RBI's long history as an inflation fighter: Raghuram Rajan likely to uphold tradition

........On the issue of coordination between fiscal and monetary policy, Rajan was a bit more circumspect. But he has an excellent precedent to help him along. It’s there in the RBI Annual Report, 1984-85 , under the signature of Manmohan Singh, “While careful supply management could help, aggregate demand is a critical factor in the short-run management of prices . In view of the direct bearing that fiscal deficit has on reserve money and on money supply, coordination between fiscal and monetary policies is imperative if money supply is to be kept within limits and price stability is ensured with a view to facilitating growth with equity.” ........

Read - ET

The potential for a surprise from RBI is high due to multiple policy levers: Nomura

...... If the RBI decides to make repo rate the operative rate immediately, then Nomura believes it would be accompanied by a 50bp repo rate hike. RBI has its monetry policy review meeting tomorrow  (29 October 2013). Nomura expects the RBI to downgrade its FY14 (year ending March 2014) GDP growth forecast to 5% year-on-year from 5.5% and raise its WPI inflation forecast to 6.5% by March 2014 from 5%..........

Read - Moneylife

Rates obsession

......One-third of all NPAs of PSBs were contributed bythe top 30 NPA accounts in each bank. Deregulation of savings bank interest rates did not add to the interest income of real SB account holders. The net interest margins enjoyed by banks in India are among the highest in the world............

Read.........

RBI Governor Rajan to set the stage for normal monetary policy operations

Reserve Bank of India (RBI) Governor Raghuram Rajan is widely expected to make a return to normal monetary policy operations on Tuesday when he announces the second-quarter policy review. Rajan, in his second policy review since taking over as the RBI chief, is likely to make the repo rate the effective policy rate that decides lending rates in the economy. Here's how he will likely do it...........

Read........

Prices of food products to increase further: RBI’s inflation survey

his was revealed in a survey conducted by the Reserve Bank of India to gauge inflation expectations. The survey, among other things, is an important feedback that the RBI takes into account while framing its monetary policy. The RBI defines anchoring inflationary expectations as one of its key functions. Therefore, it can be interpreted that the expectations of people that prices will only go up might put the RBI ill at ease when it meets to decide the monetary policy today.......

Read - HBL

Rajan prepares ground for rate hike on stubborn inflation

Reserve Bank of India governor Raghuram Rajan has prepared the ground for increasing the repo rate– the second successive rate hike in two months – as inflation continues to remain above the central bank’s comfort level.  The central bank also sees modest improvement in growth in the second half of current financial year..........

Read | Business Standard

Are consumption pattern change and vegetable inflation linked?

.....One theory that was put forward by senior officials at the Reserve Bank of India (RBI) was that the inflation problem has its roots in a sharp increase in demand for certain food items that people eat more frequently as incomes rise...........

Read - Mint

‘NSEL crisis exposes regulatory gaps’

............The Union Government has taken several policy initiatives to plug regulatory deficiencies. It has transferred the administrative control of FMC to the Ministry of Finance and constituted two committees, one under RBI Deputy Governor K.C. Chakrabarty and the other under the Secretary, Department of Economic Affairs, Arvind Mayaram, to look into various aspects relating to this crisis. These committees have since submitted their reports to the Centre, the RBI said..........

Read - HBL

Stringent gold import norms may be relaxed

.........“Some discussions are going on to relax the rule. The government is considering a proposal whether importers can be allowed to make the declaration less frequently, say on an annual basis,”.........

Read | Business Standard

Your private data may be online, courtesy govt

To push the government's agenda of greater transparency and accountability, several states and central departments might be, unwittingly, following a bare-it-all approach in posting citizen data online. And, even sensitive and personal information, such as bank account numbers and income status, is not being spared........

Read | Business Standard

Hacking attacks up, bounty for Indian IT companies

Technology companies are expecting a boom in anti-money laundering software sales as Indian financial services firms look to upgrade their technology systems in the wake of scandals and stricter policies from the Reserve Bank of India. Indian banks have been using anti-money laundering software but the last major implementations happened four or five years ago and those systems merely reported abnormal transactions. Banks now want to leverage modern tools such as using analysing real-time data to predict possible frauds or illegal............

Read - TOI

Cooperatives, PO savings hold the key - DR. N. A. MUJUMDAR

........Those small borrowers who were thrown out of the formal financial sector, sought refuge in the arms of the moneylenders and have stayed there. All this went on, till say 2008, when financial inclusion became fashionable. There are limits to the PSBs’ ability to reach out. First, physical access and second resource constraint. The credit deposit ratio was 78 per cent in August 2013 and the incremental credit- deposit ratio 70 per cent. Thus the PSBs are already over- stretched. But the solution is not new, small private sector banks, which may take time to grow roots in the rural economy. The cooperative sector holds out great potential in this context. Look at the reach of cooperatives. Cooperatives account for a relatively small share in the bank– dominated Indian financial system. However, given their geographic and demographic outreach, they hold a key position in the financial system. Geographically, cooperatives have been instrumental in extending formal financial services to villages and small towns in India...........

Read - FPJ

Walk alone but don’t dance alone: Chidambaram to Subbarao

........But those who attended the function say that it was a farewell with a difference. Despite the strains in the relationship a lot of thinking went into selecting a coffee table book for Subbarao. A book on Indian dance styles was chosen given the penchant that the former Governor has for dance forms, especially the Brazilian style Salsa. Finance Minister P. Chidambaram, the Chief Guest at the event, went a step ahead telling Subbarao that he might have wanted to walk alone as Governor but he never wants the Governor to dance alone...........

Read - HBL

The Independent...............

At the launch function of his book, Barons of Banking: Glimpses of Indian Banking History, author Bakhtiar Dadabhoy delivered a short speech, apparently under instruction from his publishers. He said he was keeping the speech short to compensate for his “bulky tome”, and delivered the perfect punch line: “Even if you don’t plan to read it, buy it!”........

..........Y. V. Reddy, who was chief guest at the launch, took a crack at the debate about central bank independence. A former RBI governor himself, Reddy was often asked about this and this is how he responded: “The RBI is independent. The Governor is very independent. And I have taken the permission of the Finance Minister to say so.”

Read - HBL

On Central Banking

......There was a belief or an unwritten law in the past that the central bankers should neither be seen nor heard in the public. It was the late H V R Iyengar, an exceptionally brilliant civil officer and the sixth governor of the RBI (4th Indian governor, 1957-62), who broke this convention and started periodically making public speeches expounding on central banking practices and policies to the benefit of laypersons. From then on it was a quantum jump to the days of Duvvuri Subbarao who effectively brought the concept of central banking to the doorsteps of even the villagers in India, apart from ...............

Read........

Vaastu differences

Why is it that every finance ministry official who moves to the Reserve Bank of India as governor turns against the finance minister who is the most responsible person for appointing him? Y V Reddy,D Subbarao and now Raghuram Rajan - all stop seeing merit in many of the things the finance ministry suggests. Subbarao, who had ........

Read | Business Standard

ICAI to point out financial health of WB

.....Kishore Periyar, Deputy General Manager, DNBS, Reserve Bank of India, said, “Over the last two years RBI has undertaken grassroots level sensitization programme in the mother tongue where police officers, consumer welfare officers, district level officials of directorate of small savings are being educated on how the common people should be educated about investment. After all one rupee saved is one rupee earned.” Periyar went on to add that the Reserve Bank of India (RBI) Rural Planning Department has started a new programme called 'Raju and Money' which is run in all village gathering like fairs and weekly bazaar. "Besides this RBI is continuously in touch with Urban Bank Department and advise people not to invest in companies about which they don’t understand," he said.............

Read.......

Bridge ideas & execution, says RBI deputy governor KC Chakrabarty

At a time when there is no dearth of innovative ideas, Deputy Governor of Reserve Bank of India (RBI) KC Chakrabarty emphasised that it was time to bridge the gap between innovative ideas and its effective implementation...........

Read - DNA

Sequencing monetary policy moves

............The menu of monetary policy instruments is quite wide in the October meeting, keeping markets guessing about the details. However, more clarity on financial reforms and the new RBI Governor’s market-development agenda might overshadow the importance of the monetary policy actions

Read - FE

RBI’s just tinkering around

.....You cannot get a stronger repudiation of the extreme short-termism in market reactions to developments in the macro-economy than the former SBI Chairman’s statement. Indeed, if the latest WPI number had come in a shade lower, the “Street” would have sounded the all-clear for a reduction in the repo rate. Such is the fixation on the short-term. The policy recommendation is data release to data release. A perspective on how central bank interest rate moves impact banks’ deposit and lending rates is not obtained in the process; and, in turn, how they influence consumption, savings and investment behaviour in the economy over a period of time. With his hard-hitting comments, therefore, the ex-SBI Chairman may have done a signal service in highlighting the RBI’s challenges................

Read - HBL