.......The external sector will be pressurized during the year and the challenges faced in FY13 such as rising current account deficit will continue to play in the mind of the government and RBI while formulating policies. However, it is expected that there would be some improvement in the CAD and the continued flows of foreign capital will keep the rupee largely stable – assuming that geo-political tensions do not deteriorate and global economic conditions remain where they are, with the recovery process also being cautious.........
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.
Saturday, April 13, 2013
A Holistic Approach to Money Management
........Setting aside the obvious point that bank accounts are among the easiest indicators to track, the policy focus on “banking the unbanked” seems to rest on the premise that bank accounts have a special role in financial inclusion. Three important functions ascribed to bank accounts are: a place to save, a money management hub, and a way to establish an ongoing relationship with a formal financial institution (an “on-ramp” to other services). These assumptions appear to underpin much of financial inclusion thinking and policy............
The lending rate dilemma
....The RBI is mulling over the recommendation made by its nominated committee that the first 7-10 years of a home loan tenure carry a fixed interest rate which later may be reset to the floating rates or the then prevailing rates. This recommendation seems worth considering. Floating rates are quite confusing for the common home loan borrower who invariably pays a higher EMI when the rates increase but does not benefit when the rates subside......
Disappointed India Inc seeks cut in interest rates by RBI
.........PHDCCI President Suman Jyoti Khaitan pitched for 100 basis points (1 percent) cut in short-term interest rate by the RBI in its forthcoming credit policy, saying such a step was necessary to improve investor sentiments and promote growth. "Tight monetary stance by RBI has impacted investment sentiments in the economy and inflation still remains in an uncomfortable growth trajectory," ........
Agriculture is a contrasting picture of stagnation and change induced by consumption: report
RBI Governor D Subbarao recently talked of changing consumption pattern in rural areas towards protein diet which has led to higher inflation in these items. In a different context, a CII-Mckinsey report also pointed towards this trend. The third Food and Agriculture Integrated Development Action Report titled: ‘India as an agriculture and high value food powerhouse: A new vision for 2030, prepared jointly by CII and McKinsey and Company, said the story of Indian agriculture in the last more than a decade or so has been changing gears to some extent with a significant alteration in consumption patterns skewed towards high-value food items prompting higher production of these crops and rise in output per agriculture worker...........
Solan, Kullu to be covered under DBT scheme from July
......He expressed satisfaction that the banks in the State had surpassed five National parameters out of six stipulated by Reserve Bank of India and during the year 2012-13, made fresh disbursement to the tune of Rs 6,260 crore to 3.34 lakh new beneficiaries, achieving 93 per cent of target up to December, 2012.......
Gujarat, the gateway to India: fact or farce?
...........Nothwithstanding the government claims, it is an open fact that Gujarat’s FDI numbers have always been the same or lower through the years. Reserve Bank of India’s FDI figures encompassing the decade of 2000 to 2011 reveal that while Gujarat received just about $7.2 billion in FDI, Maharashtra got $45.8 billion and Delhi over $26 billion. Even Karnataka and Tamil Nadu, with a $8.3 billion and $7.3 billion share, got a larger piece of the national FDI pie............
Punching in card PIN can help prevent fraud
.............Although bankers said keying in the PIN would provide additional safety, consumer acceptance would be a critical factor in determining its success. "In many smaller establishments, the consumer may be standing next to or in front of the shopkeeper while keying in the PIN and instead of being a security enhancer, it could actually end up being a hazard," said a banker.
Startup Village incubatee Payd offers low-cost payment system for SMEs
..........In other words, unlike existing payment services, you don’t have to pay a hefty fee for installation. Registration is completely free and businesses can sign up online and immediately start accepting payments, according to Nambiar. The product is currently in beta and awaiting RBI approval. “We will launch a pilot with a few select brands in a few cities as soon as we receive RBI approval,” said Nambiar..................
Friday, April 12, 2013
Inflation-indexed bonds likely in a month: RBI
Inflation indexed bonds: Will it find buyers?
........Inflation index bonds will be linked to the wholesale price index (WPI) and indexation will happen every six months. The maturity period is likely to be in the range of 7-15 years.
But, the calculation of coupons needs to be simple to understand and transparent for it to get more retail participation. Also, the distribution mechanism would play a crucial role...........
Cobrapost expose: RBI mulls action against erring banks
Reserve Bank Deputy Governor H R Khan on Thursday said the central bank is initiating action against ICICI Bank, HDFC Bank and Axis Bank in connection with allegations of money laundering by Cobrapost. “Actions are on the way. Scrutiny has been done, actions are being taken both in respect of systemic level and at the individual banks,” he said when asked if RBI has completed investigations on Cobrapost exposes. “I will not be able to tell you the details but actions are being taken. Actions are being initiated both at the system level and the individual bank level,” he said on the sidelines of an event organised by National Housing Bank in New Delhi.............
Bank Licences: RBI should make financial inclusion an opportunity not an obligation - Janmejaya Sinha
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| ..........The RBI should allow the recipients of new licences time to comply with the guidelines as it did to the earlier recipients of bank licences. About 18 months after starting operations should be a fair period for such compliance. Overall, I believe the guidelines deserve our praise.......... |
Banks looted to finance terrorism: Security expert
...Based on the concept of crypto currency, Bit coin is an internet-based alternative currency which uses electronic signatures and was developed in 2009. Sivanandhan, who is the Security Adviser for the Central Security Cell of the Reserve Bank of India, said that unfortunately investment in security was still considered a redundant expenditure by banks and financial institutions. He added that banking surveillance was yet to leverage the possibilities of video analytics............
My View on Updation on "Pension Updation............."
The news is welcome. But pensioners and their associations have to be on guard. The Mandarins of the Ministry of Finance (MoF) may yet launch a rearguard battle to dilute the benefits by making the updating of pensions prospective, i.e., from 2012 for which the revision of pay scales is due, rather than retrospective. If the principle is approved, logically the retired staff are entitled to arrears in relation to the past revisions of pensions. Secondly, the RBI should pay interest on the arrears at the Bank Rate. These issues may be taken up, if required, after the approval of the proposal is officially announced and the Bank issues a circular to implement it. Raising them at this stage may only help the MoF to delay the final decision. Unlike on the last occasion legal action may be taken early if the two points are not conceded. Augmenting the “Fighting Fund” with contributions from the pensioners should not be difficult.
- A. Seshan
No doubt this is a good news. We had Rs 7184 crore in Superannuation Fund as on 30 June 2012.Keeping in view the demographic and financial structure of RBI pensioners,if we compute an annual pension of Rs 2 lakh (which is on the higher side) for 10,000 pensioners, the entire expenditure would be Rs 200 crore p.a; whereas the yield on our Superannuation Fund @ GOI Bonds would be Rs 560 crore.Even a minuscule interest component would be sufficient to cover the cost of Pension Updation. Then why should we approach GOI as a SUPPLICANT and give them a written assurance that the cost would be met by our own internal earmarked funds when their legit and otherwise expenditure play havoc with the finances of our country i.e. result in drastic increase in fiscal deficit leading to depreciation in Re, inflation, increase in interest rates etc.Anything which impacts exchange rate, interest rate,inflation, money supply i.e. variables of monetary policy, it is they who should get clearance from us. Seventh Pay Commission announcement would be done by the year end. Prior RBI approval should be obtained for this. Another question, why Pension should be restricted to 50% of last pay. Why can't we be flexible and fix the same at 70%,80% or 100% of last pay when Fifth Pay Commission has opined that RBI can give pension updation depending on its financial strength.We are not a burden on our country in a way Central Bureaucracy is. This type of issues which concern handful of RBI employees where no external financial impact is there, should best be left to RBI.
- Sitendra Kumar
When RBI is mandated to manage the monetary policy and to ensure the onerous task of maintaining the value of the Rupee and in effect to try and achieve 'Growth with Stability', is this glorious institution not capable enough to find solution on its own to a less important problem like 'Updation of Pension' of Retired Employees. I feel wiser counsels should prevail and the GOI should leave the issue to RBI Management to suitably solve the issue without raising unnecessary spoke in the wheel.
- Srinivasan, Cochin
Economy is not the villain
.....Looking at the above reasons, it would appear that nothing but ‘economic malfunctioning’ led to higher NPAs. There is little to say on system identification of NPAs. All the other four factors are ‘economic’ factors. So, how valid is the ‘economy downturn’ hypothesis? The RBI Report on Trend and Progress of Banking in India, 2011-12 blamed “the slowdown prevailing in the domestic economy” as the prime cause for increase in NPAs (paragraph 4.29). In general, there are two broad reasons for any economic occurrence: (a) endogenous and (b) exogenous. While endogenous factors are controllable, exogenous ones are not. By holding the economy responsible for higher NPAs, bankers are evading responsibility for the ‘controllable’ (or exogenous) factors. However, there are ways to deal with exogenous factors........
Many slots empty, PSU banks told to ease promotions
..........RBI data shows there are about 4 lakh officers in the 29 PSU banks as on March 31, 2011. Nearly 20 per cent of them are expected to retire by 2015 while the pace of recruitment is far lower. The new rules circulated to banks by the finance ministry say they can lower the minimum experience required for a scale by three months and also relax the minimum marks in the annual performance appraisals..........
Chidambaram to sell India story in Canada, US next week
.....The Minister is likely to spell out steps taken by the government to streamline FII investment in the debt market. Sources said Chidambaram, accompanied by senior Finance Ministry officials and RBI Deputy Governor Urjit Patel, would also seek investments into various sectors, mainly infrastructure for which the government has pegged expenditure at nearly $1 trillion during the 12th Plan (2012-17)........
Bank outlook bleak
.....To be sure, the figures above are a broad brush summary. Private banks, as has been seen in the past several quarters, are likely to post earnings growth of 20% or more. Still, the economic environment being depressed as it is, banks would have depended on factors such as trading gains to shore up their profit........
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