........he foresight and timely action of the RBI and Government of India ensured its merger with Punjab National Bank. Few other problem resolutions and strategic consolidations have taken place in the banking sector amongst about 35 mergers and acquisitions in India, post 1990 economic reforms. However few failures of Cooperative banks could not escape the ultimate closure. This brings into focus well-timed discussions within the Reserve Bank of India, drawing lessons from the causes and factors of domestic and international failures and the complexities of globalisation. A view is gaining ground that the RBI needs to strictly control certain risky tendencies of few banks in the country to minimise shocking surprises as happened in USA,UK and elsewhere. ........
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.
Monday, October 14, 2013
A Hopeful New Phase Called 'Raghuram Rajya'
......As in the Ramayana, it reflected a belief in an ideal cast of characters – the ideal father, the ideal brother, the ideal wife (all subsumed, in contemporary life, into the ideal citizen), the ideal king and the ideal servant (in contemporary life, ideal elected representatives and ideal bureaucrats). While the word “ideal” is curiously old-fashioned and, indeed, sometimes seems almost laughable in current usage, it actually reflects the only true reality of man. For many years of my life (the last few that I spent in New York), I was known as Ideal Boy, so I know what it means. And now, we have another Ideal Boy at the head of the RBI.........................
I am not superman, says RBI Governor on euphoria surrounding him
Big banking sector reforms coming soon: Raghuram Rajan
.....The policy framework for the entry of foreign banks in India, Mr. Rajan added, would be unveiled in the next few weeks. The banking sector reforms, in particular to those facilitating entry of foreign banks in India in a “big way” is part of the five pillars of reforms, including monetary policy framework, which the RBI is going to implement in the next few years, the RBI Governor said. “For foreign banks, if you adopt a wholly-owned subsidiaries structure and we are coming up with details on that in the next couple of weeks, we will allow you near national treatment,” he said, quickly adding that there would be two conditions..........
Policy soon to facilitate entry of foreign banks: Rajan
......The banking sector reforms, in particular to those facilitating entry of foreign banks in India in a “big way”, is part of the five pillars of reforms, including monetary policy framework, which RBI was to implement in the next few years, the RBI Governor said. “For foreign banks, if you adopt a wholly-owned subsidiaries structure and we are coming up with details on that in the next couple of weeks, we will allow you near-national treatment,” he said, quickly adding there would be two conditions..........
RBI puts corporate black sheep on notice
.....Take the two statements, made independently of each other, and it is clear that things do not augur well for the black sheep in corporate India. Actually the strategy is more than just a clean-up operation; it is a way of killing several birds with one stone. By couching the argument with the line that the public needs to know, the governor is seeking to usher in transparency—a key element if India has to continue to make its transition from an exception-based to a rules-based regime. At the same time, he has been careful not to tar all bad debts with the same brush by clearly focusing on projects where promoters have winged it on minimal equity infusion together with a huge overhang of debt..............
RBI shouldn't go by retail prices
.....So, should the RBI continue to use WPI as the anchor for monetary policy? The case against using WPI is that it captures prices only at the wholesale level, rather than retail prices. Further, WPI does not adequately capture movement in the prices of services, which make up more than 60 per cent of the GDP. Former RBI Governor D. Subbarao had rightly pointed out that focusing on CPI reflects the welfare objective of monetary policy better. However, he cautioned against using CPI for monetary policy for three reasons..........
Multi-organ failure - Charan Singh
.....As a citizen, it is clear that the Union
Ministry of Finance and the RBI are aware of the grim situation. But
what is not clear is whether the two have a common view on the
diagnostics of the problem? Is it high interest rates, policy paralysis,
governance deficit or simple uncertainty that is the cause of lack of
demand and slow growth? In the absence of a credible and common
diagnosis, at least in the perception of the common public, how would a
strategic recovery path emerge that inspires confidence in the course of
treatment? It is this lack of direction and forward guidance that
probably is confusing the market...........
Indian Economy Since Independence
......This book initially designed for Delhi University students, was transformed over the years into an unusual book for students of all Indian universities.That eminent economist Dr. V. K. R. V. Rao declared that “ the book was a pioneering effort and was an unusual kind of text- book”. Students of economics find that most of the material germane to their studies are spread over hundreds of journals, periodicals, official documents publications of RBI, NCAER and ISI. Dr. Kapila has successfully compiled in one volume the kernel from these.......
Read - FPJ Book Review by P.P.Ramachandran
India needs Effective Bankruptcy Laws
RBI
Governor Raghuram Rajan wants effective resolution of bad loans that
shows zero tolerance of mismanagement and fraud but makes room for
genuine, surmountable difficulty. This means changing India’s current
laws and procedures for dealing with corporate sickness.............
Read - ET
Read - ET
FinMin sends Raghuram Rajan report to PlanCom for 'necessary action'
........"Following the recommendations of the Finance Minister and pursuant to the directions of the Prime Minister, I am enclosing a copy of the report of the (Rajan) Committee for necessary action," said an official communication from the Finance Ministry to the Planning Commission..........
Fake notes a worry for BMTC
...“Earlier, I never used to come across counterfeit notes, but now the situation has changed. A couple of times I myself had to pay from my pocket as passengers had duped me with fake notes. It is now a common hazard being faced by all conductors,” he said. “It is not easy for anyone to follow these people. So whenever I receive a Rs 500 note, I check it multiple times to ensure that I will not be at receiving end,”............
Fake currency gang busted, 2 arrested
...."The accused would buy steel at Rs 45-50 per kilogram and make 50 to 60 coins out of a sheet of metal," said an officer, adding that the trio would incur a cost of about Rs 1.20 for every coin they made. The accused would pay the workers 20 to 30 paisa for every coin they made. Manoj would deliver the coins and would charge as low as Rs 15,000 when the RBI charges around Rs 25,000 for every bag of coin. ..........
Hunt on for new finance secretary
Even as the Ministry of Finance (MoF) has started preparations for Budget 2014-15, and has asked different ministries to enumerate their estimates of receipts as well as expenditures for the next financial year, the Budget in all probability will be prepared by a new finance secretary and also a new chief economic advisor (CEA) to the MoF. Finance Secretary R S Gujral is due to retire next month, while the post of CEA fell vacant after Raghuram Rajan took over as the governor of the Reserve Bank of India last month.............
Chidambaram questions IMF’s methodology for calculating India’s growth projections
....."For example, India’s growth rate, which was projected at 5.6 per cent (at market prices) in the WEO July Update, has now been revised significantly downwards to 3.8 per cent. I would like to ask, respectfully, what is the information that IMF has gathered between July and September, that we do not have, that has impelled the Fund to drastically change the estimate? We do not share this pessimistic outlook. We also believe there is a need for review of the methodology for growth projections as in the past IMF projections have often been at divergence with final growth numbers," ...........
Gold: The new rules for investing
...........You can also monetise your old gold coins/jewellery by depositing your holdings with the gold deposit schemes of banks. The minimum maturity period for these deposits has been reduced from three years to six months by the Reserve Bank of India. The deposit scheme now offered by SBI allows you to deposit physical gold in jewellery or coin form for a nominal interest payment with the bank. When you make a deposit, the bank melts the jewellery, tests the purity of gold and then issues a deposit certificate which you hold till maturity.............
Bankers cut consumer loans, cry foul on government missive
........“This is a case of directed lending. Directed lending in an economy can inherently result in losses mainly because credit discretion tends to be absent,” said Abizer Diwanji, a partner and head of financial services at global consulting firm EY, formerly known as Ernst and Young. “If lending is directed through incentivization, then the government should ensure that it is being done in a good credit risk policy framework. Risk management is very important,” Diwanji said, adding that directed lending for a limited period may not damage the system..........
This festive season, play your cards right
.....According to the Damodaran panel report, the percentage of interchange/ merchant fee charged by the card service providers for both debit and credit card being the same, a merchant is indifferent to a credit/debit card. Card data indicates that more than 80 per cent of the cards are debit cards and the customers feel that debit card is akin to cash as it directly debits their accounts and does not confer any advantage by way of a credit facility...........
Sebi working on guidelines for social media use in capital market
......That apart, with increasing popularity of platforms like Twitter and Facebook, capital market regulators worldwide are also looking to tap such tools to understand overall trends and also gather market intelligence. A senior Sebi (Securities and Exchange Board of India) official said it would take some time before the regulator finalises guidelines related to social media use...........
Saturday, October 12, 2013
Indians treat economy as they treat their cricket: Rajan
......"We Indians treat our economy very much the way we treat our cricket," Rajan said at a think tank event on Thursday, his first after taking over as RBI Governor. When the cricket team is doing well, the players can do no wrong. They are elevated to the level of God -- "disregarding the weaknesses that actually exist". When they do badly people throw rocks at their doors and castigate them for the same weaknesses, which were overlooked earlier, and which now look serious........
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