) were known to be cautious in their approach to open up, but whether Rajan would break the tradition (true to his background) towards a more liberalised monetary sector or not – remains a question of immense interest in near future. Meanwhile, his posturing is generating fair amount of curiosity in the minds of everybody involved and interested in the monetary affairs of the country.

Read............

Ignore the IMF, Go with Rajan on Growth

On India’s growth prospects, RBI Governor Raghuram Rajan is more correct than the International Monetary Fund (IMF). The Washington-based multilateral lender, which released its World Economic Outlook on Tuesday, has trimmed India’s growth forecast down from 5.6% to 3.8%, calculated at market rates. This is the steepest fall in terms of.................

Read - ET

RBI vs GoI

........While RBI is signalling a hike in interest rates, the finance ministry has said it is willing to give banks more capital provided they used this to lend more in certain areas and at lower interest rates. If the finance ministry gives banks Rs 100 of additional capital, banks can lend up to Rs 1,000 given the current capital adequacy norms. And since banks will now have to raise less funds in the market, either through CASA or bulk deposits, their cost of funds will fall and can be passed on to consumers. ............

Read - FE Editorial

Rajan effect working well for currency

Raghuram Rajan seems to be a perfect talisman for the rupee. Ever since he's taken over as the governor of the Reserve Bank of India, the currency has appreciated by 8.76 per cent and is now stabilising between Rs 61-62 against the dollar. Not surprisingly then that Rajan has opted to cut the marginal standing facility (short-term rates) by another 50 basis points, barely weeks after he cut it by 75 basis points on September 20. Incidentally, his predecessor had opted to tighten short-term rates to bring more stability to the rupee, and Rajan's rollback indicates that the currency crisis is over for now.........

Read | Business Standard

Bank Tarzan meets Jane(t)

Washington, Oct. 9: President Barack Obama nominated Janet L. Yellen as the US Federal Reserve chairwoman, one of the most important economic policy-making jobs in the world. The nomination will put Yellen, 67, on course to be the first woman to lead the world’s most influential central bank in its 100-year history. She will also be the first woman to head a central bank in any Group of Seven industrial nation. The elevation of Yellen, who has been the Fed’s vice-chairwoman since 2010, will provide some relief to global markets, including that in India, which will expect her to tread carefully in winding down the US economic stimulus........

Read - The Telegraph

Technical committee to look at ways to boost mobile banking

.......The committee will also look at any other solution that could expand the reach of mobile banking and, accordingly, draw up a roadmap to implement the solutions. B Sambamurthy, director, Institute for Development & Research in Banking Technology, will be the chairman of the committee and Vijay Chugh, chief general manager, RBI, the member-secretary. The committee members will comprise officials from State Bank of India, ICICI Bank, HDFC Bank and Axis Bank. It also includes Anthony Thomas, chief information officer, Vodafone India.......

Read | Business Standard

Sound Move, Reserve Bank

With the concrete measures now taken by the RBI, the rupee is beginning to settle at around 60-61 against the dollar, much to the relief of exporters. Against this backdrop, the RBI has preferred further easing of liquidity by cutting the marginal standing facility rate. The ongoing festival season that is to stretch up to March next year is expected to create a rise in demand, leading to credit expansion. The  lending and deposit rates of banks to that extent might require some alignment. In a nutshell, it is a welcome development by the RBI to make conditions more conducive for banks to operate, which will contribute the growth of the economy. The important thing is that Dr Rajan has successfully tried to restore much needed confidence in the markets, which is a right beginning to take the economy forward to high-growth terrain.

- SRINIVASAN UMASHANKAR, Nagpur (ET) 

Making the job easier...........

The Finance Minister could have named the group which should own these seven banks, making the Jalan commitee's job easier. He could then have the upper hand in dictating the future of the pending applications.

- T K E Das, Ex-General Manager

Priority for non bank finance companies in bank licenses: K C Chakrabarty

MUMBAI: Government will give non-banking financial companies (NBFCs) priority when awarding new commercial banking licenses as they already own an existing network of financial services in the country, central bank deputy governor K.C. Chakrabarty said on Wednesday..........

Read - ET

Ban has come at the right time: Chakrabarty

.....On the timing of last month’s directive to banks asking them to desist from offering zero per cent EMI schemes through credit cards, Chakrabarty said the timing is absolutely right. “During the festive season, mis-selling is at its peak, so wrong things should not happen when more people come (to buy). Whatever you (banks) are doing, convey it to the customers,,” he said. “There is no ban on giving loans on credit cards. What we are saying is don’t charge customers. Don’t charge more per cent by saying zero per cent,” he added.......

Read - HBL

Credit card loans: RBI says has no issues if done transparently

....."There is no ban on giving loans on credit cards. Don't charge 12 per cent actually and claim that I am charging only zero per cent interest," RBI Deputy Governor K C Chakrabarty told reporters here. It could be noted that RBI had last month banned zero per cent interest schemes offered by various bank to credit card holders saying the scheme lacks transparency. The move is likely to dent banks festive season sales........

Read - FE

Obituary

E.P.VEERARAGHAVAN (81) Retired Officer, RBI, Chennai expired on 5-10-2013. Ph: 22604902.

Hindu

This week, withdraw from an ATM, get crisp new notes

.........Such complaints may now reduce, as the Reserve Bank of India, Chennai, has instructed various banks in the city to provide fresh notes to its customers, particularly through ATMs. Starting last week, RBI officials initiated the process and directed banks to feed new notes, particularly of those under the denomination of Rs. 100 and Rs. 500, into their ATMs................

Read - The Hindu

Contentful questions.......

My View on "Growth, Low Inflation to be RBI’s Priority": 

This interview gives in one place Dr Rajan’s perceptions on RBI’s role, RBI-GOI relationship and the need for skill development in RBI, among other issues. Team ET has asked right questions and where there was ambiguity in questions, the answers were elaborate to make things clear. It was a refreshing experience reading this, as, in some interviews in the recent past with heads of some organizations, published in the media, the questions had more ‘content’ than the answers. 

- M.G.Warrier

Former Chief of Reserve Bank of India meets CBSL governor

Former Governor of the Reserve Bank of India, Dr. D. Subbarao has visited the Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal on Tuesday............

Read..........

Unrealistic appeal

This refers to “Cheap loans: By how much can you cut rates, FinMin asks banks” (Business Line, October 9). Asking commercial banks to disclose information regarding the possibility of cut in lending rates, has been viewed from two angles can be seen asa stimulus measure to expand the demand for consumer durable goods in the short run. It also seems like a poll campaign in disguise. Whatever the motive, it will ultimately nullify the constructive measures taken by the RBI to contain inflation. How can a bank lend money to the extent of 10 times its deposits just to get one-tenth of it as additional capital from the Centre? 

- S. Lakshminarayanan, Cuddalore (HBL)

Cash-ferrying companies flout rules on weapons

.......The Internal Security Division, in a September 10, 2013 letter, sought information about this matter from the Reserve Bank of India (RBI) but is yet to get a reply. Information has been sought on, among other things, carrying bulk cash, guidelines on type of vehicle (security levels) to be used for transportation and model copy of contract document between private security agencies and banks for cash in transit.

Read - TOI

Seminar on banking

The College of Cooperation, Banking and Management of Kerala Agricultural University is hosting a two-day national seminar on ‘Contours of Indian Banking’ on October 23 and 24 at the University Central Auditorium on the main campus.........

Read - HBL

Bitcoins: Exciting, anarchic and risky

...Bitcoins are an anonymous, decentralised digital currency. In contrast to electronic money, no company controls the bitcoin, nor ever could: all the rules about how it works are embedded in the very operation of trade, including the rate of inflation and how to verify transactions. For most users, the easiest way to get bitcoins is to buy them. But due to strict anti-money laundering controls, even that is tricky...........

Read - HBL

Globalisation vs the rupee

.......Some economists say that we have not had enough ‘reforms’ to keep India attractive for foreign investments; others point to the enormous increase in our Current Accounts Deficit as the import bill has increased substantially; yet others blame the recent upswing of the American economy and other global factors. Caught in the crossfire of facts and opinions is the poor resident of the non-stock-market-investing Bharat, struggling to obtain even basic necessities like food and shelter. Do our decision-makers understand that this citizen is suffering not due to inadequate ‘development’, but because of an inappropriate model of economic growth? Faith in this model has privileged cold growth (GDP) statistics over meaningful indicators of human well-being, sharply increased inequities.......

Read - DNA

Some more liquidity, please

By rolling back a steep increase in short-term rates, opening the floodgates on FCNR deposits, and infusing liquidity through bond purchases, the Reserve Bank of India has been signalling to banks and the bond markets that it isn’t entirely anti-growth. But for these measures to be really effective, the central bank needs to do much more..................

Read - HBL

RBI couldn’t care less about corrupt UPA

.......It is indeed a relief to see Governor Raghuram Rajan at the RBI beginning to ease up on the liquidity. This is essential for growth, even as the IMF expects barely 3.8 per cent growth in GDP this year, down from its earlier estimate by a dramatic two per cent points, but going up to 5.1 per cent next year. Of course, even five per cent odd was a 10 year low when it happened last year, and therefore, the current dip estimated is all the more significant. It shows the Government’s economic policies are just not working...........

Read............

From anxiety to complacency in six weeks?

......The tide began to turn in early September with the new Reserve Bank of India (RBI) governor's confident and well-considered initial policy statement on September 4, including the announcement of swap facilities to banks for foreign currency non-resident (bank), or FCNR (B), deposits with maturity of three years and over at a rate of 3.5 per cent per year. This quasi-exchange rate guarantee soon triggered fresh inflows. Within days of this initiative, ..........

Read | Business Standard

India Inc needs stronger bankruptcy legislation for efficient revival process

....If Reserve Bank of India Governor Raghuram Rajan's plans to expedite loan recast and speed up the resolution of unviable businesses come through, India's economic recovery from any slump in the future could be as quick as that of the US, unlike Japan, where companies linger on like in India..........

Read - ET

CAD, growth and the rule of law

The Second Quarter Monetary Policy Review is due end of this month. We are currently in a scenario of the higher Current Account Deficit at 4.9% of the GDP than both the previous quarters, as well as Q1 2012- 13. India would do well to use the breathing space that has been provided by the US deferment of tapering, to fix its Current Account Deficit ( CAD) and resuscitate growth. While it is the Current Account deficit and deficit in output growth rate which are garnering maximum attention, there is a third deficit - a Rule of Law deficit, equally important due to ......

Read - FPJ

Beyond the taper talk

....In India, though RBI has raised the repo rate and is increasingly been seen to be moving away from the Wholesale Price Index towards the Consumer Price Index as the key operating variable, this transition may not be easy as the interest rates will have to be increased by a fair amount in order to undertake this policy shift. However, raising interest at this point will affect sentiments and expectations around growth. Notably, RBI will also have to reassess its position on the exchange rate and capital flows, as focus in last few months has been on external sector management...........

Read - Mint

Why you need to be careful when your bank changes your home loan rate

.....A simple online search on home loan complaints will throw various cases where banks have goofed up with customer’s home loan agreement. It is thus wise to figure out what can go wrong in advance, so that you can be cautious and avoid having to face an unpleasant situation...........

Read..........

Public sector banks will score this festive season

Has the recent Reserve Bank of India dictate asking banks to stop zero per cent equated monthly instalment (EMI) schemes, as well as the rising prices of electronic gadgets, spoilt your Diwali shopping plans? If so, you may still have a chance of buying the iPhone 5 or the LED TV you have been eyeing!...........

Read | Business Standard

Nachiket Mor : Return of the Finance Prodigy

..........Nachiket Mor, the man who ran the treasury, corporate funding, and learnt how a retail customer behaves from his perch at ICICI Bank, will wear the hat of a jury in two key panels constituted by Raghuram Rajan, the man who told a partying Wall Street that the music had stopped long ago. “He straddles many worlds,” says Rajan. “We could not pick up a better and more capable person who has seen all aspects — the theoretical as well as the practical — to give us a sense of the future of what we should be doing.” ..........

Read - ET

Concern over impending takeover of DICGC

All India Reserve Bank Employees Association writes to Governor............

Read............ 

Also read this........

A takeover best avoided - Dr.S.S.Tarapore

Read - Views by M.G.Warrier

Can’t change rules midway, process for bank licences won’t be rolled back

........Many are criticising this move saying it will lead to more bad loans, besides leading to distortions. Even RBI Deputy Governor K C Chakrabarty was quoted as saying that it is not prudent to increase consumption by lowering interest rates because if the interest rate goes up, loans will become NPAs. How do you respond to that?

The RBI Deputy Governor was quoted completely out of context. He told me that the answer that he gave was in reference to a theoretical question asked by a student at a function he attended. That, unfortunately, has been taken and portrayed as some kind of criticism of the government policy. It was not............

Read - FE

Achieving financial inclusion

........ It is hoped the RBI takes note of the views of Dr CD Datey, who sacrificed his career to oppose the establishment of RRBs in 1975. The small banks may not serve the purpose of financial inclusion. The Centre should rather think of having small branches of the commercial banks with all facilities of core banking solutions (CBS) which may ensure cent per cent financial inclusion.

Read...........

Angry Mumbai Schools approach RBI governor

..........."It is a pity to see such qualified sportsmen, who are officers at the RBI, using such foul and abusive language. Even after the cops arrived, they were still behaving violently. I am really upset over the whole incident and hope that the RBI takes stern action against those who were responsible for such behaviour,"........

Read - Mumbai Mirror

JOINT MEETING OF RBI, GOVT OFFICIALS HELD

..Among the seized currency notes,  there are 903 notes of Rs1,000 denomination, 618 of Rs500 denomination and 44 of Rs100 denomination. Present in the meeting  were RBI Chief General Manager, Nagpur, S V Raghavan, RBI General Manager, Raipur Office Nirmalchand, Assistant Inspector General of Police, Chhattisgarh, Sanjay Sharma besides officials from Airports Authority of India and BSNL. 

Red - The Pioneer

Guidelines For Creating Posts of GMs, DGMs and AGMs in Public Sector Banks

........Based on above guidelines, MoF has calculated the maximum number of General Managers in each Public Sector Bank based on the business mix as on 31/03/2013. The details of posts of GMs is given below based on MoF guidelines. These guidelines will now be reviewed only based on the business mix as on 31.03.2015 and the ceiling provided below shall remain effective till next review.  As per MoF circular, it appears that Punjab National Bank, Canara Bank, Bank of India already have exceeded the number of posts at General Manager level. MoF has allowed them to retain the existing number of General Managers.........

Read.....

Let more Women Rise to the Top

We welcome the appointment of Arundhati Bhattacharya, the first woman to steer the country’s largest lender, the State Bank of India. She joins other women heading public and private sector banks in India, all of whom have been chosen on merit and performance, and not because of their gender. But in sectors other than banking, there is a dearth of women in the senior-most positions. Which is strange and calls out to be remedied...........

Read - ET

Bhattacharya underlines tech in SBI’s war on NPAs

.....To improve NPA management, SBI will employ more tools than before, with emphasis on effective use of IT. Bhattacharya said IT is going to be used in risk mitigation, product pricing, customer-related issues and in raising productivity. The bank will also ramp up technology to tackle loan recovery. Focus will also be on structure rationalistaion and improved time resolution to fight bad loans...........

Read - DNA

No plan to slash lending rates, says SBI chief

.........The new chairperson has also proposed removing the cap of two transfers on ‘spouse grounds’ for both female and male employees. She is also considering introducing a longer sabbatical (leave on loss of pay) for employees, especially women, similar to the scheme she introduced in SBI Caps, when she was heading it. At present, SBI Capital offers leave without pay for up to six years.

Read | Business Standard

Who is Arundhati Bhattacharya?

..............Her elevation came after the glass ceiling was broken in 1996, when Tarjani Vakil took over as head of Exim Bank. Ms Vakil's appointment was followed by Ranjana Kumar, who was appointed chairman and managing director of Indian Bank. Over the past few years, India's banking sector has seen a few more woman heads. Shubhalakshmi Panse, Vijaylakshmi R Iyer and Archana Bhargav are heading state-run Allahabad Bank, Bank of India and United Bank of India, respectively. In the private sector, Chanda Kochhar and Shikha Sharma now head ICICI Bank and Axis Bank, respectively. At the Reserve Bank of India (RBI), Shyamala Gopinath, K J Udeshi and Usha Thorat have all been Deputy Governors............

Read........

Appropriate to indicate the facts - K.Kanagasabapathy

My View on  "Cash holding confusion - A.Seshan": 

Yes. This is a ridiculous practice to say the least. Previously when government's cash balance exceeded Rs.50,000 crore, the amount was invested in government's own securities. Now perhaps the entire amount over and above Rs.100 crore is invested in government's own securities. Even if the government's cash balance is invested in securities and goes into investment account of the central government, the impact on the market of such high balances is the same. It would be appropriate at least to indicate in a foot note that so much amount of cash balance is invested in government securities. The impact of such high balances is technically equivalent to a CRR imposed on the system. Yet another issue is that RBI indirectly pays interest equivalent to interest on invested securities, since the interest on such securities accrue to the government. Since RBI is not paying any interest on banking system's balances on account of CRR, it would be proper for RBI not to extend the benefit of investment of surplus cash balances of the government in its own securities. Rakesh Mohan committee on Financial sector assessment earlier recommended that such surplus cash balances can be lent in the overnight market, since such accumulation of balances cause every time a cash crunch, rather unintended, on the system. On this also, no decision seems to have been taken. Yet another irony is that government continues to borrow heavily even when it has huge cash balances which only precipitates the cash crunch caused by the surplus balances. 

- K.Kanagasabapathy

‘FUNDING FOR LENDING’ SCHEME MAY CRAMP BANKS FOR SPACE ON LOW INTEREST RATES

....Though the Government has announced that it will infuse `14,000 crore in PSU banks, allowing them to lend at attractive rates in the festival season, sources pointed out that this move may also not prevent the CoF of these banks to fall short by 0.1 per cent. Analysts too feel that the proposed ‘funding for lending’ scheme may not help banks to lend at cheaper rates..........

Read - The Pioneer

Stop criticizing Gov...........

My View on  "THE SECRET DIARY OF RBI GOVERNOR": 

The tragedy is that every tom dick and harry has either started giving suggestions to the new RBI Governor or criticizing him on policy initiatives he has started taking. Is it partly due to either jealousy or some others and playing shadow boxing. There is clear indication of political overtones in the remarks of the author against a more erudite, intelligent and a more competent person who is a hope for all of us to give true direction to the economy. 

- M.K.Bandopadhyaya

Working backwards

.........Committee member Shaibal Gupta has written a long dissent note appended in the report.  Gupta, among other things, questions the committee’s decision to assign equal weights to each of the sub-components (such as monthly per capita expenditure and percentage of SC/ST population) for calculating the overall index for the state.........

Read - HT

MSF cut: RBI weakens its inflation-fighting credentials

........After all, it is just over a fortnight ago that the Bank in its wisdom thought it fit to reduce the MSF by 75 basis points, rather than go in for a more aggressive easing on the grounds that consumer price inflation is still high and savings in financial instruments is less than desirable. Has anything changed on either of these two fronts? No! What has changed is that .........

Read - ET

A Consistent RBI Policy

The RBI has eased interest rate on borrowings under the marginal standing facility (MSF), defined as an emergency way that banks use when they face a paucity of funds. The RBI must have a consistent policy to regulate the money market. Tampering with instruments of credit control or credit creation measures such as the repo rate, MSF, open market operations, etc, often will deprive banks of cost-effective and profit-maximising strategies. 
- S RAMAKRISHNASAYEE, Ranipet  (ET)

Keep reversing

......This is good news and it will ease liquidity conditions in the market. An RBI committee headed by Deputy Governor Urjit Patel is working on a new monetary policy operational framework. Until the committee makes its recommendations and a new framework is put in place, one may expect that the RBI will move back, albeit slowly, to the framework that existed before mid-July...........

Read - IE

CAD target of $70 bn is imminently reachable: Rajan

"........There is increasingly a sense amongst analysts, amongst commentators that India's current account deficit (CAD) problem is under control. $70 billion that the government proposed as a CAD after calculating it with us seems now imminently reachable. Some independent analysts are saying it will be even better,"........

Read | Business Standard

I’m pleasantly surprised by the economy’s ability to react: Raghuram Rajan

.....What I have said since then and I keep saying is that yes, inflation is a big concern for the Reserve Bank; that we intend to fight inflation. When we fight inflation, however, we keep in mind the state of the economy. Because of the lower level of output relative to potential, we also have disinflationary forces at work. Disinflation is not a one- month or two-month process. ..........

Read - Mint

Inflation still biggest bugbear

 Duvvuri Subbarao, the former Reserve Bank of India governor, will probably have the last chuckle. On Tuesday, the finance ministry forecast inflation based on the wholesale price index (WPI) at anywhere between 6.5 and 7.2 per cent at the end of 2013-14 — a number that is streets ahead of the RBI’s projection of 5 per cent that was made in the first quarter monetary policy review on July 20. The forecast is also higher than the 5.5 per cent projected by the PM’s Economic Advisory Council headed by C. Rangarajan in its report last month. For over a year, the finance ministry under P. Chidambaram and Subbarao have clashed over the conduct of the monetary policy.........

Read - The Telegraph

Raghuram vs America! Street caught in the crossfire

The stock markets seem to be been dancing to the tunes of what appears to be a battle of sorts between US Fed and RBI. What's heard on the Street is that markets are uncertain over what would happen in the US in terms of the ongoing shutdown, debt ceiling and quantitative easing..........

Read - ET

Economy has growth potential, CAD isn't an issue now: Rajan

....“A narrowing fiscal deficit is also something that international investors are looking at. One way to narrow the deficit would be a jump in diesel prices. if that’s not on the table, a sequential increase in diesel prices at a rate that makes us close to market price in the near future is important,” .........

Read | Business Standard

Growth, Low Inflation to be RBI’s Priority

.......After every RBI action, various government functionaries comment on it. But this time when you raised repo rate, there were no comments from New Delhi. How did you achieve it? 
Anyway, look the finance ministry and the RBI talk. It has been true since September 4th, it was true before September 4th. We talk and very rarely one side surprises the other... Let me start by saying objectives are the same. Both sides want growth, both sides want low inflation. The pace and the instruments we use to achieve those objectives, there is always a healthy debate and ultimately I think this is true in every country and the whole issue is to try and convince the other side.......

Read - ET

RBI’s Raghuram Rajan says things will only get better for India’s economy

 The news on the economy will only start getting better from now, Reserve Bank of India (RBI) governor Raghuram Rajan said in an interview, reflecting a growing view in many quarters that the Indian economy has bottomed out. He listed the factors behind his assessment: rising exports in the second quarter; the possibility that the US’s problems would be temporary and that lawmakers in that country would arrive at a fiscal deal; stronger agri production; and the revival of many projects that were stalled............

Read - Mint

Moneylife IMPACT: RBI asks High Mark exec chairman Anil Pandya to step down

Following several complaints and reports by Moneylife, the Reserve Bank is understood to have directed Prof Dr Anil Pandya to step down as executive chairman of High Mark, the troubled and cash strapped credit bureau. Reserve Bank of India (RBI) is understood to have asked Prof Dr Anil Pandya to step down as executive chairman of troubled and cash strapped credit bureau High Mark Credit Information Services Pvt Ltd. ........

Read - Moneylife

P Chidambaram to reach Washington tomorrow for IMF-World Bank meetings

Finance Minister P Chidambaram will reach Washington tomorrow to attend the IMF/World Bank annual meetings, after which he will meet investors in San Francisco to hardsell India as an investment destination. Reserve Bank of India Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram, among others, will also attend the IMF/World Bank annual plenary meetings on October 11 and 12........

Read - ET

Panchayat-owned ATMs

......To further motivate the banks, panchayats could lease an ATM from the companies and offer wet lease to banks, making the installation of ATMs a reality in a large number of bigger and richer villages..........

Read | Business Standard

Unmaking monetary policy

........If this is the case, then, between the mid-quarter review of September 20, in which the RBI announced a tightening of the monetary policy stance, and last week, its position appears to have changed. If not, it needs to provide some explanation for how stimulating demand for even some products is consistent with its anti-inflationary stance. Or, is this just another instance of monetary policy being hijacked by a finance ministry seeking to smooth over ruffled feathers in the business community?......

Read | Business Standard

* The Governator *

Reserve Bank of India Governor Raghuram Rajan may not have an official twitter account but someone has set up a parody account on the microblogging site under the handle The Governator that has a modest following of 3,000-odd and some mildly amusing tweets....................

Read | Business Standard