T
he Reserve Bank of India will consider easing banks' cash reserve ratio (CRR) further if liquidity deficit persists for more than a few weeks at a stretch, Deputy Governor Subir Gokarn said on Tuesday.....
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Wednesday, October 31, 2012
RBI's forecasts, initiatives depend on govt policy: Gokarn
The underlying structural factor that has been pushing the RBI to increasingly use the CRR this year is the persistently increasing wedge between deposit and credit growth
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Will inflation rise or fall? Even RBI doesn't have a clue
...........As RBI has rightly pointed out, there are far too many factors at play simultaneously that goes into shaping inflation. That being the case, the central bank can be forgiven for being as clueless about it as the man on the street is............
RBI takes baby steps to reduce frauds, fix rates
..........one strong proposal, though still at a pilot project level, is double authentication of card transactions through Aadhaar. It means that, along with swiping the card, the Aadhaar biometric authentication – either through an Iris scan (scanning of eyes) or a fingerprint – will also be required for both at ATMs and PoS terminals. So, stolen cards will be useless as transactions won’t be possible without a fingerprint or Iris scan. The pilot project will start in Delhi from November 15...............
Interview with RBI Governor D. Subbarao
RBI governor D. Subbarao says that while growth remains an important concern for RBI, it needs to be balanced with the fight against inflation
RBI Governor Subbarao's full speech on interest rate cut
.....over the past few quarters, monetary policy had to focus on inflation, even as growth risks have increased. As recent policy initiatives by the Government start yielding results in terms of revitalising activity, they will open up space for monetary policy to work in concert to stimulate growth. However, in doing so, it is important not to lose sight of the primary objective of managing inflation and inflation expectations. This policy review is set in the context of the above global and domestic concerns. It should be read and understood together with the detailed review in Macroeconomic and Monetary Developments released yesterday by the Reserve Bank.......
Vijay Cooperative Bank penalised for violation of RBI norms
Ahmedabad: Reserve Bank has imposed Rs 5 lakh penalty on city-based Vijay Cooperative Bank for violation of KYC norms and other guidelines......
RBI may Grant New Licences to UCBs
.........Urban co-op banks came under the regulatory glare of RBI post the Madhavpura Co-operative Bank debacle resulting from misuse of funds and run on deposits that affected the credibility of the co-operative banking system. But, after 2002, the RBI started playing a bigger role in regulating UCBs by signing a memorandum of understanding with various state governments.
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RBI permits UCBs to undertake forward contracts in corp debt
....."It has been decided to include scheduled UCBs with strong financials and sound risk management practices as eligible participants to undertake repo transactions in corporate bonds," RBI said in a notification. .......
Partial fix for NPAs
....Given this, RBI has done the right thing by telling banks to put in place a mechanism to evaluate the risks from unhedged positions and to report this regularly to RBI, apart from pricing this in while extending credit to them. In the case of restructured loans, RBI has advanced some of the recommendations of the Mahapatra committee that was to review this. While the draft guidelines will be issued by the end of January 2013, RBI has said that provisioning on restructured standard accounts is to be hiked from 2% right now to 2.75%. While that’s a good step, it may not be enough—indeed, the RBI working group had suggested a figure of 5%. More important, if regulatory forbearance is being abused—based on Chakrabarty’s data—RBI needs to come out with some norms, including personal guarantees of promoters. Hopefully, we’ll see this in the January guidelines.......
'NPAs are not alarming as our banking system is robust’
What was the thinking behind the CRR cut?
I have explained the rationale in the policy document. The monetary situation is determined by two variables – the policy interest rate and the liquidity conditions. We want to keep liquidity comfortable. Comfortable liquidity when interest rates are very high does not happen. Lowering interest rates when liquidity is tight does not happen..................
Read - The Hindu
Frame new law for Islamic banking: RBI
Putting an end to the speculation on allowing Islamic banking in the country, the Reserve Bank of India (RBI) governor, D Subbarao on Tuesday said the current Banking Regulation Act does not permit Islamic banking and that the government will have to bring in a new law if it wants to introduce it in the country..........
Time for more subordinate legislation for the financial sector
...........There have been examples of piecemeal transfer of authority to subordinate legislation in the past. In the last decade, RBI got the power to set statutory liquidity ratio (SLR) and cash reserve ratio (CRR) levels, unencumbered by limits set under laws earlier. Some regulations had moved from the Companies Act to Sebi and the Insurance Act to Insurance Regulatory and Development Authority (Irda). The prohibition on preference share issues by State Bank of India (SBI) was removed and thereafter it needs to follow RBI regulations on preference capital. There was an individual shareholding limit of 200 shares listed SBI associate banks, and that too only in paper certificates form—this was repealed and harmonized with Sebi rules.............
Total4U violated RBI norms: Police tells court
KOCHI: Sabarinath, who duped the public through a Ponzi scheme named Total4U, has been booked for violating the Reserve Bank of India (RBI) regulations, in addition to charges of cheating, police submitted to the Kerala high court on Monday............
RBI directs banks to monitor unhedged FX exposures
The Reserve Bank of India has asked banks to put in place systems to monitor unhedged foreign currency exposures of corporates.............
Read - ET
Read - ET
RBI panel to resolve stress in financial conglomerates
.........This inter-regulatory forum, to be headed by RBI’s Deputy Governor (banking supervision), will institutionalise the framework for supervision of financial conglomerates (FCs). It will also develop framework to monitor and management of systemic risks emanating from their activities. This forum will assist the Financial Stability and Development Council (FSDC) for monitoring the functioning of SIFIs. The forum will be responsible for framing policies for FCs such as identification, group-wide risk management, and corporate governance...........
Banks can't lend to jewellers for purchase of gold: RBI
....."No advances should be granted by banks against gold bullion to dealers or traders in gold if, in their assessment, such advances are likely to be utilised for purposes of financing gold purchase at auctions or speculative holding of stocks and bullion," the RBI said in its half-year review of the monetary policy..........
Thursday, October 25, 2012
Technology in the financial sector - some issues and a few concerns - G Padmanabhan
Bankers’ Club, Thrissur, 22 October 2012
.............The point that I have been trying to make so far is that advancement in information and communication technology has opened vistas in financial sector that could not be imagined a few decades back. Yet, it cannot perhaps be said that all the ways in which we have harnessed the technology has contributed to social utility or made the financial sector more robust and useful.........
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Inflation — visible and invisible - A.Seshan
......The RBI’s focus should continue to be on inflation, though there is considerable pressure on it from the banking and the corporate sectors, and also the Government, to loosen up policy in the interest of growth. Such liberalisation can be in two ways. One is a further reduction in the banks’ cash reserve ratio (CRR) that will release primary liquidity. The other is a decrease in policy (repo and reverse repo) rates by the RBI. Under the current circumstances, the reduction in policy rates is preferable to that in CRR.......
FINANCIAL LITERACY DRIVE
As part of the drive to initiate financial literacy, RBI in its series of workshops conducted in various schools all across the country, conducted its first workshop in D.A.V East of Loni Road, Delhi on 5th October 2012 for the students of classes X to XII. The workshop was conducted under the resource persons Mr Anupam Sharma, Assistant Manager RBI and Mr Pal, Assistant Manager RBI........
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