Remembrance of a visionary............

It is a great loss to all those who know Shri M Ramakrishnayya the man with a vision who shaped NABARD in the first few years. He chaired the Committee set up to review cooperative legislation when N.T. Rama Rao was Chief Minister of Andhra Pradesh and was instrumental in formulating the first liberal Act on Cooperatives - Mutually Aided Coop Societies Act that is now a parallel Act in nine States of the country and on its foundations the 97th Constitution Amendment Act 2011 has been formulated. An ardent believer in the capabilities of Cooperative system as a saviour of the country sans the political seize it currently holds.  May his soul rest in peace.  

- Yerram Raju

My View on "Spare a thought for the RBI Governor"

This is with reference to the captioned item in VITALINFO. What is there to spare when he (RBI GUV) himself nurtures the hope for extension.If situation has so hopelessly deteriorated, let him come out with his own version that his hands are tied. The organic links between the Ministry of Finance and RBI are through the transportation of a person (Secretary) with a pronounced bias for fiscal policy who has excelled in unsustainable fiscal deficit ,current account deficit, uncontrolled profligacy etc; to the position of head of monetary policy with emphasis on inflation control, benign interest rates, stable exchange rate, monetary stability etc.These points of conflict are to be minimised in which the present GUV has failed and it is not likely that Arvind Mayaram who is also in the reckoning would be able to do any better. 

The  article "Spare a thought for the RBI Governor" overlooks some important facts. The remark " He has had the misfortune of having to serve under a government that has been, arguably, the most incompetent and most venal since independence. His predecessors were not so unlucky" betrays the fact that it is the same government who appointed him first the Finance Secretary and then RBI GUV besides giving him an extension. Was this done without his willingness or co operation or consent. I am sure his prior consent must have been obtained and there is no doubt that there were certain moves by him backed by IAS lobby for his candidature when so many world renowned worthies were also in the fray for Governorship.Is our present predicament anyway worse than faced by USA in 1931 (Great Depression), England, Germany, Japan etc after the end of second world war in 1945,Western Europe when Marshall Aid was granted and post oil hike global crisis in 1973 when Bretton Woods agreement was scrapped. In fact ,we are nowhere near 1991 criss when we had to go to IMF for a bailout or in mid sixties when we we were forced to devalue our currency and beg for food under PL 480. The present crisis is mainly the result of lack of decision making by the Government on various aspects of economic reforms and Subbarao alongwith another aspirant for Governorship, Arvind Mayaram, are part and parcel of the same bureaucracy which has stoutly refused to reform itself and innovate when pathbreaking changes have been made in British and American bureaucracies.

Why not SPARE A THOUGHT FOR RBI PENSIONERS FOR A CHANGE DEAR SUBBARAO AND ARVIND MAYARAM? 

- Sitendra Kumar

The present predicament of RBI, the only institution in India which has a consistent record of performing well for the last 78 years, within the constraints imposed by the whims of New Delhi, could not have been better described than by this observation in this article:
“One should spare a thought for RBI governor D. Subbarao. He has had the misfortune of having to serve under a government that has been, arguably, the most incompetent and most venal since independence. His predecessors were not so unlucky. Hence, to direct one’s ire at RBI is akin to a cop shooting at an easy target because he is afraid to go after the real criminal.”

If, still RBI remains in one piece, and is able to carry on unperturbed, the credit should be shared by the organisation’s maturity and the deft handling of the situation by Dr D Subbarao. One hopes that, at this juncture, GOI will not destabilise the central bank by bringing some ‘yours obediently’ at the top. 

- M.G.Warrier

The article highlights the need for a fresh thinking sans blaming the Governor RBI for all the ills. We seem to be reaching a stage where the headroom for raising public debt will no longer exist. We should not reach the level of Greece in sovereign debt. On the other hand it makes lot of sense to incentivise savings that we systematically put down for the last 15 years and protect the savings against inflation. The CAD can't be contained against the increasing prices of oil at more than $105 a barrel and this constitutes more than 60% of our import bill. Device ways to explore alternate energy sources and hold reins on natural gas - this should be the policy for government if monetarist has to play his role effectively at the current juncture. Keeping the hands and legs tied the Governor cannot be expected to run to save the economy. 

- Yerram Raju

The next Governor should be................

The source of pool of former Governors is extremely narrow as all of them were either former IAS or academic turned bureaucrats. None of them were serving Professors (except Dr Rangarajan) engaged in path breaking research, industry or corporate sector unlike in advanced countries. All of them, in varying degrees, made the meeting of Government's demand of public borrowing for unsustainable social sector projects/ uncontrolled expenditure resulting in high fiscal deficit as their first priority and inflation control, risk management systems etc took a backseat. Only Dr Manmohan Singh in 1991 was honest enough to say that "I knew the policies were wrong but as a civil servant I had to follow a particular ideology and I had no choice". Were high SLR/CRR conducive to health banking?

Now why RBI GUV are appointed from those category of people, read only IAS, who are on the verge of retirement? According to Shri M.K.Kaw, former Secretary, Civil Aviation and former Member Fifth Pay Commission, RBI Governorship is a sinecure job. He admitted that as Addl Secretary in MoF he also nursed an ambition to become RBI GUV but somehow tricked to become Member Secretary FPC. Had he known Secretary Revenue was retiring next month, he would not have agreed to become Member Secretary FPC. He retired as Secretary, HRDD.

As far as CCA is concerned, what role Home Minister plays (clearance from vigilance angle).The next Governor should be one who has a sympathetic view on pension for retirees follows from the fact that in case of selection of Army Commanders, one important criterion is whether they are sympathetic to their subordinates mainly Jawans and Junior Officers. When GUV is himself enjoying pension updation, he must be sympathetic to his staff as well. Please remember, the crux of RBI is better than IAS. Only we lack guts borne out of political patronage. 

- Sitendra Kumar

Promotion to the position of Governor should be from Dy. Governor from RBI Cadre by seniority like CJI from supreme court judges for keeping real independent and autonomy of RBI and to avoid public opinion that RBI is also a parrot of central government like CBI. Public confidence has to be kept high by adopting selection from RBI Cadre -- Governor > Dy. Governor > Executive Director > Chief General Manager. Central Government to adopt this selection procedure in larger interest of the RBI Image and controversies in selection to this position from outside channels. 

- C B Gupta

A world to win over

Exactly a decade ago, Bimal Jalan famously declared in his farewell interview as Governor of the Reserve Bank of India (Financial Express, August 18, 2003): "there is no longer an external constraint to (India's) growth". A decade later, talk of an "external constraint" to growth has resurfaced. To an extent, it is the consequence of the trans-Atlantic financial crisis and the global economic slowdown, but it is also a manifestation of internal problems. Jalan's 2003 declaration was doubly significant............

Read - IE

Twist in RBI's tale

.......there was the issue of communication. Under its current Governor, D Subbarao, the RBI has emphasised clarity and transparency in its communication strategy. But last Monday's announcement did not achieve either of these objectives. On the contrary, its terseness left everybody guessing how the measures were expected to work, and towards what end. Subsequent messages by other government representatives appeared to add to the confusion. For example...............

Read | Business Standard

Policy Sanity for a Recovering World

.......Monetary policy, says the communiqué, should focus on domestic inflation-targeting without strangling growth. This is a tough call, as Reserve Bank Governor Duvvuri Subbarao knows. When prices are persistently high, he is blamed for doing too little with interest rates; when rates are hiked, he is berated for keeping them too high and squeezing growth. In this debate, it is forgotten that..............

Read - ET

Are India’s policy rates too low?

..........The question of what Governor D. Subbarao should do next is intimately linked to the question of what the “correct” level of interest rates should be in the first place. A tighter monetary policy after a long period of unusually low interest rates has very different implications from a similar action when interest rates are close to their neutral level, where monetary policy is neither tight nor loose. One useful way to estimate the desired level of interest rates is based on two sets of data............

Read - Mint

More clarity, no new measures

........With a flurry of measures announced in the last few days, the July monetary policy statement may not have too many new announcements, but markets will be looking for some clarity on the RBI’s overall approach to attaining currency stability. There are several open questions: How far will the RBI let interest rates rise in a slowing economy? If these tightening measures are temporary, then under what conditions will they be reversed? How robust is the relationship among liquidity, interest rates and the currency in the Indian context?...........

Read - Mint

Why even the bravest of the brave can’t predict RBI’s next move

The Reserve Bank of India’s 30 July 2013 policy review has gained significance on the back of its actions in the last few days. The central bank has sent confusing signals to the market by first announcing liquidity tightening measures and then taking steps to prevent bond yields from rising...........

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Subbarao Tightens Fist, Rate Hike All but Given Next Week

...........“These measures have had a restraining effect on volatility with a concomitant stabilising effect on the exchange rate,” RBI said. “Based on a review of the measures, and an assessment of the liquidity and overall market conditions, it has been decided to modify the liquidity tightening measures.” But the measures will also impact the government’s borrowing costs and strain the already stretched fiscal further. The interest rate increases this time are not like in 1998 when Governor Bimal Jalan shocked raising repo, bank rate and CRR..............

Read - ET

Falling rupee: It’s the Government, stupid

The stance that the RBI should take in its July 30 Monetary Policy Review Statement is being hotly debated. Popular opinion seems to be that with the rupee is refusing to be coaxed or coerced into behaving itself, the RBI is left with little option but resort to a tight monetary policy. However, it appears to be a case of missing the woods for the trees. Two specific issues come to mind. First, a the myopic concentration on global factors to the exclusion of the role of the Government. Second, a misplaced focus of relying on on a single instrument — short-term interest rates — to achieve multiple (and mutually conflicting) objectives, namely, growth, price stability and exchange rates. As long as these twin issues remain unresolved, the RBI may well continue with its ‘costly gamble’..........

Read - HBL

ANOTHER RE GAMBIT

.......The RBI said its measures over the past two months have had a restraining effect on volatility with a concomitant stabilising effect on the exchange rate. “ Based on a review of the measures, and an assessment of the liquidity and overall market conditions going forward, it has been decided to modify the liquidity tightening measures,” the central bank said in a circular.........

Read - FPJ

Need to re-define poverty: C Rangarajan

Though Tendulkar methodology is being criticized now, it drew kudos when proportion of the people below poverty line rose to 37.2% for 2004-05 against 27.5%, calculated on the basis of earlier methodology. Can we expect similar raise of poverty numbers after your recommendations come?............

Read | Business Standard

Father of poverty line takes estimates with a pinch of salt

The Planning Commission has issued poverty estimates based on the Suresh Tendulkar methodology, while admitting it was not taking this seriously. Which is also what quite a few statisticians feel about these estimates, including the man regarded as the father of India’s first official poverty line estimate in recent times, Yoginder Alagh..........

Read | Business Standard

China to join hands with India to bust fake Indian currency notes network

NEW DELHI: In what could be the beginning of cooperation between India and China on the security front vis-a-vis threats from Pakistan, Beijing has expressed concern about their country becoming a route for smuggling of fake Indian currency notes (FICN) and have agreed to crackdown on the network.  Chinese financial intelligence agencies have established communication with India's Directorate of Revenue Intelligence (DRI) seeking details of a recent seizure of an FICN consignment smuggled via China. ..........

Read - TOI

Saraswat Co-operative looking to acquire Pune-based bank

India’s largest co-operative bank, Saraswat Co-operative Bank (SCB), has set its eyes on yet another distressed urban co-operative bank for possible acquisition. The bank is conducting due diligence on the Pune-based Rupee Co-operative Bank, said a senior SCB official. Since 2006, SCB has aggressively pursued an inorganic growth strategy. So far, it has acquired eight loss-making urban co-operative banks, including Maratha Mandir Co-operative Bank, Mandvi Co-operative Bank, Nashik Peoples Co-operative Bank and South Indian Co-operative Bank. The century-old Rupee Co-operative Bank has 35 branches, four extension counters and seven ATMs, all in Maharashtra. Currently, SCB has 242 branches and 168 ATMs spread across six States — Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Goa and Delhi. It has deposits and loans aggregating about Rs 22,000 crore and Rs 14,000 crore, respectively............

Read | Business Line

RBI relaxes KYC norms for updating bank data

Mumbai: Banks will now be required to update know your customers (KYC) data only once in two years for high risk entities, and just once in 10 years for low-risk clients, the Reserve Bank of India (RBI) said on Tuesday. "The issue has been reviewed in the light of practical difficulties/constraints expressed by bankers/customers in obtaining/submitting fresh KYC documents at frequent intervals as the relative documents submitted earlier specially by low-risk customers have remained unchanged in most of the accounts," the apex bank said in a notification.................

Read.........

Karnataka govt turns down BJP demand for CBI probe into bank scam

.......Cooperation Minister H S Mahadava Prasad said as per RBI report, the irregularities were to the tune of Rs 102 crore in the bank and investigation has been conducted into three cases. “Criminal cases have been filed,” the Minister said, without elaborating. He said the government would take further action once the ongoing process is completed.........

Read - HBL

Where are the gold prices headed?

..........“The main aim of RBI, through this recent measure, is to restrict import, limit all gold coin and other transactions through jewellery shops only and prevent banks and non-banking financial companies from entering this arena. The move is likely to generate more interest in refining from scrap gold, which is available in a huge quantity in India,” said C P Krishnan, whole-time director, Geojit Comtrade..................

Read | Business Standard

Credit card payments: Use your face

No more swiping credit cards to make payments! A new technology that allows customers to use their face (facial features) instead of swiping a credit card to purchase goods has been developed by a Finnish company. The technology provided by Uniqul, works by recognising the customer's face and then linking it to the individual's bank account............

Read..........