Thoughtful Pillars

My View on The five pillars of RBI's financial sector policies: Raghuram Rajan

My humble comments on a fantastic vision put forth by Gov. Dr. Raghuram in his 'Five Pillars' speech. I wish and pray that these thoughts should be converted into action by one and all , be it Reserve Bank, Babus in the Government system, Industry, our farmers, academicians and above all THE POLITICAL MASTERS. India has everything that will make it a model country to look to in the next decade or two as it was in the times of Geeta, upnishads, Vedas and all other scriptures. Best of luck to all stake holders and to Gov. 

- B K Katyal, Ex  Chief General Manager

Amazing clarity of thought and crisp expression. In recent times, to my knowledge, no other speaker has opened up his mind to an august audience like this. Having read Rajan’s book Fault Lines, there is no surprise, though. Let us wish the four areas identified and the five pillars on which solutions can be built get the attention of policy makers outside Reserve Bank also. 

- M G Warrier, Ex General Manager

Trickster dupes 2 by promising jobs in RBI

NAGPUR: Jaripatka police have on Saturday registered a case of cheating against 32-year-old Vikas Mankar, who allegedly posed as a senior official with Reserve Bank of India. Mankar is learnt to have taken Rs9 lakh from complainant Sushma Bansod to get jobs in RBI for her and her physically challenged sister Pratibha Sahare. However, he never kept the promise and disappeared...........

Read - TOI

Lighter moments around 'serious' events

My View on  "While at BANCON 2013...": 

This is refreshing and welcome. I thought, this kind of media reporting (lighter moments around 'serious' events) had become a thing of the past. As electronic media always try to 'break' news and print media gets enough stuff to fill space even 'without going there' power of observing good things in life was waiting for a boost up. Thank you, Team BS, for contributing this, and VITALINFO for covering this. 

- M G Warrier, Mumbai

Numismatics exhibition gives glimpse of history

........The exhibition has coins from the Mughal era, Punchmarks coins, commemorative coins made by Reserve Bank of India, coins having different pictures of political, religious, social leaders from across countries. There are unusual ‘leech shape’ coins from 12 inches long to as small as one inch in various metals. Moreover,.............

Read - Sakal Times

The outsider

The sudden exit of Yogesh Agarwal as the chairman of the Pension Fund Regulatory and Development Authority, or PFRDA, has once again brought the relationship between financial sector regulators and the finance ministry into sharp focus. The facts of the case are also a clear pointer to the need for a better system for appointing regulators as well as removing them if indeed such a step becomes necessary. Agarwal does not belong to the Indian Administrative Services (IAS), a powerful cadre of officers who have a virtual monopoly ove rregulatory jobs across sectors. He is a banker.........

Read | Business Standard

‘Collaterals for rural women seeking bigger loans is a huge challenge’

..............I decided that this time I will not go alone. So, 17 women went with me to RBI’s office in Mumbai after seeking an appointment. Initially, we were not allowed to enter because of the way rural women dress (most of them belong to the shepherd community), but in RBI if you have an appointment, they are sure to meet you. The women told the RBI officer, “We may not be literate, but you ask us to calculate interest on any amount, if we fail, don’t give us the licence”. The entire debate engaged the officer and after a two-hour meeting we got the licence. This was in 1997..................

Read - HBL

A test of nerves

..........Both central banks targeted interbank rates to control the supply of money, aiming for a more surgical monetary tool than orthodox bank reserves or policy interest rates. The People's Bank of China and the Reserve Bank of India were worried that sticking with traditional policy rates or bank reserves would have had a greater impact on the overall economy and slowed growth..........

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Swinging on uncertainty

............Indian politicians are hypersensitive to inflation in election years so, the RBI could actually get tacit support from the government. Hiking rates probably won't work since food inflation is driving the indices up. Food is near 15 per cent despite a good monsoon and excellent agro performance. Rate hikes won't do much to pull food prices down in the absence of structural reforms in the distribution and procurement structure. But Rajan might pull out the sledgehammer anyhow. Higher treasury yields and the recent rate hikes by the State Bank of India and other banks indicate market expectations............

Read | Business Standard

Uncanny parallels between Sachin and Indian economy

As Sachin Tendulkar retires after 24 years in international cricket, Business Today discovers some uncanny parallels between the maestro's career and the country's economy...................

Read - Business Today

RBI frowns on loan recast efforts

.......“We’ll tolerate a bit of restructuring, we will give the regulatory forbearance, offer more time — that is the loss or the sacrifice that we as regulators are willing to make. But you as bankers should also be willing to make more provisions...and the borrowers should also sacrifice, he should bring in more equity,” ....................

Read - The Telegraph

Chakrabarty lambasts ARCs for killing their own business

Mumbai: Senior-most Reserve Bank Deputy Governor K C Chakrabarty has blasted asset reconstruction companies (ARCs) for being "non-transparent" and squarely blamed them for the failure of the mechanism. "ARCs have failed in our country because their pricing is the most non-transparent. Bring more transparency in the pricing," he said while speaking at the annual Bancon over the weekend here........

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Blunt instruments

......But RBI Governor Raghuram Rajan who talked of how the central bank had to ‘focus the laser light on inflation’ is also right since, once inflationary expectations run high, this gets factored into all contracts including wage agreements. Given that Rajan said monetary policy was a blunt instrument and had to be used carefully, the question is how inflationary expectations can be tempered. To some extent, Chidambaram answered the question when he said supplies had to be augmented and this required changes in the supply chain, the distribution logistics, the entire production chain......

Read - FE

Should we gradually open the doors for FIIs in debt mkts?

CNBC-TV18's Latha Venkatesh chats with Dr Bimal Jalan, former RBI Governor, Dr Subir Gokarn, former Deputy Governor of RBI, Dr. Samiran Chakrabarty of Standard Chartered Bank to get their view on whether India should gradually open the doors for FIIs in debt mkts?. Below is an edited transcript of the discussion..............

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India and the slowing economy: Chidambaram squares off RBI, again!

...........The Reserve Bank, under Mr Raghuram Rajan, continues to maintain the aggressive stance that was seen when D Subbarao was at the helm. The widely criticised monetary belt-tightening, experts say, is here to stay, flying in the face of a desperately growth-seeking Finance Minister P Chidambaram as well as the corporate India............. 

Read - ET

RBI's sensible eye on inflation

......Finance Minister P Chidambaram and Reserve Bank of India Governor Raghuram Rajan didn't seem on quite the same page at a BANCON 2013, a bankers' conference held in Mumbai this week. Mr Chidambaram and Mr Rajan's discord was provoked by numbers released by the union ministry of statistics earlier in the week that revealed headline inflation for October had hit 7 per cent.

Also read......... 

 

P Chidambaram backs bankers over bad loans

............."Banking is a business and lenders take decisions which turn out to be wrong,'' Chidambaram said at the banking conference Bancon 2013 organised by Bank of India in Mumbai on Friday. "At times, some decisions are taken. But a poor or a wrong decision does not mean it is a malicious decision. But if authorities question these decisions that would be the most dangerous thing to do."  The finance minister's declaration of support triggered a burst of applause from the audience...........

Read - TOI 

RBI Deputy Governor Chakrabarty says PSU banks lax in credit appraisals

............“Banks always say the rise in NPAs was mainly due to the slowdown in the economy, but the truth is that banks became complacent in 2006-07 when credit growth was high. In general, banks who had credit growth in 2004 -08 ended up with high NPA growth in 2008-13. Our NPA problem started much earlier and not in 2009. Yes, the financial crisis affected us, but credit appraisal had been deteriorating,” ...........

Read - Mint

Back to basics

Recent articulations by the finance ministry and the Reserve Bank of India suggest that the very concept of banking itself is being revisited. What has been mooted, in particular, is the idea of niche or specialised banks, whether it is with reference to geographies or sectors. Such proposals need to be viewed in the context of the basic principles of banking and, if that is done, some concerns inevitably arise. The word "bank" itself means trust and reliability, with every effort being made to keep ..........

Read | Business Standard

Banks may face additional challenges

.........Put together, this could push the sector into a new orbit. It will force the existing players to be more efficient in their operations and in their allocation of capital. Given the level of interference public sector banks face, they are likely to fall even further behind their private sector competitors........

Read | Business Standard

DBS Bank evaluating RBI's WOS guidelines for foreign banks

New Delhi: DBS Bank, fourth largest foreign lender present in India, is evaluating RBI's new guidelines that provide significant benefits to foreign banks adopting Wholly-Owned Subsidiary (WOS) route of running branches here. The guidelines were issued earlier this month and allow foreign banks incorporating WOS branches to acquire local private sector lenders and expand branch-network across the country without any restrictions.........

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What is wrong with India’s banks?

........The point to note is that most banks, particularly in the public sector, have been showing a secular growth in bad assets, although the bad loans data, both in percentage terms as well as in absolute numbers, do not provide the correct picture. This is because banks have been restructuring many of their stressed loans, which is not reflected in their NPAs. If one-fourth of such restructured loans turn bad, gross NPAs of many more banks will cross 5%. At least for a few of them, it could inch towards double digits.............

Read - Mint

The mirage of bank ‘bail-ins’

.......... RBI’s bias against market mechanisms is to a fault, but the then governor Y.V. Reddy and his officials understood that the reason why we regulate the financial system over and above the way we regulate other industries is that the financial system cannot insure itself. Financial crises are large, pervasive and a result of market failure. Market prices cannot easily protect us from such market failure. Bail-in investors will underestimate risks in the good times and will be shocked and ruined in the bad. In the good times, they will use optimistic valuations of these instruments as backing for other holdings. Then..........

Read - Mint

A new deal for foreign banks

Even while the issue of granting bank licences to a few private banks is gaining traction, the Reserve Bank of India (RBI) has released important guidelines for foreign banks to participate in the Indian financial sector in a bigger way than what has been possible so far. The two developments have one common objective — they are meant to deepen the financial sector. If all goes well, a few new private sector banks will advent in early 2014........

Read - The Hindu

Delhi: banks turned blind eye, buyers suffered

.....Following complaints by the buyers, inquiries were initiated by the Reserve Bank of India (RBI) and the district magistrate of Gautam Budh Nagar. The RBI asked the National Housing Bank (NHB), to look into the suspect transactions while the Gautam Budh Nagar DM appointed the Chief Development Officer to investigate the case. Both have produced reports that indict the builders and question the financiers’ role..........

Read - HT

Dena Bank hopes to open London rep office by Dec-end

Dena Bank is hopeful of opening its London representative office by the end of December, a top official said. This public sector lender has already received approval from the Reserve Bank of India for opening a representative office at London, Ashok Dutt, Executive Director, said here today. The bank's senior management had also met the UK regulator and the bank is hopeful of its nod soon, Dutt said........

Read - HBL

The five pillars of RBI's financial sector policies: Raghuram Rajan

Full text of Raghuram Rajan's speech at Bancon 2013 held in Mumbai on Nov 15

.....In the rest of this talk, I want to focus on what we at the Reserve Bank are doing to improve the financial system. We plan to build the Reserve Bank’s developmental measures over the next few quarters on five pillars. These are:...........

Read | Business Standard

Clean the viewfinder

.......... Important steps have been taken but these need to be institutionalised so that Rajan's legacy is assessed not merely in terms of how well the RBI does under him, but by whether or not he leaves behind a reformed institution..................

Read - IE