...............Persistent inflation reinforces inflation expectations. While maintaining that there is no room for complacency, the RBI feels it has enough reasons to wait and watch. For one thing, there is evidence that vegetable prices have started coming down. Second, the disinflationary impact of stable exchange rates will ease the pressure on prices. Finally, the lagged effects of monetary tightening since July should help. The decision not to raise the rates is obviously a debatable one. There is no room whatsoever for complacency...........
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.
Friday, December 20, 2013
Has Raghuram Rajan succumbed to Congress led UPA's pressure?
.......So what has happened to the man who believed, ‘If you can keep your head when all about you...Are losing theirs and blaming it on you...If you can trust yourself when all men doubt you’? What has happened to the man who proclaimed to take necessary decisions even if he does not receive ‘facebook likes’ for them? Has India’s central bank governor succumbed to government pressure to save his position? Does the RBI governor feel insecure? Why is the governor not adamant anymore over economic reforms? What is withholding the former Chief Economist to Government of India (GoI)?.........
A balancing act
......the apex bank has softened its stance on inflation and Rajan is perhaps losing his credibility in arresting inflation. Sometimes, no decision also amounts to a good decision. Remember, ........
RBI hope on prices not shared widely
.....Defending its stance, RBI said, “There are indications that vegetable prices may be turning down sharply... In addition, the disinflationary impact of recent exchange rate stability should play out into prices.” However, economists still feel WPI inflation would remain elevated in the coming months. “Even if we go by RBI’s presumption of a likely decline in food prices, the remaining impact of rupee depreciation and continuous adjustment in diesel prices will keep the inflation high,”.........
Its too early
My View on "Limitation of RBI’s monetary policy in taming infl...":
It may be too early to come to conclusions about RBI’s (Read Dr Rajan’s) intentions while leaving the rates untouched this time. Perhaps, this may be just to give signals to speculators that RBI doesn’t go by market gossip. RBI has never claimed changes in base rates alone or even a combination of traditional Monetary Policy measures in the central bank’s armoury can manage inflation. Every time RBI’s policy statements contain or are followed by ‘expectations’ from GOI on various ‘possibles’ from fiscal policy angle. One of the objectives of truncating RBI and making the central bank an organisation handling only Monetary Policy and Financial Sector Regulation is to take out responsibilities now with RBI which are giving headache to Finance Ministry.
- M.G.Warrier
India prepared to deal with Fed taper: Chidambaram
.....Markets have already factored in the decisions of the US Federal Reserve, the finance minister said in a statement. To highlight that the government and the Reserve Bank of India (RBI) are working together, the finance minister said he has spoken to RBI Governor Raghuram Rajan on this issue..........
Cabinet proposal soon to constitute 7th Pay Commission for revising salaries of 50 lakh employees
....According to information available, the government's intention to constitute 7th Pay Commission before going for polls is clear as it has made provision of Rs 3.5 crore in the second supplementary demands for grants in this regard which was approved by Parliament in the just concluded Winter Session. Earlier in September this year, Finance Minister P Chidambaram had announced that Prime Minister Manmohan Singh has approved setting up of the 7th Pay Commission...........
SMEs playing key role in development of social, finance sectors: RBI General Manager
........."The small and medium industries are playing a vital role in the development of financial and social sectors. "Reserve Bank, along with both the state (Andhra Pradesh) and Central governments, is implementing special programmes for encouragement of SMEs," said RBI General Manager (rural planning and credit) R S Das. He was addressing a conference organised by RBI, Hyderabad, here yesterday. Bankers, industrialists and district officials participated in the event. "The loan sanction has been increased to small and medium industries, but the sector is encountering certain issues which are being addressed by the Prime Minister's Advisory Committee and discussions are going on," Das said.............
PINching the so called safety measure - P.Aravind
Recently RBI have stipulated that we type PIN when we use our Debit Cards at Point of Sale (Shops, Restaurants etc). I accept this is to protect the interest of the customers, but it is also exposing our secret PIN to public. While some shops gave us access to the Swiping Machine to type our PIN in privacy, there are some places like large restaurants, the waiters take our card and also ask for PIN to be given to the Cashier for making payments. In some places the cashier asks us to spell the PIN loudly across the counter while others watch. Now a days we read in newspapers about cloning of debit/credit cards. We are being constantly advised not to share our PIN with anybody, (even with our spouse). Are we not exposing ourselves for frauds by publicly sharing our PIN? Is there no other way to protect our interest? Hope RBI will have a rethinking on this so called safety measure.
- P.Aravind, Former Regional Director
BS Banker of the year: Aditya Puri
........The country's second-largest private sector bank, the jury felt, had benefited hugely from Puri's "common-sense banking" - keep things simple, never allow retail customers to over-borrow, and refrain from lending to companies that have over-leveraged themselves. The jury, headed by Subir Gokarn, former deputy governor of the Reserve Bank of India, also said the bank's greatest strength was its ability to maintain a consistency in quarterly credit growth, across credit cycles..........
Reserve Bank of India to issue new currency of various denominations
.......As per the information provided by the RBI, the organization would shortly issue Rs 100 domination currency incorporating the new rupee symbol and without any inset letter. All the new bank notes would bear the signature of Raghuram Rajan, Governor, RBI, India. The year of printing of the notes would be 2013...........
IDFC not eligible for bank licence as fgn holding exceeds 50%
..."The Board of Directors on December 19, passed a circular resolution approving postal ballot process for seeking an enabling resolution from the shareholders to authorise the board...To keep reducing ceiling limit of the foreign shareholding from existing 54 percent to 49.9 percent in various stages...," IDFC said in its filing. It further said that in case it does not receive the bank licence from RBI, it "will take steps to reinstate the ceiling on the foreign shareholding back up to 74 percent. The RBI guidelines require that the eligible promoters of a bank should to be 'owned and controlled by residents'.......
Rising non-performing assets a concern, says Andhra Bank CMD
..........“The NPAs will continue to impact the third quarter. There are some more slippages left on the NPA front in the current quarter. We do not know about the fourth quarter though.” Going by the broad indications of the Reserve Bank of India, the bank was not keen on lending to commercial real estate..........
RBI’s new NPA norms: the spirit is willing, but flesh is weak
.......Perhaps the RBI’s intention is not to just allow restructuring of loans, but the restructuring of companies since it is advocating leveraged buyouts (LBOs). However, even that is not easy for listed companies because of a whole lot of norms put in place by the capital markets regulator. A buyout will not only mean buying the promoter stake, but also that of the public, in which case ........
Kodagu’s PLP for 2014-15 unveiled
The Potential Linked Credit Plan (PLP) prepared by the National Bank for Agriculture and Rural Development (NABARD) for the year 2014-15 has been put at Rs. 3.035 crore. The PLP was unveiled at the Corporation Bank—lead bank for Kodagu—on Thursday by an official from the Reserve Bank of India, Anand Babu. Credit projections to the agriculture sector are estimated at Rs. 2,666 crore, including Rs. 1,888 crore for crop loans.......
More banks hawk loans gone sour
...........According to Reserve Bank of India (RBI) data, gross NPAs of commercial banks ballooned from Rs 94,121 crore (2.36 per cent) in March 2011 to Rs 236,245 crore (4.2 per cent) by end-September 2013. There are growing signs of banks becoming ready to sell some of the bad loans in their portfolios, to keep on holding these in the hope of realising value. The pace of growth ........
Taxes deflate inflation bonds
........All in all, the tax department takes back a part of the benefits that the government planned to give. One hand of the government gives, and the other hand takes back a part of it. This defeats the very purpose of providing relief from inflation. Inflation affects personal expenses, which are met after taxes have been paid. The net increase in income has to be higher than the inflation rate for the bonds to really protect savings. One wishes that ..........
Rs2 crore worth blood diamonds sneak into Gujarat from Nepal
In the wee hours of Wednesday, the Directorate of Revenue Intelligence (DRI) sleuths made a shocking discovery when they pounced on a family of smugglers ferrying, blood diamonds worth Rs2.12 crore, near Memco on the city’s outskirts. They also found 1.5 kg gold worth Rs50 lakh with the smugglers. This discovery couldn’t come sooner. For on Wednesday, RBI governor Raghuram Rajan said curbs on gold import would incentivise smuggling of the precious metal, while he was addressing the RBI’s third mid-quarter review of monetary policy...............
Thursday, December 19, 2013
Raghuram does a Rajan
RBI gets its priorities right - A.Seshan
........What is important is the strong message coming through, both in the press release and in the interaction of the governor with the media, that the RBI is not soft on inflation. There is a reassuring statement that, if the expected fall in inflation does not take place, the central bank will take appropriate action even before the next review. Though growth is mentioned, there is not much focus on it. In fact, comfort is indirectly derived from the fact that slower growth should contribute to some relief in inflation!..................
Raghu Leela...
We
are trying to calibrate monetary policy primarily to target inflation
in an environment when the economy is weak. So, when we take action, we
have to be convinced. That’s why we were waiting to take action. When
there are a lot of uncertainties, you want to wait for more data to get a
sense… This is precise calibration of action. Rate decision does not
depend on a particular indicator but a variety of indicators. We need to
see substantial softening of headline inflation as well as some
momentum in the right direction of food........
Read - ET
Read - ET
Philanthropist Chaurasia wants to start a charity hospital
NAGPUR: Jaiprakash Chaurasia, a retired employee of the Reserve Bank of India, for whom philanthropy is passion, is now proposing to start a charitable hospital for the needy. "I have identified a land on the outskirts of the city, on Kamptee Road, and want to start a medical facility where doctors from the city could offer services," he said. Talking to TOI on Tuesday after returning from New Delhi where he received the Rashtriya Seva Ratna award from a non-profit voluntary organization Vishwa Sewa Parishad on Sunday, he spoke about plans to start a hospital. ............
Ooty to host workshop on mountain development
........On the occasion, the Deputy Chairman will present the Nilgiri Conservation Award to Dr. K. C. Chakrabarty, Deputy Governor of RBI and Dr. M. Narendra, Chairman and Managing Director, Indian Overseas Bank for implementing the unique and successful financial inclusion plan for the primitive tribes of Nilgiris.........
Aspects of foreign exchange, export discussed
...........Speaking on the occasion, Chief General Manager in charge of Foreign Exchange Department (Central Office), Reserve Bank of India (RBI), Mumbai, RN Kar said such awareness programmes in the name of town hall meetings must be taken as an outreach programme for making effective policies. Kar spoke at length about the various aspects of foreign exchange business and the incentives available to the exporters across the state. Regional director, RBI (Bihar and Jharkhand), MK Verma, while speaking on the evolution of foreign exchange business and various liberalized measures and facilities available to the exporters and manufacturers in Bihar, said the RBI being the regulator and supervisor of the Indian market is entrusted to oversee it...........
Against the current
......The policy decision indicates that the RBI's internal models do not expect this to happen soon. The internal assumption must suggest that demand will stay low and will not rise for another couple of quarters, by which time monetary policy contraction will have had an effect. When the RBI adopts a proper monetary policy framework, which Rajan has asked Deputy Governor Urjit Patel to work on, we can expect to see a clear inflation target and a way to get there. .........
RBI holds rate for now but warns of future hike
Bankers rule out rate cuts
.........“It really hurts the depositors, and we would not like to do (cut rates) that. Our rates are still higher than what they were on July 15, I see no immediate response towards the rate cut.”.............
Don’t Expect Central Bank’s Breather to Last
......Indeed, the phrase Mr. Rajan used in his remarks was “wide bands of uncertainty.” The RBI said it will act if there isn’t a “significant” reduction in headline inflation in the next round of data, or if core inflation doesn’t fall. In that case, the policy response will be “appropriately calibrated,” Wednesday’s statement said. No guesses as to what “significant” and “appropriate” will actually mean for the central bank’s purposes. Consumer and wholesale inflation data for December are scheduled to be released Jan. 13 and 14, respectively. Recent data releases have included sharp upward revisions to previous months’ inflation figures. The RBI’s suspicion is that price pressures are close to abating on their own. Recent high inflation largely is due to high vegetable prices, which in theory aren’t that affected by central-bank policy..............
RBI ready to act on off-policy dates: Guv
RBI
Governor Raghuram Rajan shied away from acknowledging that his decision
to leave things unchanged was a brave move, pointing out that in the
British comedy “Yes Minister”, ‘brave’ was the euphemism used by
bureaucrats to describe a foolhardy move............
Red - TOI
Red - TOI
Gold import curbs will spur smuggling: RBI
..........“I would have been happier if we had the current account deficit (CAD) that we have without significant curbs on anything, including gold. I think that is our aim. I think, we should aim to have a sustainable CAD without any distortions, like removing incentives for smuggling of gold [the 10 per cent import duty on the yellow metal has led to a spike in gold smuggling],” said Dr. Rajan. He was addressing a press conference to announce the RBI’s third mid-quarter review of monetary policy.......
Sensible pause
Given that the signals on inflation are very conflicting, RBI has done well to decide to wait for another month or so before it takes any action on hiking either the repo rate or CRR level—the latter is more likely to result in borrowing costs rising. As..........
India Inc lauds Rajan, says 'brilliant forward reading'
......."RBI's decision to keep the repo rate unchanged after two successive increases comes as a welcome breather. Ficci has been urging RBI as well as the government to bring the focus back on growth which has taken a serious beating.",....................
Why waste a rate hike?
.....Since weak growth momentum has restricted RBI’s degrees of freedom in using interest rates to fight inflation, it is also important to use the limited room to synchronise domestic policy action with evolving global dynamics. With possibility of tapering by the US Fed remaining high in January, a rate hike around the same time offers tactical advantage by bolstering India’s preparedness for the unwinding of liquidity stimulus. So, why waste a rate hike now?
Equity, bond markets cheer ‘Santa’ Rajan
Equity and bond markets saw in Wednesday’s RBI policy review a veritable Christmas gift and in governor Raghuram Rajan a lovable Santa. Equity markets that had been on a downward ride for the last six straight sessions and were anticipating a third straight rate hike, were pleasantly surprised by RBI’s no-hike policy. After ..........
Raghuram Rajan takes a calculated gamble by not hiking rates
........By every yardstick, RBI’s decision to hold on to the current policy rate despite rising inflation is a close call. Instead of going for an all-out attack against inflation and bottling inflationary expectations by being proactive, Rajan has preferred to play a game of catch-up. Not too many analysts are expecting a significant reduction in inflation numbers—both retail as well as wholesale—in December. If indeed that is the case, Rajan is merely delaying the inevitable. An action-less policy at this point is not in sync with his stated stance against inflation. Moreover, the time was ideal as there would not have been an iota of political opposition to a rate hike at this juncture............
Limitation of RBI’s monetary policy in taming inflation
..........The RBI measure to increase inflation in the past has only retarded growth. The RBI needs to understand that even if inflation comes down in near future, it may be because of factors such as better supply of foodgrains post-kharif crops. Given the policy measures adopted by the government during recent years, it is better that we learn to live with new normal inflation or rethink our policy measures. .......
Governor’s Master Stroke Defies All Expectations
.....The
hike in interest rate was expected as inflation has been stubbornly
high. Let us understand why it makes a lot of sense despite high
inflation and desperate need to tame it. The primary contributor to
price rise is food inflation which has been in double digits for 20
months now. The Achilles heel is vegetable prices, hurting the common
man. The other large contributor to inflation has been fuel prices. Yet,
the fact is RBI’s monetary policy can achieve nothing as far as food,
vegetables or fuel prices are concerned...........
RBI to keep vigil on inflation
...The
central bank admitted the decision to maintain the status quo had been a
close-run thing but that the situation merited a pause in the policy
tightening war on inflation. RBI will be vigilant on the inflation front
and won’t hesitate to take action whenever it deems necessary. “Current
inflation is too high,” it said in a release on Wednesday. “However,
given the wide bands of uncertainty surrounding the short-term path of
inflation from its high current levels, and given the weak state of the
economy, the inadvisability of overly reactive policy action, as well as
the long........
Read - ET
RBI kept key rates unchanged to push growth, says Montek Singh Ahluwalia
......."Keeping in mind, the need to give the economy stimulus and not wanting to take too hasty a step, the (RBI) Governor has surprised the markets. Markets were expecting a hike," Ahluwalia told reporters here. "He (RBI Governor Raghuram Rajan) is expressing confidence that price inflation will come under control and let's hope that he is right. If he is right then definitely in retrospect it will be proved to be very good decision,"..........
PSU banks' staff go on strike; operations hit
Divide to rule
My View on "CURSE OF ’13 OFFERS A FEW LESSONS":
Institutional reforms are not easy come by in a world ruled by hypocrisy. Banking sector is in dire need of governance reforms. It is time to see whether the CMD posts in PSBs need separation of Chairperson. Time to see how the SBI and other private sector banks with non-executive chairmen are performing with division of functions between the Chairman and Managing Director and draw lessons. It is also time to see the effectiveness of the various committees of Board in Banks are functioning in terms of their roles and responsibilities.
- Yerram Raju
Making NPAs perform
......... Though some part of this exists even today—such as the provision to transfer part of the borrowers’ equity to the banks or to put it in an escrow account to allow for change in management control—RBI is strengthening the provisions by, in some cases, codifying them. Wilful defaulters—and it is up to the banks to classify lenders in this fashion—will not be eligible for restructuring and, if an exception is to be made, each and every bank in the consortium has to approve this. Here’s the added twist......
RBI should have given spl push to engineering exports: EEPC
........“RBI should have given a special dispensation of interest rates to exports, which are key to maintaining stability on the external sector parameters like current account deficit,” EEPC India chairman Anupam Shah said...........
Bilateral Currency Swap Arrangement Between Reserve Bank of India and Bank of Japan
......The terms of the Agreement have been agreed between the Indian and the Japanese side in this regard. The Government of India has authorized Reserve Bank of India (RBI) to sign the agreement..........
Government to conduct debt switch mostly with insurers
..........RBI Deputy Governor H. R. Khan said the central bank was considering dealing directly with insurance companies, which are traditionally buy-and-hold investors and would not be as much affected by falls in bond prices. "A large number of long-tenure bonds are held by insurance companies," Khan told analysts in a conference call on Wednesday. "So they will be the ones who will be switching, and not the banks so much.".......
RBI surveys households in Bhopal on impact of inflation
....... "We have been provided with a questionnaire by the RBI for the door-to-door survey in Bhopal". Also, RBI wants to know impact of existing inflation and how it would affect all in three months from now. A few of the questions asked by the surveyors were how much your expenditure has gone up? and what is the difference in your foodbill and expenditure?...........
Tightening rules
....Asset deterioration of banks has been perceptible for some time now and by specifying the formation of a lenders committee, the RBI is clearly requiring a timeline from borrowers to settle their outstanding debt. While it would be officially acceptable to call the situation stable for now, the RBI has been pre-emptive in tackling any inherent instability in the banking system by changing the solution for ..........
‘Please tell me your ATM PIN’
........Retailers to restaurateurs, traders to merchants and most importantly customers are finding it difficult to incorporate the change. The most glaring problem is that of debit card holders being asked to share their PIN at merchant outlets where the cashier’s counter is not easily accessible..........
The GenNext currency
..........Bitcoins got visibility in India when bitfilm used it for the voting process and as prize money in its 13th International Digital Film Competition in Bengaluru. Reports talk of 30000-strong Indian BTC and e-wallet owners participating in TOR forums on BTC. CoinMonk organised India's first bitcoin conference in Bengaluru (December 15) where investors/enthusiasts/bankers gathered to convince the government and regulators that the bitcoin ecosystem would be a valuable economic innovation for unbanked India and for remittances. They talked of India's laxmicoin, the Rs.1.20-crore bitcoin transactions, and hoped RBI would form policies about it......
Shunted out of top 10 banks list, 'displeased' HDFC Bank wants rankings overhauled
..........HDFC Bank also sought to differentiate large or commercial banks with cooperative or small banks while working out rank for any bank as later normally have less presence or branch strength. "Cooperative banks should be put in separate category (for ranking purpose),"........
Bitcoin’s challenge
......Bitcoins can be mined by anyone who owns a computer and devotes machine time to running an algorithm which computes data blocks representing value. Like conventional currencies, it is built on the notion of scarcity. In this case, the difficulty of computation and the physical limitations of computer hardware create scarcity. ..........
Over 6,000 financial frauds in 2013: RBI
The Reserve Bank of India has reported 6,034 cases of frauds involving credit cards and debit cards in 2013, Milind Deora, minister of state for communications and information technology said Wednesday while answering questions on cyber crimes in Lok Sabha.......
Read - ET .......
Wednesday, December 18, 2013
CURSE OF ’13 OFFERS A FEW LESSONS
..............Although
Rajan’s regime had just four months this year, it has delivered on some
of the promises made on September 4 when he took charge, including a
repackaged interest rate futures. Silencing experts from airing their
opinion on interest rates, inflation, yields and the currency movement
may yet turn out to be his best achievement this year since their
unstoppable opinions harmed the markets more than helping it. Will he be
tested once a new administration comes in after general elections?
Read - ET
Should the RBI powers be diluted?
The government has to get its priority right. It has to take immediate steps to tackle issues related to supply chain bottlenecks, inflation, subsidies and the deficits. Blaming the RBI and trying to clip its powers is not the solution to solving India's economic problems. Should the RBI powers be diluted? Let us know your comments or post them on our Facebook page / Google+ page.
RBI Guv Rajan May Want Mor
Mor returned
from an active social service to add his might to RBI Governor Raghuram
Rajan’s efforts to hasten banking licence process and look at ways of
having financial inclusion. The chances of Mor becoming an active banker
is ruled out, but he may remain in the regulatory circles for a long
period.
ET
ET
When Modern Payment Systems Are the Problem
..............The report is of interest to India for three main reasons: the Reserve Bank of India’s emphasis on financial inclusion when granting new bank licenses; Indian banks expanding their use of electronic payments and non-branch interaction with customers; the Indian government’s focus on promoting direct electronic transfer of social benefits. The five European nations of the study are smaller than India in size and population, but they’re ahead technologically and in financial services market development. Nonetheless...........
Bank account holders pay attention to the new RBI mandate over cheque books
Reserve Bank of India governor is on a mandate spree. First, guv introduced the regulation that mandated ATM pin to be entered while one is shopping with her/his debit card. Second, Rajan launched another policy, which shall be effective by 1 January, which prohibits one from scribbling over currency notes. Now comes another regulation at the behest of customers. Effective from 1 January 2014, all banks are required to abide by new cheque book system. These new cheque books shall have ..........
Finance Minister P Chidambaram battles RBI governor Raghuram Rajan
The tussle between the incumbent RBI governor Raghuram Rajan and Finance Minister is out in the public now with both sides criticising each other openly in front of national media. Just days ago Governor Rajan had criticised government of delaying key reform bills in the winter session of the parliament. Rajan held that any further delay would jeopardise the economy irreparably. Finance Minister P Chidambaram on Saturday pitched for limiting the Reserve Bank's mandate to monetary policy formulation and banking regulation, and for delegating its other functions to government or other regulators........
When RBI Made FM Walk Alone
How often does a
nation get to see its Finance Minister and the central bank chief
express their differences in public? Differences at that level is
nothing new, but the manner in which the exchange between the P
Chidambaram and former Reserve Bank of India Governor Duvvuri Subbarao
took place was strange. On that count, 2013 was quite historic................
Read - ET
Read - ET
Moody's thumbs-up for Rajan; calls Subbarao monetary policy ineffective
A day before the Reserve Bank of India’s mid-quarter review, central bank Governor Raghuram Rajan drew kudos from Moody’s Analytics for his monetary stance. The research arm of New York-headquartered Moody’s was critical of RBI’s monetary policies in the past three years, though it did not directly take the name of previous Governor D Subbarao. “Indian monetary policy over the past three years has been at best ineffective and at worst counterproductive, but this is changing under the new central bank head,” said Moody’s.......
‘Application-oriented research needed to stoke innovation’
......Even currency paper and printing machines were imported at enormous cost, a situation he had tried to correct during his stint as director on the RBI Board a few years ago. The Department of Space, he recalled, achieved some success with indigenous technologies and gained from the embargoes placed by the West in the 1980s and the nineties. “There were many machines that we needed but couldn’t buy because of various embargoes. ..........
RBI's thumbs-down for exporters
...........A committee on this issue was set up last year, headed by G Padmanabhan, executive director, RBI, which gave its report in May with recommendations. In addition to inclusion of exports in priority sector lending, the panel recommended an extension of the swap facility, setting up a nodal agency for borrowing in foreign currency from abroad on a pool basis and further lending to these companies in India at competitive rates. “RBI found these recommendations too lenient towards the exporting community and have decided to scrap it,” a senior commerce department official told Business Standard.........
Bank unions to go on strike today
..........Ashwini Rana, general secretary of National Organisation of Bank Workers, said IBA held discussions with UFBU on December 14 on wage revision. After a lot of discussions, IBA stated that they would be able to offer an increase of five per cent over the wage expenses. "Since their offer was too low and not acceptable to the unions, it has been decided to go ahead with strike as per the schedule," Rana said. The wage revision of bank employees was due from November 2012.........
IBA Snubs Senior Leaders of UFBU by Offering 5% Hike - Is it High Time to Pass the Baton to Younger Generation ?
.......GoI feels that paying reasonable salaries to bankers will lead them empowered to raise their voices on other matters like corruption, NPA etc. and thus pay them low so that poor talent is attracted to banks and they can enjoy the fruits of public money. This is on similar premises wherein politicians love to keep large population below poverty line so that they keep on struggling for day to day requirements and find no time to raise voice against the corrupt political class. The future does not seem to be rosy for bankers, as in the given circumstances, it is unlikely that bankers can expect increase of over 12% or so inspite of strikes for few days. There is a need for drastic steps (even beyond strike) - may be throwing of the old unions. Young Bankers have to start a new movement as old bankers have already resigned to their fate. Like AAP of Kejriwal, new innovative methods have to be adopted and the free fund flow of crores of rupees to existing unions has to be cut by starting a movement for change. Till new leaders emerge with self-less interest, bankers need to suffer as our poor population is suffering.........
Read......
‘Cash management services of banks need a relook’
The Reserve Bank of India (RBI) has asked the Indian Banks' Association (IBA) to set up a working group to look into all aspects relating to outsourcing of cash management services following the rise in instances of looting of ATM cash vans. In a letter to the IBA, the central bank said that the issue of outsourcing of cash management services needs to be examined in greater detail, especially with the risks involved with such activity............
Taking stock
Private sector banks have more than doubled their office count in the country since 2007. In comparison, the number of offices of public sector banks increased by 45.5 per cent during this period. Foreign banks, with restrictions on their branch expansion, widened their office network in India by 22.8 per cent in the last six years. However, public sector banks continue to have the largest share, 69 per cent, in the total number of offices of commercial banks in India..........
RBI kicks off reform process to curb bad loans
........The apex bank has sought comment from the public on the discussion paper in next fortnight, after which the final guidelines will be issued, a central banker said, requesting anonymity. “Our intend is to speed up the process of resolution of bad assets,” the bank official said in an informal briefing ahead of releasing the paper. “If you delay dealing with it, the problems will magnify.”...........
Give incentives to banks for timely taming of NPAs: RBI paper
.......In a discussion paper on non-performing assets management, the RBI proposed "early formation of a lenders' committee with timelines to agree to a plan for resolution", among other aspects. Lenders coming together to salvage an account timely and collectively shall be incentivised through "better regulatory treatment of stressed assets", while in cases where a resolution agreement cannot be reached, there shall be accelerated provisioning, the discussion paper said..........
India's Rajan in tough spot as stagflation risk emerges
.........."The data pose the now familiar dilemma for the central bank. While the direct effect of interest rate hikes on inflation is debatable, particularly when food prices are such an important driver, we very much doubt Dr. Rajan can be seen to be sitting on his hands at this stage," Robert Prior-Wandesforde, director of Asian economics research at Credit Suisse wrote in a recent note............
The central bank will walk the talk: Radhika Rao
.........Further, an RBI committee's report on the monetary policy framework is the other big factor to watch. In the past, the central bank has faced criticism for trying to do too many things, often with conflicting objectives. In contrast, Governor Rajan has shown a preference for a single objective, that is, 'low and stable inflation'. Nor does he see a long-term trade-off between inflation and growth. Hence, the likelihood of a calibrated and gradual shift to some form of an inflation-targeting regime is high. An immediate move, however, is hamstrung by significant fiscal deficits. Despite the fiscal responsibility Act, adherence to targets has not been taken seriously, with the exception of the last financial year..........
India Inc gloomily set for Rajan rate rise
.........."The thinking is the rate hike will be limited to 0.25 per cent, as India Inc is already complaining about high rates," says Prabal Banerjee, president, international finance, of the Essar group. Chief financial officers (CFOs) say the RBI governor had already indicated, on December 11 in Delhi, that the priority was to find a balance between control of inflation and economic prices. Many industrial corporations are already complaining about high interest rates because ............
Getting Volcker’s Rule to India
.......Volcker’s Rule, though not very tight in scope, should be taken in the right spirit and structures built to ensure that banking should be free from high risk-taking. Trading activity is within the preserve of fund managers, investment banks, hedge funds and the like and should not be mingled with core banking where savers put their money based on an assumed safety of principal and interest. This should never be compromised ..........
Time to hold nerve, and rates
.........While we agree completely on the importance of anchoring inflation expectations, we think it is difficult for RBI to achieve this in the near term when higher inflation is being driven by food prices and not by demand overheating. The role of the government and administrative policies (e.g., ensuring smooth logistics, curbing hoarding, breaking cartels of traders and middlemen, ensuring strategic imports) will have far greater influence.........
Rajan Comes to the Mountain of Bad Loans with Carrot & Stick
Reserve
Bank of India governor Raghuram Rajan is adopting a carrot-and-stick
approach in draft proposals aimed at cracking down on rising bad loans
that have crippled the financial system and blighted the chances of an
economic recovery. Among the extensive measures the central bank is contemplating...........
Read - ET
Read - ET
RBI draft norms for bad loans require a mindset change:SBI
.........There is going to be a total change of culture, there will be strict discipline. This is something that we really require in the banking system today.\\\\\\\\\\\" She added that this move will not only require a mindset change but also technology changes. The existing personnel will need to be trained more to recognise the accounts (NPAs) at the stress stage itself. She is confident that the bank if capable of handling the changes needed with the help of existing staff. However, she emphasises more clarity is required on time line front...............
Jaya tells Finance Commission not to fall into political trap
.....“The state urgently needs fiscal support at this crucial stage of development. Any tapering of transfers at this stage would adversely affect long term growth prospects,” she said at a meeting with the 14th Finance Commission headed by former RBI Governor Y V Reddy, which is on a two-day visit to Chennai. Referring to the report submitted by the Expert Committee headed by present RBI Governor Raghuram Rajan to evolve criteria for identifying backward States and for devolution of funds from the Centre to such states, CM told the Commission to “reject outright” the report..........
Kotak Mahindra launches financial inclusion programme
......."We are taking concerted efforts to bridge the barriers to formal banking system across the country through financial inclusion. Kotak Samridhi takes us a step closer towards inclusive banking as it introduces farmers of village dairy societies in West Bengal to the formal banking channel,"...........
Kotak Mahindra Bank plans to open 600 new branches
.........Out of the 600 odd branches, 45 percent of them would be in the rural and semi-urban areas, he told reporters here today at the launch of `Kotak Samridhi' scheme for milk producers in West Bengal. He said that the bank's CASA ratio was 29 per cent and the year-on-year growth was 25 percent..........
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