Large numbers are generally used to grab attention to a crisis.RBI Deputy Governor K.C. Chakrabarty, known for his outspoken views, did exactly that when he said that Indian banks have written off a whopping Rs 1 lakh crore over a period of 13 years...............
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Wednesday, November 20, 2013
RBI checks with banks on prospective entrants
.....RBI, which is now screening the applications to confirm if the candidates are complying with the fit and proper criteria, before sending it to the high level advisory committee headed by former central bank governor Bimal Jalan. For the initial screening, the banking regulator has sought additional information from the aspirants which includes additional balance sheet, source of funding, possible investors and their source of funding, among others...........
Competition act to cover forced bank mergers: MCA
.......MUMBAI: The corporate affairs ministry has turned down the Reserve Bank of India's request for a blanket exemption from the Competition Act for forced mergers of distressed banks initiated by RBI. The central bank had sought exemption under Sections 5 and 6 of the Competition Act, which requires prior approval from the government before a merger..........
Chit funds regulation: SC notice to Centre, RBI
The Supreme Court on Tuesday issued a notice to the Centre, the Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI) seeking their response on a PIL for putting in place a proper mechanism to regulate functioning of chit funds in the country. A bench headed by Chief Justice P. Sathasivam asked the government and the institutions to file their response within four weeks..........
FinMin, RBI panel discuss 49% cap on FII investment
........The Budget had put forth the proposal saying that FII and FDI definition should be clarified, below 10 percent would be FII and above that would be FDI. The panel which includes the Economic Affairs (EA) Secretary Arvind Mayaram, Reserve Bank of India (RBI) Deputy Governor HR Khan as well as Securities and Exchange Board of India (Sebi) EDs is looking at building this transition mechanism.............
Onions Bring Tears to RBI’s Rajan as Prices Surge: India Credit
........“Structural weaknesses and seasonal volatility are being combined and that’s why we’re seeing gains in double digits,” Rao said. The RBI “will be closely monitoring food and fuel inflation over the next couple of months when food prices are broadly expected to decrease. If that doesn’t happen then the RBI would be forced to raise rates at a faster pace.”
Policy enigma
......The measures proposed in the RBI’s monetary policy are hardly intelligible to the lay people for whose benefit they are supposed to work. But they have every right to understand them. After all the patient should know what medicine is being given to her/him. Unless the jargon is understood it would be difficult to judge the efficacy of the twin goals -- arresting inflation and accelerating growth -- announced in the recent review of the monetary policy for this year.............
RBI should and will keep inflation under control: Andrew Michael Spence
Andrew Michael Spence, recipient of the 2001 Nobel Prize for economics (along with George A Akerlof and Joseph E Stiglitz), favours the Reserve Bank of India (RBI)’s stance on containing inflation, despite some sections seeking polices to boost growth. Spence is also on the same page as RBI Governor Raghuram Rajan as far as monetary stance is concerned........
Bad loan lessons
.......... PSU banks are to blame for not being alert to warning signs—for 10 corporate groups, Chakrabarty points out, while bank credit more than doubled between 2007 and 2013, their overall debt rose 6 times. But there are larger lessons to be learned for all concerned.
RBI - Lessons from the past? - R.C.Mody
This refers to the report "RBI asks banks to increase bad loan provisions" (November 17). When faced with a similar situation the Reserve Bank of India (RBI) had appointed, in July 1974, a study group to frame guidelines on bank credit (known as the Tandon committee). The group, inter alia, examined whether norms could be evolved for the debt-equity ratio to ensure minimal dependence on bank finance. And as a result of its deliberations,..........
Trouble at the bank
.....More worryingly, banks are able to recover fewer bad loans with each passing year. While nearly half of the reduction in NPAs in March 2001 was due to higher recoveries, this ratio is down to around 29 per cent today. While PSU banks clearly need to answer for this, it is something the RBI and the government also need to worry about. It is clear the debt recovery tribunals and the Sarfaesi mechanism are not working.............
Calling the bluff
The RBI Deputy Governor must be appreciated for finally calling the bluff of PSBs. While a host of relevant issues such as need for stringent appraisal, lax credit risk management and regulatory control draw a holistic picture of the NPA scenario, K. C. Chakrabarty missed out on some critical issues at the grassroots level. The principal issue is the poor skill level of decision makers, who take credit decisions out of crisis rather than conviction. The rush by PSBs to increase the size of their balance sheets ahead of perceived mergers further aggravated matters. Finally the important role of internal audit as an extended arm of the regulatory process and its efficacy as an early warning system should have found a place in his discourse.
- D. Prem Nath, Thiruvananthapuram (HBL)
PSBs’ burden
Reserve Bank of India officials are quite right in flagging the risks to public sector banks from mounting bad loans. Gross non-performing assets (NPAs) of these banks have doubled as a percentage of their advances over the last three years. At over 4 per cent, this number is twice that of private banks. Worse, PSB books don’t fully reflect the real magnitude of the problem. Restructured assets (loans rescheduled at the behest of the borrower) make up another 8 per cent of PSB portfolios..............
Kinks in the non-performing assets of banks
.......However, given the tricky bye-laws and categories of credit management in the Indian banking system, headline numbers can be misleading. As a presentation made by Reserve Bank of India deputy governor K.C. Chakrabarty at a recent conference shows, Indian lenders have resorted to devices such as technical write-offs and restructuring loans to show a reduction in their non-performing assets.........
The NPA conundrum
........RBI, on its part, must address the broader issue of compelling banks to get into inclusive lending, where such risks may be high and will ultimately impinge on the quality of bank assets. Evidently, at some stage, we must be practical when it comes to lending and let this sense override emotion.
Automatic stabiliser
In textbook macroeconomic models, a floating exchange rate is viewed as an automatic stabiliser. When the balance of payments of an economy is under stress because of a large current account deficit or a drop in capital inflows, the currency depreciates, causing exports to increase and imports to decline, thus easing the stress. In the other direction, when there is a surplus situation, the currency appreciates, causing the current account deficit to widen, which eases the pressure. Of course, textbook models are oversimplifications, but that does not make them.....
Bond yield spike should ease on RBI action: Chidambaram
Finance Minister P Chidambaram on Tuesday said the sharp rise in yield on government bonds, driven by high inflation, was temporary and would come down on the Reserve Bank of India (RBI) taking some steps. "We hope that with some measures the RBI will take, and when the next set of inflation figures come, if food inflation moderates, it's possible that G-sec rates will go down,"......
Tea growers explore bitcoin option to expand global biz
.........However, the lack of domestic bitcoin exchange is now holding up plans to formalise the process. According to Ms. Peterson, Tealet is now approaching established exchanges that “we can integrate our growers’ business with”. While bitcoins are not illegal in India, the Reserve Bank of India is “watching and learning about the developments in bitcoin” even though it has no intention of regulating it right now.
Post Offices Can’t Sell Gold Coins
The
finance ministry has cancelled India Post’s tender for sale of gold
coins through its post office network through out the country. India
Post had sought to sell gold coins at a time when the government is
discouraging commercial banks to sell gold coins. The finance ministry
has cancelled the demand. “The tender is cancelled” said finance
minister P Chidambaram at a media briefing following the launch of the
Mahila Bank on Tuesday.............
Read - ET
Read - ET
Yet another PIL filed against Aadhar
Another public interest litigation has been filed has in a Kerala High Court questioning the government's move to link various welfare payments such as cooking gas subsidy with the unique identity or Aadhaar number. The petition, which has been accepted by the Supreme Court today, has also made the Reserve Bank of India and Election Commission a party. Court, has reportedly, asked the government and the central bank and election commission to respond to it........
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