............This will be RBI Governor D.Subbarao’s fifth and last annual monetary policy since he took over the reins in September 2008 after the collapse of US investment bank Lehman Brothers Holdings Inc. that plunged the world into an unprecedented credit crunch. In relative terms, this is possibly Subbarao’s easiest policy as low inflation and the even lower inflation outlook in the short term—because of a drop in crude and gold prices and insipid growth indicators—will help him make up his mind on the rate trajectory. Inflation is expected to rise only after he leaves the corner room at the Indian central bank’s headquarters on Mint Road in Mumbai in September.........
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Thursday, May 2, 2013
RBI does not have clear inflation objective: Richard Illey
........ RBI does not have a clear inflation objective. It is trying to address a pretty wide menu of options in inflation. The CPI is a better measure for the consumer. The sticky nature of CPI largely reflects two things. The high food inflation is putting a lot of pressure on the CPI and food inflation is also stubborn. A more elevated CPI is an impediment to aggressive rate cuts.........
Run-up to RBI annual policy review
.................“RBI will take a cautious stance and reiterate that the recent developments in terms of softening of inflation and commodity prices, if the trend continues then probably there can be more rate cuts. But I do not think they will give a clear signal of more rate cuts as on May 3 because they are very conditional that way. RBI will wait and watch to see how things pan out. The guidance may not be as hard as it was in March. ......
RBI given the go-by
......Some banks have advocated that the RBI should have reduced CRR and SLR to increase the money supply. But while during the previous occasion CRR was also cut, the response from banks was negative. Under such circumstances, the open market tool of RBI has failed to bring in the desired result. The culprit is the “base rate” system, which is not effective, and the banks, including SBI and public sector banks, do not want effective implementation of the base rate system.......
RBI probes sale of gold coins by 30 Indian banks
.........The central bank is studying the business practices of 30 banks to ascertain any mis-selling of these products and to find whether such products are being sold as a pre-condition for offering the regular banking services, sources said. The RBI is also looking into complaints that bank staff are being pressurised by their senior officers to sell gold coins and other gold-related products in lieu of incentives..........
Praful warns against Chinese aggression
.........“Due to the non-availability of a level-playing filed, the Indian power generating equipment manufacturing industry has been severely dented by foreign competition, especially by China,” the minister said in a letter to D Subbarao, RBI Governor. He has asked the RBI to help the domestic industries get finance on the same rates as Chinese Exports credit or stop allowing......
Saradha due to formal financial system's failure: RBI
......“The fact that people have to rely on such entities (chit funds) for their saving needs indicates a failure on the part of the formal financial system to reach out to such groups and earn their trust and confidence through a transparent and responsive customer service regime” said K C Chakrabarty, Deputy Governor, RBI, at an event in Pune yesterday........
India Inc expects RBI to cut interest rate
............."The central bank must cut interest rates aggressively, or else the industry will witness more non-performing assets hitting the overall economic sentiment. Banks will also take a huge collateral damage (otherwise)". ....
Odisha: Investors duped of Rs 20,000 cr by fraudulent firms, authorities admit lapse
................The Reserve Bank of India (RBI) lists 17 non-banking financial companies registered in Odisha and none are permitted to raise deposits from investors. But fraudulent companies attract depositors posing as mutual fund firms and even as real estate businesses. With regulatory bodies like the RBI, SEBI, the state finance department and the state police failing to act together, the fraudsters get away with hundreds of crores.........
Credit Guarantee Fund for education loans planned
........The Reserve Bank of India advised the banks in November 2012 that ‘service area’ norms were not applicable in case of educational loans. Hence, banks had been advised not to reject any application on the grounds that the residence of the applicant did not fall under the bank’s ‘service area.’ As regards the rates of interest charged on educational loans, Mr. Meena said the RBI had de-regulated the interest rates. With effect from July 1, 2010, all banks had to price their loan products, including education loans, linked with the base rate of the bank.........
Dhanlaxmi Bank seeks RBI’s approval to raise capital
...........Under RBI norms, no single individual or entity can acquire more than 5% stake in any bank. They can exceed the limit only if the apex bank says so. The bank is raising the money to meet the higher reserve requirement under international Basel III banking rules. “At this stage, we are in discussions with three to four investors to identify eligible parties. Once RBI approves the share issue, we would like to do it by the end of this month,” ........
SC dismisses petition against FDI in multi-brand retail
...............In this case of FDI, the policy does not suffer from any of these, the order dictated by a bench presided over by Justice R M Lodha said. The government has the competence and authority to make policy regarding FDI and the power exercised by Reserve Bank of India was valid..........
Wednesday, May 1, 2013
Need to resolve structural issues; gold crash helps: Gokarn
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| "I am not sure that it is at this point a safe call that everything is going to move down and settle there. I think there are still upside risks to oil prices and that can re-exert the pressure," |
Monetary policy for the aam aadmi - A.Seshan
..........While one can understand different estimates being made by private and international agencies, how does it help the consumers and producers in taking decisions if there are different official estimates from the RBI, the Finance Ministry, the Planning Commission and the Prime Minister’s Economic Advisory Council? Can the four agencies not exchange their ideas and come out with one estimate on each variable, based on a consensus that would help entrepreneurs estimate demand for their products, and plan production and investment accordingly?.......
Horns of a dilemma
...........The RBI will also be worried that commodity prices, which have aided in the decrease of the WPI, are unpredictable, and may well go up again. Oil, for example, is hardly likely to remain below $100 a barrel, and has already shown signs of moving up to at least the $110-115 zone. A revival in world growth, especially in China and the United States, would likely push commodity prices up further. That would also be bad news for India's outsize current account deficit, on which the RBI will have one worried eye....................
Obituary
I am sorry to advise you of the demise in Mumbai, on April 16, 2013, of Shri.R.L.Talwar. He was 92 years old ( born on 20--09-1921). He was a highly disciplined person and was active even a day before he died. He was a leading member of the "Laughter Club" in Bandra West. He had joined in the Lahore Office of R B I. He retired as D G M from the Bombay Office and was a highly popular colleague. He leaves behind a large circle of friends. May his soul rest in peace.
- P.P.Ramachandran
RBI sub-office resumes functioning in Sgr
Srinagar, Apr 29: The upgraded sub-office of Reserve Bank of India Monday resumed its functioning in Srinagar for summer months, in line with Darbar movement of State Government from Jammu to Srinagar. Besides the Cell of Foreign Exchange Department (FED) which is already functional here, the Cells of Rural Planning and Credit Department (RPCD) and Department of Banking Supervision (DBS) carved out of the Regional Office Jammu, shall function from the existing premises at Amir Manzil, 1-C, Raj Bagh, Srinagar- 190008 (Kashmir). The sub-office is headed by Ramesh Chand, Deputy General Manager............
Lower inflation will help RBI consider rate cut: Mayaram
............"We would be happy if the RBI continues the trend of softening the rates. To what extent, we'd leave it to the wisdom of the RBI. We do believe that there's a case for continuing with the easing,".........
Hat-trick opportunity
..............Lacklustre economic growth is at least bringing the benefit of a decisive retreat in cyclical inflationary pressure, evidence of which has continued to accrue since RBI’s last policy review. Headline wholesale-price inflation slowed to below 6% in March while RBI’s preferred gauge of underlying inflation pressure—non-food manufactured goods prices—decelerated to 3.4%, its lowest reading since February 2010. With little prospect of a decisive re-acceleration in economic growth for at least several quarters, “core” inflation should continue to subside through the rest of the year as the economy continues to operate below potential. RBI’s “core” gauge could realistically retreat to below 2% by the year-end..........
Depositors’ body moots ‘inflation-proof deposits’
.........The AIBDA has represented that the interest rate for small depositors and senior citizens should be at a mark-up of 3 percentage points over the annual average consumer price index (CPI) based inflation, said. The Association defines small depositors as those with deposits up to Rs 5 lakh, and senior citizen depositors, who generally prefer to park their terminal benefits in bank deposits, as those with deposits up to Rs 15 lakh. This is the first time the central bank has invited a depositors body for the pre-policy consultation exercise. The RBI will unveil its annual policy on May 3...........
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