A number of companies are coming up with tax-free bond issuances. These companies are planning to tap investors who put their money in bank fixed deposits. Below is a comparison of tax-free bonds and bank fixed deposits..........
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, December 18, 2013
Tuesday, December 17, 2013
India needs a Paul Volcker
.......So, if I were you, I would go ahead and do a 50 bps rate increase in the monetary policy meeting next week and in the January meeting. That does not sound that radical, I think. I was tempted to recommend a 75 bps increase next week but even I am brave enough only to be a “practical (arm-chair) revolutionary”. India needs a Raghuram Rajan-Paul Volcker, to force genuine structural reforms on India’s public and private sectors. With politicians distracted and powerless for now, you have a unique opportunity to hasten reforms with monetary policy. ..........
How Rajan asserts his autonomy
............The inflation we are experiencing is not amenable to monetary policy instruments, let us recognise that. It is primarily the responsibility of the government to contain price rise. It might be difficult to have quick fix on that. But let there be a beginning for a reasonable solution. Raghuram Rajan is of course aware of this.........
Change for the RBI regime?
............Greater transparency and communication policies: As recommended by the Committee on Financial Sector Reforms (2009), the RBI could develop and make public its inflation model to give some guidance to market participants on monetary policy decisions. As price stability becomes the RBI‟s primary mandate, it could produce its own version of the inflation report, which provides detailed economic analysis and inflation projections, on the basis of which interest rate decisions are made. Detailed minutes of the RBI‟s monetary policy committee may also be publicly released. That said, it doesn’t seem unreasonable for the RBI to move and then let everyone else catch up............
Banks have national responsibility to extend liberal credit to J&K: Rather
.......Speaking at the 91st meeting of the State Level Bankers Committee (SLBC) at Jammu today the Finance Minister impressed upon the Financial Institutions to remove the persisting impression that banks in J&K are interested only in deposits least concerned about advances. He asked the Banks to improve Credit Deposit Ratio (CDR) which is yet for below the National Bench Mark adding that there should be no flight of capital from the poor state like J&K. Chief Secretary, IqbalKhandey, Chairman J&K Bank, Mushtaq Ahmed, Principal Secretary Planning and Development, B.R. Sharma, Principal Secretary Finance, B.B. Vyas, Regional Director RBI, K.K. Saraf, Chief General Manager NABARD, DR. B.G. Mukhopadhay, Representatives of various National Banking Institutions, Administrative Secretaries and heads of various departments were present in the meeting...........
Obituary
Mr.N.Ramaswamy, (Ex.RBI/NABARD) Passed away peacefully on 12.12.2013.Deeply mourned by Wife: Lakshmi Ramaswamy Son: Narayan Rukmani Kartik Daughter: Saroja Ravichandran Rahul Brothers, Relatives & Friends
TOI
'Gold'en will
My View on "All that glitters... Dr.Subir Gokarn":
The inherent fear to touch or talk about the huge domestic stock of gold in India gets interwoven even in such a well-articulated and well-researched article by a person like Subir Gokarn. The fear of gold was captured by K U B Rao in his report on Gold Management repeased in January, 2013 in the following words:
“Indians’ obsession for large investment in physical gold is the outcome of the confluence of numerous and divergent factors. Given the complexities involved in the lure for gold in India, a holistic strategy that deploys a combination of demand reduction measures, supply management measures and measures to increase monetisation of idle gold stocks needs to be put in place. Creation of an alternative asset class that may provide returns comparable to return on investment in physical gold with similar flexibility is important. A necessary pre-condition for reducing the excessive demand for the precious metal is to ensure benign inflationary environment along with achieving and maintaining macroeconomic stability.”
If there is a will, there should be some way, to exploit productively at least a small portion of the domestic stock of gold which will minimize the need for gold import. There is no escape from standardizing a major portion of non-jewellery surface gold and making it available for productive purposes. When every other asset can be accounted, government cannot be apologetic only about gold.
Establishment of the Bullion Corporation of India proposed by the Working Group can play a major role in recycling and pooling of domestic scrap gold. In this context, the Committee’s following observation is relevant:
“ Temples in India holds large quantities of gold jewellery offered by devotees to the deities. There is also significant amount of scrap gold in the country. Some estimates say that scrap gold that comes into the system is nearly 300 tonnes per annum. It would be worth trying to channel the existing supplies of scrap gold in the country into the financial system, so that the unproductive nature of the gold asset is turned into a financially-productive medium.”
- M G WARRIER, Thiruvananthapuram
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ICSI conference with NISM
The Institute of Company Secretaries of India (ICSI) in association with the National Institute of Securities Markets (NISM) organized a conference on ‘Ethics and Corporate Governance’ on December 11, 2013 in Kolkata. The Conference was inaugurated by Anand Sinha, Deputy Governor, Reserve Bank of India.......
Forensic audit of ministries, too?
.......If RBI wanted to convey the message it means business, it has gone home. Last week this correspondent met the chairmen of two public sector banks where the discussion was just about this audit. RBI has followed it up barring lending of above Rs 10 crore by the bank to a single entity and also blocked it from restructuring stressed loans............
Promotions in Public Sector Banks
Government of India has published a new policy for the promotion of employees & officers in public sector banks. Detailed notification is attached below. Pls have a look if you are aspiring to get a bank job...........
Jalan panel holds 2nd meet to shortlist bank licence awardees
The advisory committee headed by former Reserve Bank of India (RBI) Governor Bimal Jalan for vetting applications to establish new banks held its second meeting on Monday. The committee is to eliminate applicants which do not meet the ‘fit and proper’ criteria for getting a licence. It is expected to complete the entire process in three months.........
Banks may not accept scribbled notes
......Indian currency notes, arguably, the dirtiest, most soiled and most perforated ones in the world. The Reserve Bank of India (RBI) is reversing the trend by pursuing aggressively its 'clean note policy.' The Central bank has asked all the banks that in the present system of mechanized processing of banknotes, 'inscriptions or scribbling on any part of the banknote would render it to be classified as unfit for reissue from January 1...............
Insurance plan of seven banks hits hurdle
Seven commercial banks are in danger of being tripped up by a tough Reserve Bank of India guideline that stipulates only those lenders with net bad loans below 3 per cent will be eligible to become insurance brokers. The central bank had recently come out with its draft guidelines relating to banks looking to enter the lucrative insurance broking business..........
A mission to secure currency for bitcoin
.......“In India, bitcoin can help solve the problems of the unbanked rural population. It is also a potential remittance tool. We are working with lawyers to draft possible policies that we could present to the RBI and other government agencies by next month,” said Sunny Ray, Director of Business Development at Buttercoin, a free bitcoin exchange that is backed by investors including Google Ventures..........
Fait accompli
..............Coming to policy decisions - the next of which is due on Wednesday - Reserve Bank of India Governor Raghuram Rajan has already made it clear that inflation control will be his priority and that he will attach significant weight to the CPI. These numbers do not seem to make enough of a case to deviate from the path that he started going down with a repo rate increase in September. Thus, .........
Despite high inflation, India Inc for 'accommodative' stance from Raghuram Rajan's RBI
.........Voicing similar concerns, Assocham Secretary General D S Rawat said the increase in WPI inflation released today before RBI's monetary policy review on Wednesday is certainly a big dampener for India¿s macro picture. "Still, the RBI should take a contrarian call this time around and hold the interest rates, if not drop them, since the data suggests that inflation has largely come about riding on a steep rise in prices of food articles, particularly fruits and vegetables," Rawat said..........
Cereal offenders - Ila Patnaik
The RBI governor, Raghuram Rajan, has a difficult task this week. He has to decide whether to keep interest rates constant or raise them — bearing in mind the possible taper of the US Fed's bond buying programme, a decline in industrial production and a rise in inflation. The sharp increase in consumer price-based inflation, to more than 11 per cent, has significantly added to the RBI's headache. The increase in inflation is mainly due to the nearly ................
Curbing inflationary expectations to take precedence
........Taking into consideration the evolving growth and inflation dynamics, RBI may be constrained to raise the repo rate by at least 25 basis points in the next policy review, to anchor inflationary expectations. Agriculture sector growth and increased clearances to infrastructure projects may result in better second-half growth numbers. With concern about the external sector............
RBI has little choice but to raise rates after inflation data
.....Note also that Rajan has said several times that the source of inflation is not important, it’s their effect on inflationary expectations that counts. He has also consistently stressed the need to provide positive real returns to savers and bank deposit rates are still lower than retail inflation. With both ..........
Year 2013: Unexpected reversal of interest rate cycle
.......What wasn’t foreseen was a plunge in the rupee; it fell to an all-time low of 68.85/dollar on August 28. “Despite growth being a concern, with inflation remaining significantly stubborn for most of the year, the policy stance had to shift and calibrate, in terms of addressing inflationary expectations. A large part of this inflation came from supply constraints. In addition, RBI mounted an interest rate defence to impart stability to the highly-volatile currency. A hint of taper from the US Fed...........
Taper not a worry as RBI better prepared
....As far as RBI is concerned, looking at all the inflation data and all the facts, it needs to act to control the inflation but interest rate hike may not be something which will have the desired effect. This is because if you look into the banking system you will find that the deposit growth rates are higher than the credit growth rate. Also, the FCNR deposit that has come into the country has resulted in huge amount of liquidity with the banks and so, the rate hike may not be transmitted...........
The Phailin effect
..... As with any policy that is not reactive, RBI needs to look at what future sources of inflation will be. While private consumption expenditure grew a faster 2.2% in Q2 versus 1.6% in Q1, this is dramatically lower than the 9% levels just six quarters ago; government expenditure, given that 84% of the fiscal deficit target has been used up by October, is going to slow dramatically, indeed this is already visible with government expenditure contracting..........
Time to signal monetary easing
.....Under the circumstances, monetary policy must combat rather than exacerbate the effects of fiscal consolidation. A reversal in its tight stances at this point will relieve both producers and consumers somewhat and contain the spreading fragility. This may sound ludicrous to inflation hawks, but surely monetary policy must be anticipatory and move ahead of the economic cycle? Indications are that the depreciation-caused inflation pressures, which appeared in the past two-three months, have subsided. ........
India’s latest political problem: inflation
....The Reserve Bank of India (RBI) appeared to be the lone voice warning about the perils of inflation even as it faced tremendous pressure from both the finance ministry and industry lobbies to maintain an accommodative pro-inflationary bias. To its credit, RBI did not entirely give in to such pressures but it remained behind the curve for quite a while. In his last public speech as the RBI governor, D. Subbarao pointed out that the economy would have been better served if the fight against inflation “had started sooner and had been faster and stronger”. Now that the tide of public opinion seems to have turned sharply .....
High CAD just Might Return
This
refers to ‘Gold Import Curbs may Go as CAD Falls Dramatically’ (ET, Dec
16). As long as there’s demand, it will be difficult to restrict import
through illegal channels. People will invest in gold as long as high
inflation is seen and easy liquidity is available for the commodity.
Though inflation cannot be controlled in the near term, the RBI may ban
loan against gold jewellery by banks. If import curb is removed without
bringing down inflation or reducing the appetite for gold, we may see
uncomfortable CAD again.
- S KALYANASUNDARAM, Chennai (ET)
- S KALYANASUNDARAM, Chennai (ET)
RBI Alone Can’t Curb Inflation
This
refers to ‘RBI Likely to Increase Repo Rate by 25 bps’ (ET, Dec 16).
RBI alone cannot control inflation since it is an indivisible economic
phenomenon affected by growth and governance. Inflation is bound to rise
because of 2014 general elections and repolling in Delhi. Elections mean exorbitant expenditure and use of black money. The RBI’s quantitative
controls cannot control such resources. Also, inflation should be seen
not only in terms of price rise but also in terms of decrease in quality
and size of products and services.
- A L AGARWAL, New Delhi (ET)
- A L AGARWAL, New Delhi (ET)
Moneylenders come under police scanner
............City Police Commissioner P. Vijayan said the intelligence wing had conducted a preliminary audit of the functioning of these institutions following a spate of complaints from the public, mostly the urban poor and also aged and indigent persons. Most of the errant institutions operated on licences obtained from the Commercial Taxes Department. They charged an usurious rate of interest from their customers, often up to 20 times more than that set by the Reserve Bank of India (RBI), he said..........
RBI's new PIN rule boosts sales of payment solution companies
......The new PIN mandate would affect more than 350 million debit card holders in the country. A recent study by industry body ASSOCHAM showed that the debit card users, growing at an annual rate of 18 per cent, were clocking sales of 69 billion rupees using POS terminals every month. The number of POS terminals in the market has grown significantly in the recent years. As of the end of September, there were 965,000 terminals in use across the country, 46 per cent higher than the 661,000 devices in March 2012, according to data provided by e-payment services provider Worldline India..........
ATM density still low in India
Do you often find yourself standing in queue at the ATM (automated teller machine)? Well, the reason could be there are just 25.4 machines in every 1,000 sq. km in India. This translates into 8.9 ATMs for every one lakh population, one of the lowest densities in the world, according to RBI data outlining global financial inclusion indicators for 2011. In contrast, bank customers in China have access to 2,975 machines in the same geographical expanse, with 49.6 ATMs per one lakh population...............
PIN at your own risk...
....“Though it’s a good rule, it’s not totally fool-proof,” he feels. “Some of my customers actually send their cards, along with the PINs, with their servants,” he exclaims. Ask him if it’s safe to use the PIN in a crowded store and he replies, “It’s difficult to notice it. Most people hide the keyboard and press the number.”...................
What RBI’s NPA move really mean: Govt control on banks should go
..........The report says the RBI will force banks to profile a borrower at the very first instance of a default. Further, a panel of lenders’ consortium will vet decisions taken on loans of Rs 100 crore or more. This move is expected to curb restructuring. Another step being considered is giving incentives to banks which identify potential NPAs early on. The norms being mulled are pre-emptive in nature. They are aimed at encouraging banks to spot an NPA early on and taking necessary measures. But that is not all. They also have pointers to the government..........
Read............
Public sector banks may have to set up insurance broking arms by February
.....What this means is that banks cannot push products of their own group insurance companies beyond 25 per cent of the total annual sales. Most major public sector and private sector banks, such as State Bank of India, Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have promoted insurance companies. The Reserve Bank of India has also released stringent draft guidelines on banks becoming brokers. It stipulated that their net non-performing assets (NPA) should be below 3 per cent......
How 'wilful defaults', write-offs cost banks Rs 1.6 lakh cr last decade
.........RBI numbers showed that the banks added Rs 494,836 crore to their bad loans between 2007 and 2013. During the same period, they reduced NPAs to the extent of Rs 350,332 crore. This was possible because loans worth Rs 141,295 crore were written off; another Rs 90,887 crore were upgraded to repaying loans; and a small part — Rs 118,149 crore — was recovered from defaulters. As Chakrabarty explained, after a technical write-off there is no incentive to pursue recovery...........
Beware of Insurance Agent’s ‘Triple Benefit’ Sales Pitch
This
life insurance product is available for a limited period. It won’t be
available after December 31. Don’t miss the opportunity to get triple
benefits of savings, insurance and tax-saving.” Recognise the sales
pitch? No? Well, you are most likely to hear those lines from an
insurance advisor before the end of the year. The advisor is right: the
three-in-one policy that he tries to sell won’t be available after
December 31, since that is the deadline set by insurance regulator IRDA
to withdraw the existing traditional endowment products. What he doesn’t
tell you is that there will be better ‘customerfriendly’ products
available from the New Year.........
Read - ET
Read - ET
Monday, December 16, 2013
Pitching for limiting Reserve Bank of India functions
Clipping RBI's wings
The UPA government ruined the economy. They have also sown the seeds to kill the otherwise Sound Financial system of the country by appointing FSDC and FSLRC to take away the powers of RBI which has systematically and meticulously built up the Financial System against all odds and earned the well deserved recognition from all over the world to keep the financial system insulated from global financial crisis. If RBI 's powers are clipped further, one can see the collapse of the Financial system at the earliest and the damage cannot be easily repaired . Political agenda if allowed to overlook and supersede the economic agenda, the country can have only a very bleak future.The financial system particularly the banking system is very healthy strong and sound only because the Reserve Bank's approach to have a strong financial foundation keeping in view the growth of the economy and make it a super economy on par with other advanced economies.
- Dr.T.V.Gopalakrishnan
This refers to the report
“Pitching for limiting Reserve Bank of India functions”(December 15). FM’s
hurry to go ahead with measures to implement FSLRC report, sans legislation, is
understandable in the context of the political developments last week. The
motive, namely to complete a pending agenda before a LS Election with
unpredictable results, cannot be faulted.
Coming to the details, the
observations
“It(RBI) is the monetary authority and it will
be a regulator of banks, but all other functions I think should be revisited
and we should ask ourselves whether RBI is the best authority to discharge
those functions or is there any other authority in the system which can take
over those functions or is it necessary to create a separate authority,”
and
“What the FSLRC says is that some
functions of the RBI can be better done by the government and some functions
can be entrusted to new bodies. I think it is a well-argued thought and
well-reasoned thought,”
lack clarity and need further
elucidation.
If RBI has failed as an
institution, why FM is favouring revisiting only select functions RBI is
mandated to do? If the FM’s perception is correct, the need of the hour is
first reforming RBI, or examining the need for such a reform. As regards FSLRC report, the
implementation should follow due process of deliberation and legislation and
proceeding with implementation hurriedly may end up in controversies much
larger in magnitude than those surfaced after such bull-dozer approach in the
cases of NPS and AADHAAR.
- M G WARRIER, Thiruvananthapuram
The origin of runaway inflation - A.Seshan
................I was also one of the authors of the Liberalised Exchange Rate Management System along with OP Sodhani and PB Kulkarni. I was a member of the Policy Group on External Debt Statistics in a two-man committee along with Y V Reddy, then joint secretary in the finance ministry. Second, when the project to prepare the document was initiated, I was approached by RBI authorities to head the History Cell, a prestigious assignment from the professional point of view. Unfortunately, I could not accept owing to other heavy commitments. It is possible to review this massive volume in two parts only selectively. Overall, it is a chronicle well told by a team of experienced officials with good documentation and guided by a distinguished advisory committee of experts. I only wish they had had access to the finance ministry archives also, ................
Reforming Regulatory Environment Need of the Hour - M.G.Warrier
........It’s high time that rating agencies, or for that matter whosoever judges the performance of economies changed their parameters to factor in the inherent strengths and weaknesses of nations. Countries like India with huge resources including human resources and much less consumption needs as compared to developed’ countries and nations which.............
Corporate Ethics and Corporate Governance – Who will guard the guards? : Dr. (Smt) Deepali Pant Joshi
Speech delivered by Dr. (Smt) Deepali Pant Joshi, Executive Director, Reserve Bank of India at the National Institute of Securities Markets, Kolkata on 11th December, 2013
..........Banks constitute the largest financial intermediaries globally and possess stupendous powers of leverage. The RBI plays a direct role in Bank governance through the regulation and supervision of Banking Institutions. This role assumes greater salience viewed in conjunction with the need to ensure systemic and financial stability. Banks enjoy the benefit of high leverage with the downside protection of deposit insurance which weakens their incentives for strong management. They also remain ‘Too Big to Fail’ (TBTF). The current Basel accord lays even greater stress on...............
All that glitters... Dr.Subir Gokarn
............First, all the handwringing about gold that has gone on over the past couple of years has, of course, been motivated by the enormous surge in the current account deficit, to which gold imports were a significant contributor. The reality is that imports accelerated sharply about five years ago and, while they were certainly a factor, the massive widening of the deficit in 2011-12 and 2012-13 was more the consequence of .........
Streamlining policies, procedures and operations relating to NRIs and foreign investors: Overseas looking Glass - Dr.S.S.Tarapore
........With the easing of exchange controls after 1991, there has been a perverse effect as the monolith regulation has given rise to multiple regulators as the powers have devolved from RBI to banks and further with the delegation of powers within each bank. In the upshot the bank customer faces a myriad of regulations which are not standardized. In May 2011, the RBI set up a Committee to review the Forex procedures for individuals both resident and non-resident with Ms. K.J. Udeshi (former Deputy Governor RBI) as Chairman. The Committee submitted its report in August 2011 and a number of procedural hurdles were eased. Nonetheless, there are still a number of unnecessary procedural impediments which need to be remedied........
Raghuram Rajan has failed to curb inflation
Reserve Bank of India Governor, Raghuram Rajan, who was touted as the next "big" thing for the Indian economy, has come in for scathing criticism for failing to tame inflation after taking charge in September. Inflation in the consumer price index rose to 11.24% in November primarily because of a 14.5% rise in food and vegetable prices. "The RBI must realise that in the changed scenario where the various government schemes have raised the purchasing power of rural India, CPI and food inflation are not going to be tamed by making loans costlier...........
FM meets RBI Guv before policy; rate hike near certain
........“We discussed the economic situation and a variety of issues. The meeting was good, cordial. (there was) Exchange of information. Finance ministry and RBI are always in communication,”......
Read - FPJ
RBI pip XYZ to enter semis
RBI Sports and Recreation Club of Ahmedabad piped XYZ Football Club 3-1 in the penalty to make it to the semifinal of the Times of India Baroda Open T20 Soccer Tournament currently underway at MS University Pavilion ground. RBI got fair opportunities to score but they failed to capitalize any of them resulting in the goalless finish during regulation time.........
Interpreting Financial Policies for the Common Person
.........The book is for the “ Aam Aadmi” who has not specialized in finance and economics but is keen to know what makes the economy tick. The author believes that the common person should have a working knowledge of the nature and significance of financial policies. The lay citizen must not be trampled by the juggernaut of jargon. So Tarapore explains important concepts and terms in simple easy- to- comprehend language.......
Obituary
This is to inform that Shri Roshan Lal Sharda, AGM (Retd) left for his
heavenly abode on 10th December 2013. Tiye ki Baithak was held yesterday. He
joined RBI in 1963 and has worked in Jaipur, New Delhi and Ahmedabad
offices of the bank.
- Arora Shori Lal
- Arora Shori Lal
RBI to issue new currency notes
....The new series of Rs 500 notes will also be launched with domination currency notes incorporating the new rupee symbol and without any inset letter. The Rs 500 notes will bear the signature of RBI chief Raghuram Rajan. The year of printing of the notes will be 2013.......
Biggest Ever Slap on Face of Bank Management and IBA
.........I am not sure, how many of our colleagues will benefit from this judgment as the same is loaded with few complex interpretations. However, it is tribute to our senior bank colleagues and their families that they have been fighting tooth and nail. Once again this case belongs to a widow of a banker, who decided to not leave the Bank of Baroda Management and fought upto Supreme Court...............
Read.........
Read.........
Harsh Bhanwala is new Nabard Chairman
....Bhanwala, who had earlier worked as an officer at Nabard, succeeds Prakash Bakshi, who retired as Nabard Chairman in September............
Seminar on banking
The M.B.A. Department at JB Institute of Engineering and Technology (JBIET) conducted a day-long seminar on “Strategies for Sustainability in Banking and Insurance Sectors” last week. The seminar was organised to create awareness among students, academicians and professionals to encourage participation, and promote research in the field, a press release said. Professionals from banking and insurance sectors including RBI Deputy General Manager Rakesh Kumar Rajput, IRDA member M. Rama Prasad, NIRD professor Bijay Kumar Swain and editor of IRDA Journal U. Jawaharlal participated in the seminar and shared their insights with the students and academics. The event was coordinated by MBA Department head P. Kameshwari.
The Hindu
Bank licences to take a while
...........RBI governor Raghuram Rajan had said the banking regulator will try to issue new bank licences within, or soon after, the term of deputy governor Anand Sinha, who is 'shepherding' the process, expires in January 2014. However, the sources said since the process includes the RBI's scrutiny and a screening by an external panel led by former RBI governor Bimal Jalan, the ministry now feels that the issuance of licences may spill over to the new fiscal or could even be after the formation of a new government at the Centre (following general elections in April-May)...........
The widening cracks in India’s banking system
.......How deep is the problem? A full-blown banking crisis seems highly unlikely. But there is reason for concern if economic conditions continue to deteriorate. The results of the latest stress tests conducted by the banking regulator should be released in its forthcoming report on financial stability; they will make for interesting reading...........
Bankers’ leaps
..............The Reserve Bank of India realized its levity, and has renamed the accounts Basic Savings Bank Deposit Accounts. It recognizes that the name is a mouthful, so it has allowed the use of the acronym BSBDAs. It had earlier banned from recruitment as banking correspondent anyone who was in business or who made a profit. It has now realized that no one in a village would..................
Managing the too-big-to-fail
......Banks in India have a number of options to comply with the new loss absorbency requirement. These include capitalising retained earnings (assuming profitability is maintained), raising new equity, or reducing risk-weighted assets, which means reducing trading activity and lending. Banks will also probably try and keep lending off their balance sheets, either by helping Indian companies to issue bonds, or through securitisations. The capital surcharge could therefore......
And now, a desi digital currency in the offing
...........There is even a ‘laxmicoin’, India’s very own digital currency, in the making. Sample this: at least three different companies are in talks with Indian banks and other financial institutions to set up a domestic exchange that will allow the purchase and sale of bitcoins. The most prominent among the companies is U.S.-based Buttercoin, a free bitcoin exchange backed by investors such as Google Ventures. However, according to a senior banking official, this would require, at the least, a number of approvals and a ‘no-objection’ certificate from the Reserve Bank of India as well as co-operation from State Bank of India........
Pesky price rise monster
.......From his corner office on the 18th floor as the RBI Guv overlooks the bulging megalopolis below, he weighs the old debate of growth versus inflation once again. The debate at one level is nearly as old as the Western Ghats, for India's policy mavens have been unable to come up with any worthwhile supply-side interventions. All that the Governor Raghuram Rajan is left with is monetary tools and I am sure he will have to use this instrumentality yet again on December 18 when he comes up with another policy review...............
Global bitcoin conference calls for RBI recognition
....Globally, there are concerns of bitcoins being used as a money laundering channel. In October, the US government clamped down on Silk Road, an online marketplace that sold drugs for payments made in bitcoins. "Anything can be used for illegal purposes. If RBI forms a framework, this will be one of the easiest systems out there that can be monitored by government agencies and there is no way one can destroy the trail of the currency," ...........
RBI to unveil norms for early detection of stressed loans
..............A high-level working committee of RBI officials, reporting directly to the governor's office, will issue a discussion paper on corporate distress and financial restructuring. The move follows a sharp rise in non-performing assets (NPAs), as well as debt restructuring, mostly for public-sector lenders over the past couple of years........
Inflation not reacting to interest rate hikes: K. V. Kamath
.......Delivering the third Ravi Mathai Memorial Lecture at the Golden Jubilee Celebrations of the Hyderabad Alumni Chapter of Indian Institute of Management-Ahmedabad (IIM-A), he said inflation had not reacted to the medicine of repeated interest rates hikes. The Reserve Bank of India is scheduled to announce its mid-quarter monetary policy review on December 18. The untamed inflation would lead us to the basic question of the nature of problem affecting the economy, Kamath said,.....
The high price of food
It is strange that RBI governor Raghuram Rajan has blamed the Agricultural Produce Marketing Control Acts of different states for high food inflation. The APMC Acts certainly need to be looked into, and drastic reforms are needed to the non-transparent way in which auctions are carried out at mandis, but to say they are responsible for high food prices does not make sense...........
Chidambaram blames banks for going 'soft' on loan recovery
..... "Why do you leave blame at the door of the government? The responsibility and therefore the blame should stop with the board of directors. If the NPAs and restructured loans are combined, the distressed loan ratio is close to 10 per cent, or around Rs 5,50,000 crore, as per the figures from the Reserve Bank of India...........
How ‘wilful defaults’, write-offs cost banks Rs.1.6 lakh cr last decade
......Most defaults were “technically settled” at a fraction (sometimes one-fourth) of the principal sum lent out. The rest was written off under oral instructions “from above”. Even though the RBI was in the dark about the quantum of such happenings, the finance ministry was quite aware of this. Its own department, – the Central Economic Intelligence Bureau (CEIB) – kept track of such borrowings, and it was from the CEIB that this correspondent got several details. However, no action was taken against the bank managers, the companies or their officials. Multiply such stratagems several-fold, and you can then appreciate the numbers presented by Chakrabarty in his talk on November 11 this year (see table). It can be seen that just 181 companies accounted for almost 78% (`10,596 crore) of big frauds (of over `50 crore) and involved a period of at least five years for “crystallisation” of the loans as bad debts. Of these,..........
Will the easing pressure on liquidity persist?
...........In any case, RBI seems predisposed towards a neutral liquidity kind of scenario, said a fixed income and bond markets strategist from a foreign bank. The central bank is set to inject Rs.10,000 crore into the system through its 14-day term repo auction on Friday. That said, liquidity might again start to tighten a bit once the new year is underway.........
Microfinance Bill set to lapse yet again
........A lack of consensus has held up the proposed law. The Reserve Bank of India (RBI) is not comfortable with the proposed regulatory structure for microlenders suggested by the legislation and the ministry of rural development believes it is designed to protect microlenders and will seriously hamper the country’s self-help group (SHG) movement...............
Aadhaar-based authentication not mandatory
........Chandrasekhar had asked the ministry, and also raised the issue to RBI governor Raghuram Rajan on 10th October, whether government was proposing to direct all banks to absorb these increased cost of banking due to Aadhaar requirements, and not to pass these costs to consumers in order to safeguards their interests. Chandrasekhar said even earlier experiments with Aadhaar-based biometric ATMs during 2004 and 2007 had failed, as it proved to be a high-priced proposition for implementation.....
Premium on continuity
Much of what Finance Minister P. Chidambaram and RBI Governor Raghuram Rajan said at the Economic Conclave 2013 is not new. There is, however, a special contextual significance. It is for the first time after the recent State Assembly elections that top policymakers of the UPA government are seen reiterating the broad contours of the government’s economic agenda and policy goals. Considering that the Congress party heading the UPA lost heavily in the elections and faces an equally grim challenge in the general elections barely six months away, the purpose of such reiteration is not quite clear. .........
Cheque forgery: Bank told to pay victim 7.2 lakh
.....In his complaint lodged with the forum in 2009, Ramker Jaiswal said some unknown person had withdrawn Rs 1 lakh from his account by encashing a forged bearer cheque at the Ambernath branch of Canara Bank. He said that the cheque was cleared though the signature on it looked different from his own, which was available in the bank records. .......
Nine reasons for getting an income tax notice
.......In recent months, thousands of taxpayers have been served notices after discrepancies were noted in their tax returns or their TDS details. This sudden rise in the number of tax notices is not because people have stopped paying tax or filing their returns. It’s just that the tax authorities now have an integrated database on taxpayers and can track all financial transactions. Here are some common reasons for getting a notice. ..............
Read - TOI
Friday, December 13, 2013
Decline in investment stunting India’s growth: D. Subbarao
No escaping tight money policy - Dr.S.S.Tarapore
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