The monetary tightening by the Reserve Bank of India and spike in the short-term interest rate have closed many options for India's most indebted companies. As credit gets scarce and expensive, many companies will be left with no option but to go on a diet to survive the current economic slowdown............
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Monday, July 29, 2013
Banks roll back interest rate cut ahead of RBI monetary policy review
........What is significant is that this trend has begun ahead of the policy review by RBI Governor D. Subbarao on July 30 and at least one bank Chairman (State Bank of India CMD Pratip Chaudhuri) has openly expressed the view that it is better to hike interest rates rather than smother liquidity with a view to shore up the Indian rupee............
A Little Certainty, Governor Subbarao
............
Nobody expects the RBI to cut policy rates: keeping current rates may be
the best way forward. The outlook is very clouded, but one thing is
clear: the RBI can legitimately hope that the current exchange rate
stabilises. But if the market drives the rupee down, don’t fight it —
that’s wrong, and unsustainable.
Read - ET
‘Dear money policy is not a great recipe for growth’
..........The RBI is trying to curb the steep fall in rupee by mopping up excess liquidity. The intent is to reduce the excess liquidity which banks seem to be using for taking speculative position in the exchange markets. However, a prolonged money tightening policy will hurt both banks and the industry. If these measures continue for more than three months, then banks will be forced to raise lending rates due to higher cost of funds. This will in turn lead to more stress in asset quality for the entire sector. Also, banks will witness significant treasury losses in the September quarter, on their marked-to-market portfolio of SLR (statutory liquidity ratio) investments.......................
Monetary policy: more than usual dilemma
.............But for observers, this might be the correct time to start looking at the whole of the monetary policy statement, not just to the section on monetary measures for understanding the extremely complex environment in which policy choices have to be made.
Too many risks, too small rewards call for caution
.........“At present RBI is supporting the rupee, but the measures to control rupee volatility have been negative for the market as the risks are very high,” Mathews said. “As risks have gone up, market participants are concentrating only on some of the large-cap stocks that are fundamentally sound,” Mathew said. “I am a bit cautious in taking risks and we are trading very cautiously, so much that all trades are ending on the same day,”.........
RBI has debased the rupee; no hope in next Guv too
It’s not that we necessarily need a foreigner, but just that nationality should not be a criterion for choosing Subbarao’s successor
............. After all, in all these years where the RBI has been continually debasing the rupee, they have expressed their support for a easy money policy either explicitly or through their silence. What we really need at the RBI is far-reaching reforms that in effect end the monopoly of the RBI in the issuance of money. We need alternate and private monies to circulate and let the RBI compete against the barbaric relics with its PhD economists and let the markets decide the winners. Let us provide a choice to consumers about the currencies they want to save in – this would force the hand of the RBI to behave more responsibly in the future and not just bow down to the wishes of their political masters.................
A rock and a hard place
........... While the ostensible purpose of these measures, stabilising the rupee, seems to have been achieved at least for now, there may be an adverse impact of these actions on the growth-inflation balance, on which monetary policy has been focused until now. In this regard, the latest readings on core inflation and industrial production do make the case for monetary stimulus...............
RBI's bitter medicine
The intent of this analysis is to decipher the rationale behind RBI’s recent regulation to stem the rupee volatility and to establish whether these measures could potentially open up a few positives (beyond a support for the rupee) for us in the near term. I believe that the benefits of steps taken by RBI will be visible in some time and that RBI could perhaps tweak some regulations to achieve its goal, at the same time balance expectation of the stakeholders............
In rupee-growth dilemma, RBI may go for status quo on rates
............“It will be a tightrope walk for the central bank. Growth was required to be supported, but the recent exchange-rate volatility has compelled it to tighten liquidity. Holding on to the liquidity control is essential at this point to keep the exchange rate under control. So, there is very little scope for RBI to take an action (for supporting growth),”................
Rupee will be the focus of RBI's monetary policy on July 30 instead of growth and inflation
MUMBAI: For the first time since the 1997 East Asian crisis, the Reserve Bank governor's prognosis for the Indian rupee will take centre stage at the quarterly monetary policy on July 30, instead of interest rates. In what could be the last quarterly monetary policy unveiled by Duvvuri Subbarao, the bureaucrat-economist will explain his recent actions that have left most investors flummoxed..............
Decking up the rupee
.............The RBI should, in its upcoming policy review on Tuesday, make it clear that the current monetary measures are only temporary and do not amount to a reversal of its gradual easing stance until recently. This is a time when the Indian economy can neither afford a further growth slowdown nor a slackening of fiscal and external stabilisation efforts.
Importing gold is impossible now
.....Owing to the RBI notice, the Ahmedabad bullion market witnessed zero deals among traders and retailers. “When we go to bank to buy gold, they show us the RBI notice which says that we have to keep 20 per cent of that aside for export. We are not exporters. We do not even have any export orders. So, not a single bullion trader or jeweller in Ahmedabad bought gold on Tuesday. This would lead to gold entering the country via illegal means,” said Zaveribhai Zaveri, president of the Gujarat chapter of All India Gems and Jewellery Trade Federation. ...........
Of gold bars and coins
................Due to this increase in CAD, the Government suspended the sale of gold bars and coins, a move that is likely to continue till the deficit is reduced to a significant extent. Small and large jewellers, and major jewellery retail chains have been requested to stop sales and taking orders of coins and gold bars. Besides this, the RBI too has put restrictions on banks on imports of gold. Import duty was hiked to 8 per cent...............
IRDA bancassurance norms may be delayed
The Insurance Regulatory and Development Authority (IRDA) guidelines for tie-ups of insurance companies with banks for distribution of products may be delayed as the feedback to the regulator reflects divergent views from various stakeholders, said industry experts. Some insurance companies that do not have tie-ups with banks have recommended to the Life Insurance Council that a bank should be allowed to strike deals with five insurance companies, at a limit of 25 per cent an insurer. However...................
All bank branches to have one ATM before March 2014: Chidambaram
Sivaganga: Public sector banks have been asked set up ATMs in all branches by March 2014 to enable customers in rural pockets to do banking round-the-clock, finance minister P. Chidambaram has said. Inaugurating the 5999th branch of Punjab National Bank (PNB) at nearby Tirupattur, he said orders had been issued to all nationalised banks in this regard and their CMDs had been asked to implement the same in the current financial year...............
‘Use Kannada in banking activities’
......... “It is the desire of our government to encourage the use of Kannada in day-to-day banking activities.” It was also necessary to ensure that employment opportunities were expanded for persons knowing Kannada........
M S University clears way for Rs 2.50L recovery from deputy registrar
VADODARA: M S University's (MAS) syndicate members have cleared way for recovering Rs 2.50lakh that the university's deputy registrar M MBeedkar had drawn as remuneration from the Reserve Bank of India's (RBI) Endowment Unit at the university. Over and above his own salary,Beedkar, earlier in-charge registrar, had drawn Rs10,000 per month from the unit that was lying defunct for years................
Gujjars file petition against two banks, allege discrimination
A petition was filed before National Commission for Schedule Tribes and Reserve Bank of India against two banks operating from Jammu and Kashmir accusing them of ignoring candidates of Gujjar and Bakerwal communities for the post of Relationship Executives..............
Aadhaar or Cards? A Costly Debate
Will
banks have to spend a fortune to give customers the choice of either
putting their finger prints or swiping plastic cards to withdraw money
from ATMs and pay for purchases? Not really, says the Unique
Identification Authority of India (UIDAI), the agency that issues the
12-digit Aadhaar numbers and is pushing for biometric authentication for
credit card and ATM transactions. But bankers disagree.................
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