Corporates need to spruce up risk management: Gopinath

Reserve Bank of India Deputy Governor Shyamala Gopinath has cautioned that in an open economy like India , there is need for greater recognition of currency and interest rate risks and the risk management in banks and corporate firms need to gear up their risk management practices further in this area. “It is our experience that a large number of corporates still do not have well-designed risk management policies and practices to take care of volatile exchange rate movements and give scant regard to tail risks. There is also need for greater disclosure and adherence to accounting standards for financial instruments,'' said Gopinath who was addressing .Annual Conference of the Foreign Exchange Dealers’ Association of India (FEDAI) on Friday ``Approach to Capital Account Management - Shifting Contours''. There is also need to more comprehensively qualitatively assessment of of India's external liabilities to encompass liabilities of subsidiaries and branches of Indian financial institutions overseas, not in nominal terms but through a risk-based approach on the probability of recourse to parent bank liquidity support, said Gopinath. However, with focus on capital flows on a net basis, it is often not realized that portfolio flows were $174 billion a year over last three years on a gross basis, far outstripping FDI flows at $37 billion a year. In gross terms, over the last five years (2005-06 to 2009-10) FII flows have accounted for 47% of the gross capital inflows to India as against 9% for FDI inflows. This of course has more to do with the nature of these flows with a much larger churn for portfolio capital. High gross flows make economy more susceptible to such reversals and as such we need to continue to maintain adequate buffers, said Gopinath. In the current context, a high current account deficit (CAD) has been absorbing much of the capital flows in aggregate terms. The concerns, however, arise on account of the composition of flows coupled with lower order of reserves accretion and faster increase in external liabilities, added Gopinath. The enhanced exposure to external liabilities is reflected in the sharp increase in the ratio of external debt to foreign exchange reserves from 89.1% of GDP in 2008-09 to 99.1% as at end June 2010. Moreover, the ratio of short-term debt to reserves has increased from 17.2% to 21.0% during the same period. Another issue that may come up going forward relates to repayment of FCCBs. The redemption pressures on account of FCCBs would start building up from 2010-11 and peak in the next couple of years till 2012-13. She further said that there have been some concerns on the declining FDI flows in the recent past though as stated earlier it has little to do with the regulatory framework per se except in certain sectors. The moderation in FDI inflows to India during April-November 2010 has been driven by sectors such as construction, mining and business services.

Technology not reaching customers: Chakrabarty

RBI Deputy Governor Dr.K.C.Chakrabarty has said the benefits of technology adopted by the banks have not percolated in terms of cost, speed and convenience of the customer. The banks should move towards empowering the present day customers of information or digital age by greater choice, greater access, and better, faster, more efficient modes of delivery and service. "Customers are not going back to the old ways of banking. They are moving forward. If the banks do not complement their speed, the customers will pass by,'' said Chakrabarty.

Diesel price may be freed if inflation falls

Dr. Rangarajan, a former governor of the Reserve Bank of India, said headline inflation was likely to come down to 7 percent by the end of March on moderating food prices. Annual inflation based on wholesale prices eased marginally to 8.23 percent in January as against 8.43 percent in the previous month. ‘We have witnessed two years of high inflation. It has been around 7-8 percent. It needs to be brought down to a comfortable level of 4-5 percent,’ said Rangarajan adding the policy markers would continue to tighten monetary and fiscal policy until inflation was brought down to a comfortable level. ‘Inflation distorts the economy. It hits the poor hardest. We have to bring it down,’ he added.

Loans under JNNSM at 5% not violation of base rate norms: RBI

The Reserve Bank today said banks financing power generation equipment under the Jawaharlal Nehru National Solar Mission (JNNSM) at a concessional 5 per cent interest rate is not violation of norms. This financing below the base rate would not be considered violation of guidelines, RBI said in  a statement. "We advise that such lending at interest rates not exceeding five per cent per annum where refinance of Government of India is available, would not be considered to be a violation of our Base Rate guidelines," it said. In the new lending rate mechanism, no loans except few exceptions can be offered below the base rate of a bank. Base rates of most of the banks are 9 per cent. Other category of loans exempt from the guideline include loans to banks'' own employees and loans to banks'' depositors against their own deposits. The Ministry of New and Renewable Energy (MNRE) has formulated a scheme on financing of off-grid and decentralised solar (Photovoltaic and Thermal) applications as part of the JNNSM, it said. Under the scheme, banks may extend subsidised loans to entrepreneurs at interest rates not exceeding five per cent where refinance of two per cent from Government of India is available, it added.

Andhra Pradesh set to usher in new products under new MFI Act

Sensing foul play in the introduction of new products like loans for men and interest-free loans by microfinance institutions (MFIs), the Andhra Pradesh government is set to issue a notification to bring these products under the purview of the new MFI Act. MFIs in the state, whose revenues dropped after the introduction of the MFI Act, were finding new methods to carry on their business by introducing fresh products like loans to men and interest-free loans, a senior state government official said. According to R Subrahmanyam, Principal Secretary (Panchayat Raj and Rural Development), some MFIs are offering loans to the husbands of women members of selfhelp groups(SHGs), saying that extending loans to them will not attract the provisions of the Microfinance Act, which came into existence in December. Some MFIs were considering extending interestfree loans, arguing they would not come under the purview of the Act, he said. “That shows the desperation. When you want to make hyper profits, try to duck and find ways. We will not let that happen. A notification will be issued in a day or two, making it clear that these kinds of loans will also come under the Act,” Subrahmanyam said. The Andhra Pradesh Microfinance Institutions (Regulation of Moneylending) Act, 2010 is aimed at regulating the sector by keeping tabs on lending and recoveries by MFIs. It prohibits them from lending to SHGs already covered by the formal banking system, without seeking prior approval from banks.  Share Microfin, one of the largest MFIs in the country, recently launched ‘Suraksha Loan’ exclusively for men. In acircular to its branches, the company said the loan had to be extended to the husband of a woman member of an SHG. The circular stated the outstanding loan would be nullified only in case of death, but not suicide. Sources in SKS Microfinance said extending interest-free loans was a vague idea and one of the 40-odd concepts the company was mulling over.  “Even if they term these loans as interest-free or loans to men, they will attract all sections of the Microfinance Act. It will be viewed as a violation,” Subrahmanyam said.

PMEAC forecasts 9% growth in FY12, pitches for GST rollout, stimulus cut

RBI clarification on forex trading

The Reserve Bank of India (RBI) has clarified that existing Foreign Exchange Management Act (Fema) norms do not allow residents to trade in foreign exchange through electronic or Internet based trading portals.  The clarification comes after some advertisements recently by electronic /Internet portals offering trading or investing in foreign exchange with guaranteed high returns. “Many companies even engage agents who personally contact gullible people to undertake forex trading/ investment schemes and entice them with promises of disproportionate / exorbitant returns. RBI cautions the public not to remit or deposit money for such unauthorized transactions. The advice has become necessary in the wake of many residents falling prey to such tempting offers and losing money heavily in the recent past,“ the central bank said.

Enabling Inclusion - Aman Srivastava

Various studies have revealed that consumption is usually much less volatile than income, indicating a fair pattern of inter-temporal savings, even amongst the poorest households. But despite this active level of financial management, these households have no recourse to formal financial systems. Policymakers in India have recognised that improving current systems and designing new, innovative systems to reach the poor will require radical improvements in cost efficiency and an associated change in the existing set of regulations. The RBI has in recent years put in place several regulations to encourage financial inclusion by granting greater freedom to the concerned players while simultaneously seeking to protect the interests of the target populations. While many of its regulations have created an enabling environment for inclusion, some, understandably, have limited the progress that could have been made. This is an outcome of the ‘Regulator’s Dilemma’, a term coined by David Porteous: How can regulators balance their need to promote broader access to financial services with ensuring the stability of the financial system? This is a fine balancing act, failure to achieve it could lead to the choking of incipient attempts at providing universal access or financial destabilisation and the bankruptcy of the vulnerable. Ultimately, regulations have to be designed keeping in mind the risks involved. The risks will vary with the model adopted, whether the model is transformational or additive to banking. In addition, regulatory coordination will have to be achieved amongst the respective regulators to ensure they are not working at cross purposes. Since the current regulations touch upon the participatory capacities of players across all the concerned sectors, this discussion is segmented according to the regulations applicable to each sector. Which sectors are expected to play a leading role in expanding financial inclusion? Banks and mobile operators will be in the spotlight, along with any other companies that may partake in the business correspondent (BC) model. The chief regulators to walk the tightrope, then, are the RBI, TRAI and to a limited extent, the Competition Commission of India.  Several strides have been taken by the RBI in easing the regulatory environment to enable the entry and scaling up of participants. However, much more still needs to be done to ensure continued growth in this sector. For example, MSPs will have to provide inter-operable services by setting up some sort of clearing/settlement system, which will invariably involve the National Payment Corporation of India as a facilitator. Besides, banks will never have strong incentive to cater to poorer segments as long as their revenues come from floats and not from transactions.  While the RBI is currently marketing the FI paradigm through the bank-led model, it isn’t averse to giving centrestage to non-bank actors. Banks need to act quickly on the privileged position they currently enjoy.  Since financial inclusion through non-traditional modes is a new concept, and banking alliances with BCs a recent phenomenon, much is still to be learned over the coming years about customer protection issues, AML/CFT concerns, and the feasibility of various models. Regulations will have to keep evolving, and it shall be interesting to follow this evolution, which is already in motion and beginning to tangibly modify the financial landscape.

—The writer is an economist at the Centre for Financial Inclusion, Indicus Analytics. You can reach him at aman.srivastava@indicus.net

BoI to cover 400 villages under BC model

In pursuance of the RBI guidelines and instructions to all the bankers operating in the state, the Bank of India (BoI) will cover all the 400 villages in its share, each with over 2000 people, under the business correspondent (BC) model by the end of the current fiscal. The BoI has also planned to further boost up credit lending so that the state's CD ratio increases.  While this would mark the completion of the phase-I of the project, all the bankers have to bring the remaining villages, whatever the size of their population, under the BC model by 2013, said BoI executive director N Seshadri, who is in Bihar in connection with the inaugural launch of the same model at Sakra Mansurpur village in Muzaffarpur district by the RBI Deputy Governor on Monday.

Contenders unsure, new bank licence norms delayed

Draft guidelines on new banking licences have been delayed. According to sources familiar with the development, the main reason for this is that many of the comments received by the Reserve Bank of India (RBI) from various stakeholders on its discussion paper on the issue were contradictory in nature. As a result, the RBI could not come out with the draft guidelines by end-January — as it had said. According to a source in Indian Banks’ Association (IBA), the draft guidelines are expected to come out by the end of this financial year now and after that many players who are eyeing a licence might back out because the government and the RBI are expected to come up with some stiff terms on financial inclusion. “The government does not want new players to enter the banking industry and crowd the metros and big cities. Financial inclusion will get top priority in the draft guidelines,” the source said. In its second quarter review of the monetary policy on November 2, the RBI had said that the draft guidelines shall be put up in the public domain by January-end for public comments. In December, the RBI had released a gist of comments on the discussion paper on the entry of new banks in the private sector. It is now almost a year since finance minister Pranab Mukherjee said in his Union Budget speech on February 26, 2010 that in order to extend geographic coverage by banks, the RBI will consider giving some additional banking licences to private companies and non-banking finance companies. Some experts support the delay in granting of licences.  “If the RBI were to really very clearly articulate what is the responsibility rather than the opportunity, it would be more interesting. Then what will happen is that only those who have the long-term commitment to the economy will come forward. So it is better that the draft guidelines come out that way,” said Ashvin Parekh, partner and national leader, financial services, Ernst & Young. In the last one year, the list of players eyeing a banking licence has increased. It includes large corporates as well as medium and small players.

UCO Bank Adopts Village in Gujarat

UCO Bank in Gujarat state adopted Lakshmipura village with the sole purpose of uplifting the economic conditions of the village and making the inhabitants selfreliant by financing various productive activities and completion of 100% financial inclusion in the village. Bank At this occasion, sanctioned loans to the villagers for various activities and donated computers for use in local school. Seen in the picture are A.K.Bera Regional Director of RBI, Rajesh Kumar, GM, RBI, A.K. Roy, ZM, UCO Bank and others

Microfinance, macro problems

Indian activists protest in front of The Reserve Bank of India against micro finance institutions in Hyderabad.

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THE MICRO FINANCE MESS - DR. N. A. MUJUMDAR

Recent revelations of forprofit Micro Finance Institutions ( MFIs) have exposed naked exploitation by these institutions in the name of financial inclusion. Dr. . V. Reddy, former Governor, Reserve Bank of India ( RBI), recently said that these MFIs are worse than money- lenders. A money- lender lends out of his own money, whereas here, MFIs were actually borrowing money from depositors and banks and then further lending the money. In retrospect, the government of Andhra Pradesh deserves to be congratulated on its 2010 ordinance which spelt out clearly the malpractices of such MFIs. Whereas these Self Help Groups ( SHGs) are being exploited by private MFIs through usurious interest rates and coercive means of recovery resulting in their impoverishment and in some cases leading to suicides..., the ordinance said. This triggered a crisis which almost paralysed for- profit MFIs, with banks reluctant to lend, repayments dwindling and depositors tending to withdraw their money. It is this shock therapy which led to subsequent soul- searching on the part of those MFIs, the promoters of which were fattening themselves off the sweat of poor borrowers. The Microfinance Institutions Network ( MFIN), a grouping of for- profit micro lenders, has now set up a Committee to look into these deficiencies. In fact the clout of these MFIs seems to be so strong that in spite of all that has been now exposed, some influential papers plead: Dont Kill Microfinance. The short answer to such pleas is: We do not want to kill these MFIs but we certainly want to prevent them from killing their poor borrowers. No doubt the for- profit MFIs represent the predatory face of financial capitalism. But this was compounded by the institutional support which was extended to these MFIs. Such support came from the RBI, the public sector banks ( PSBs), NABARD and SIDBI. For instance, during 2008- 09, banks extended loans of something like Rs. 3,700 crore. Why should PSBs extend loans to MFIs at something like 12 per cent, when they were fully aware that these funds would be on- lent by MFIs at 25 to 30 per cent? The answer is that such loans by PSBs to MFIs were treated as riority sector lending. So this had the blessings of RBI. Similarly, some equity or quasi- equity support came from SIDBI and NABARD, of course, at concessional rates. RBI could have stipulated that PSBs should lend only to not- for- profit category of MFIs. PSBs could have also stipulated, on their part, that the on- lending rate of beneficiary MFIs should not exceed say 17 or 18 per cent. This was not done. This systemic support perhaps also lent some respectability to for- profit MFIs. Thus public sector financial resources were used to perpetuate usurious lending practices of MFIs. It is one thing to say that RBI had no stautory powers to regulate MFIs. But was it obliged to support for- profit MFIs? These questions must be answered by Dr. Reddy, during whose tenure the MFI party began. RBI could have stipulated that PSBs should lend only to not- for- profit MFIs, fixing a ceiling on their on- lending rates. This support made the system, in a manner of speaking, a co- conspirator in this business of exploiting poor rural borrowers. Public funds were allowed to generate private profits. RBI has not covered itself in glory in this episode. Because of obscenely high returns, stemming from exorbitant lending rates, for- profit MFIs have become attractive investment destinations for Private Equity and Venture Capitalists. The recent success of the IPO of SKS Microfinance is a case in point. It attracted high profile investors like billionaire George Soros, venture capitalists Vinod Khosala and Infosys Founder Narayan Murthy. Alluding to this transformation of the humble animal microfinance, Muhammad unus, the father of microfinance movement said: “ It is a complete detour and nothing but a quitting of microfinance mission.” Basically, lending to the rural poor at 30 or 40 per cent defies all economic logic. Our small rural borrowers are not Schumpeterian mini- heroes, who can make the project or activity for financing what they have borrowed, financially viable. In fact, by inflating interest cost, we are building ‘ ab initio’ non- viability into the project. Secondly, the engagement of for- profit MFIs with borrowers has been shallow based on touch and move on business models shorn of any development content. The average loans per client in both MFIs and SHGs have been low, between Rs. 3,500 and Rs. 5,000. The duration of the loan is short, typically one year or less. The small loan size and short duration do not enable most borrowers to do much except to ease liquidity problems.

(Dr. Mujumdar is editor of the Indian Journal of Agricultural Economics.He has worked for the RBI and has advised the central banks of Zambia, Mauritius, Tanzania, Belize and Cambodia.He was consultant to the World Bank, the FAO and ESCAP)

Non-review of MFI's programs by banks draw RBI's ire

The Reserve Bank of India is pulling up banks for not adhering to best practices and slacking on their role of reviewing microfinance institutions’ operations after extending credit support, reports The Hindu Business Line. The newspaper is quoted as saying that the apex bank sent a circular to the public sector lenders, mentioning that they were “not engaging themselves in capacity building and empowerment of the groups to the desired extent.''  At present, MFIs are disbursing loans within 10-15 days of the formation of new groups. However, the practice is to take six-seven months of group formation or nurturing/ hand-holding. “As a result, cohesiveness and a sense of purpose were not being built up in the groups formed by these MFIs,” the RBI is reported to have said in the paper.

Finmin weighs extension for Union Bank, LIC chairmen

After putting new SBI and a new SEBI chiefs at helm, the finance ministry is currently evaluating whether to give extension to the tenures of LIC chairman T.S.Vijayan and Union Bank of India CMD M.V.Nair - both will be completing their respective five-year tenure but will be having residual services to reach 60. Vijayan, who recently had to do a lot of firefighting after Central Bureau of Investigation arrested officials from LIC's investigation department and LIC Housing Finance CEO R.R.Nair in bribe-for-loans cases, will be completing five years in April but will have two more years to reach the superannuation age of 60. Similarly, Nair will ending his five-year tenure at UBI in March but will have one more year to reach the retirement age of 60. It has not been an easy decision for the finance ministry to decide whether to go for extension in both Vijayan and Nair's cases as not giving extension after 'a tenure of five years' has become a parctice for so many other important appointments in financial sector and other public sector enterprises. Usha Thorat, Deputy Governor, Reserve Bank of India, Sarthak Behuria, CMD, India Oil, Ashok Sinha, CMD, Bharat Petroleum Company were earlier denied extension though all of them had residual services to reach 60. Sources point out that initial round of discussion among the top official of the ministry hasn't found favour for giving extension to both Vijyan and Nair.. But finance minister Pranab Mukherjee is yet take a call. There are indications that Vijayan may be rehabilitated in any other top posts like UTI Chief which has fallen vacant after U.K.Sinha's appointment as SEBI Chairman or a member in the Securities Appellate Tribunal. Similarly, Nair may be shifted as the executive chairman of Star Union Life Insurance, a life insurance joint venture among Bank of India, Union Bank of India and Japanese major Dai-ichi. The contenders for the LIC chiefs in terms of seniority are DK Mehotra, Thomas Mathew, AK Dasgupta - all are currently LIC's three managing directors. Finance ministry sources point out there will be a decision about the LIC chief soon. Meanwhile, the ministry is also in the process of filling up posts of UTI chairman, Nabard chairman, CMDs of Sidbi and ECGC. For top posts of Nabard, the name of Prakah Bakshi, one of the junior most executive directors in Nabard is doing the round, sources point out. If selected Bakshi will be superseding many of his seniors including SK Mitra who is the senior most ED in the organisation. Incidentally, KG Karmakar, managing director of Nabard who has almost completed five years in the post was excluded from the exercise to choose chairman as he has one and half years of service left, falling short of the two year of residual service norms for selection of Nabard chief.

April 1 date hint for MFI interest rate cap

The Reserve Bank of India may impose an interest rate cap on loans by microfinance institutions (MFIs) from April, in line with the recommendations of the Malegam committee last month. According to RBI Deputy Governor K.C.Chakrabarty, the apex bank has commenced talks with the stakeholders on the implementation of the Malegam proposals. “Some part of the report such as interest rate will be applicable from April 1,” he said. He, however, said officials at the RBI were still discussing the proposals and no binding decision had been taken it. The committee, headed by Y.H. Malegam, proposed the capping of interest rate charged by the MFIs at 24 per cent. Its recommendations followed a regulation by the Andhra Pradesh government restraining the MFIs from adopting strong-arm tactics to facilitate loan recovery. It also stipulated that the loan repayment cycle should at least be monthly from the earlier practice of weekly collections.

India Infoline launches financial literacy programme

Brokerage firm India Infoline (IIFL) on Friday said it has launched a financial education and awareness initiative called FLAME (Financial Literacy Agenda for Mass Empowerment), with an aim to improve financial literacy across over 1,000 cities in India. The company has a budget of Rs 25 crore for its initiative towards the corporate social responsibility, IIFL said in a statement.  “We shall leverage our network of 3,000 locations, 15,000 employees and 1 million customers across the country to reach out to small towns as well as under-privileged sections of the society. We have set aside a budget of Rs 25 crore, in addition to efforts of a crack team of 500 from the company,” IIFL Chairman Mr Nirmal Jain said. The company’s programme will comprise a mass media campaign, an online portal, a helpline, ground level financial awareness workshops, connecting with students at B-schools, books and training via expert sessions on financial literacy, the statement added. FLAME was launched by Reserve Bank of India’s Deputy Governor Mr K C Chakrabarty and HDFC Chairman Mr Deepak Parekh. Commenting on the occasion, Mr Parekh said “India cannot grow at a sustained high pace without greater financial inclusion and hence a significant investment in financial literacy is no longer a policy option, but a compulsion.” As a part of this new initiative, IIFL will setup a helpline to answer queries pertaining to financial services, which will be manned by the company’s trained professionals, the statement said.

Beyond Core Banking

Seen in the photograph is Dr. K. C. Chakrabarty, Dy. Governor, Reserve Bank of India, along with M. V. Nair, Chairman & Managing Director, Union Bank of India, S. S. Mundra, Executive Director, Union Bank and B. Sambamurthy, Director, IDRBT during the Executive Round Table on ‘ Beyond Core Banking’ organised by Union Bank and IDRBT in Mumbai. This was a unique effort for benefit of the banking community to draw a road map for better customer services and business growth by leveraging investment already made in Core Banking System.

RBI starts discussion with stakeholders on Malegam report

Reserve Bank of India (RBI) Deputy Governor Mr K C Chakrabarty on Friday said the Central bank has started discussion with all the stakeholders regarding implementation of the Malegam committee recommendations on microfinance. “This (the Malegam report) is at the discussion stage... We have not decided anything yet,” Mr Chakrabarty told reporters.  “Some part of the report like interest rate will be applicable from April 1,” he said. RBI has already invited public comments on Malegam panel report which suggested among other things capping interest rate at 24 per cent for loans extended by microfinance institutions. The committee, headed by Reserve Bank’s Central Board Director Mr Y H Malegam, suggested that small loans cannot exceed Rs 25,000 and creating of a separate category of non-banking financial companies (NBFC-MFI) for the MFI sector. RBI constituted the committee in October last year in the wake of allegations of overcharging and use coercive recovery practices by MFIs that led to a spate of suicides in Andhra Pradesh. The committee submitted its report on January 19. These recommendations, the committee said, should be implemented from April 1, 2011.

New CPI series out, retail inflation at 6 pc in January

The new consumer price index, intended to reflect the actual movement of prices at the micro-level and help policy-makers like the RBI in better framing of decisions was launched today, with initial data pointing to six per cent retail inflation in January. While Consumer Price Index (CPI), according to new series, has increased to 106 in January this year from a base of 100 in 2010, government has chosen not to mention the inflation figure saying the exact level could be arrived only next year. Analysts were also guarded as the new indices have a long way before they evolve into the country''s benchmark for inflation. The figure was arrived based on a comparison with the annual all-India CPI index average for the whole of 2010. According to new series, all-India Consumer Price Index stood at 106 (provisional figure) for January 2011 taking the base at an annualised level of 100 for the entire last year. "Since these indices are being introduced for the first time, annual inflation rates have not been compiled," the Ministry of Statistics and Programme Implementation said in a statement. Inflation, as measured by the Wholesale Price Index -- which remains the top benchmark -- stood at 8.23 per cent in January. Economists said the new series will help both the Government and Reserve Bank to frame their polices as CPI is a better reflection of actual prices than the current practice of following the wholesale price index (WPI). Crisil chief economist D K Joshi said that the country desperately needed an index which is comprehensive. "Not much should be read from the figure of 106 as released today. However, they could be used for framing policy decisions by both the Government and RBI with the passage of time," he said adding the index will move up as there is inflation in the economy. The WPI based inflation for the month under review stood at 8.23 per cent. The CPI has been released for rural, urban and all-India levels. While the rural CPI indices stood at 107, CPI urban stood at 104 during the month under review. ICRA economist Aditi Nayar too said the new series would become benchmark for policy makers, including the RBI, in the future. "Broadly speaking, India is one of the few countries in the world using the WPI as benchmark. The new unified CPI would help the RBI to frame policies in a proper manner," she said adding this reflects the micro level price situation more clearly.