.........Analysts warned that giving depositors the upper hand over other creditors will have serious implications for bondholders, potentially leading to higher wholesale funding costs for the banks. "Now that RBI's stand on depositor preference is very clear, we will have to review our support assumptions on debt instruments once the resolution regime comes into force," said Saswata Guha, a director at Fitch Ratings, India.
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.
Tuesday, May 27, 2014
No debt recast requests so far in FY15
With the Reserve Bank of India’s (RBI’s) new guidelines on the management of stressed assets in place, banks have not been knocking the door of the Corporate Debt Restructuring (CDR) cell. The cell has not received a single new case for a loan recast from member banks so far this fiscal. The guidelines are aimed at helping banks spot trouble early and take speedy action to prevent assets from turning bad............
Banks unlikely to heed Kerala State directive on loans
... Considering the growing rate of non-performing assets (NPAs), the Reserve Bank of India (RBI) has instructed banks against disbursing unproductive loans. Primary Cooperative Banks (PCBs) without own funds have to avail themselves of loans from the district cooperative banks for their lending operations. On clearing unproductive loans, the PCBs will have to bear........
Banks can wait to trade in commodity futures
........Way back in 2006, the Gupta Committee report released by Reserve Bank of India argued in favour of allowing banks, MFs and FIIs to trade commodity futures. The policymakers kept the recommendation on hold, and for good reasons. India was not ready then for rabid financialisation of commodity markets whose activities touch the lives of almost everyone in some way or the other. This is especially true of sensitive agricultural commodities – food articles – that have a high weightage in consumer price index. The situation is no different even today.............
Frame new policy for coops.: Sudheeran
....The sector needed to be streamlined to arrest unhealthy practices, Mr. Sudheeran said. The government should take steps to see that the NABARD directly disbursed funds to the primary banks, he said. The cooperative institutions should also be freed from the clutches of political parties to ensure transparency in their administration, he said. With the cooperative banking sector facing additional tax burden in the wake of the Reserve Bank of India (RBI) enforcing a fresh tax slab on its business turnover, the government should evolve new policies to streamline the cooperative institutions, he said..........
RBI authorises three more companies to open white label ATMs
Reserve Bank of India (RBI) on Monday authorised three more non-banking finance companies (NBFCs) to open and operate so-called white label automated tellers machines (ATMs) in addition to the four companies allowed earlier.........
Monday, May 26, 2014
Govt, RBI shadow boxing must end - DR R. K. PATTNAIK
.........In essence, the approach of RBI to increase interest rates to control aggregate demand and thereby anchor inflation expectations has been at the center of the discord. There are also media reports that the RBI’s policy stance to control inflation may not be appreciated by the new government and there could be leadership change in the RBI. In this context it may be recalled that the election manifesto of BJP has specific action points on inflation management. The resolutions in the manifesto are well deserved steps in handling the supply side of inflation management. To ensure that inflation management becomes credible and sustainable the NDA government may also consider supporting the demand management policy stance of RBI. In the fitness of things, the new government should listen to the RBI and give its due...........
Read - FPJ
RBI and INFLATION: The Chase Begins…
.........The committee appointed by RBI gave suggestion to solely focus on CPI and not on any other indicator. There are many reasons for choosing the CPI as nominal anchor for monetary policy. One of the reasons is that many countries in the world are now choosing this indicator as the base for their monetary policy but India and China. It is easy to track the CPI and even so called ‘AAM AADMI” can also relate the RBI’s monetary policy decision to increase or decrease the rate w.r.t CPI number. But the larger question is .............
R Gandhi Deputy Governor Reserve Bank of India at FAPCCI
R Gandhi Deputy Governor Reserve Bank of India, Mumbai speaks on ordinary topic relevant to ordinary public. Gandhi says all are primarily public and then refer to FAPCCI. The ideas and impacts of Gandhi explains why they bring certain resolution from Reserve Bank of India. The National Brand and other difficulties are faced by the common public when they first addressed. After finishing them they kindly react to the ideas and they really put them. Gandhi thanks Ayyadevara and Prasad. Gandhi says Know Your Customers is not a reason phenomenon. The concept of Banking Industry is focusing on the essence of them knowing the customer that has been practiced by Bankers from day 1. Banks focus more on Asset not on Liability side as no banker takes risk and parts from the Bank to an unknown person. When a Banker lends money to the party then there is interest list, trade and individual. Know Your Customer assessment is nothing but finding employee the way they can assess of how far the money comes back from creditor’s assessment. This is nothing but Know the Customers Assessment. Gandhi speaks on the safety and soundness of banks.
Where Duvvuri Subbaro grew up
..........According to the family friends of the former chief of the apex bank, his father late Duvvuri Mallikarjuna Rao, who worked as Assistant Public Prosecutor in the city courts, lived in a rented building in the same area before he purchased this house. Later, it was named as ‘Mohan Manjal’ in memory of one of the Duvvuri’s family members. The family of nine members lived in the house until Mr. Subbarao’s father expired. Later, it was sold to a city-based medical practitioner to become a hospital. It became a restaurant after it changed hands again.............
Former RBI Governor Dr Subbarao and Chinese Business Tycoon Mr Wang join NUS B school
...Dr Subbarao will be delivering a series of lectures on central banking challenges co-sponsored by the MAS. While three lectures will be held at the NUS B School on May 30, one will be at MAS on June 2, 2014. Speaking on the occasion Prof Bernard Yeung said “We are deeply honoured to welcome Dr Subbarao to NUS Business School, one of Asia’s leading business schools. As former Governor of RBI and Finance Secretary, Dr Subbarao led India through some of the most challenging times in the country’s economic development. I am confident that our faculty members, students and community will benefit immensely from his insights and knowledge. We look forward to his lectures,”....
India Post needs to apply afresh to Reserve Bank of India for bank licence
India Post will have to apply afresh to the Reserve Bank under differential licence guidelines if it wishes to start banking operations. According to sources, aspirants, including the Department of Post, will have to apply once again after guidelines on differential bank licences are issued in the next few months.......
Interference in public banks
.....There are many reasons for this delay - interference from the Central Vigilance Commission (CVC), Right to Information (RTI), and political interference. There is an urgent need to look at these matters, so that the decision-making can become smoother. On the other hand,.............
The importance of being independent - Janmejaya Sinha
........However, the one issue on which I disagree with the committee is the structure of its solution. It is surprising that the committee did not stay with the analogy of Axis Bank, but went on to create what I believe is an unduly complex and unnecessary solution of a bank investment company (BIC) and a bank boards bureau (BBB). Both may lead to the creation of the same problems that the committee seeks to avoid. Why do we want to shift all government holding into a central bank investment committee? Why can't these banks be allowed to operate like other banks? The nomination committee of the board will pick the CEO and compensation will be market-based. When we can allow independent banks with independent boards to run their banks, all we need is that the government stake be brought below 51 per cent. I think it is simpler and more effective, after...............
Nayak panel stirs up a row
......Government interference has meant that policy objectives rather than commercial considerations dictate a PSB’s working. A less charitable way of saying is that it is because of government pressure that several PSBs have lent to unbankable companies. Not all the worryingly high non-performing assets that banks are saddled with are due to government interference but if banks had decided on purely commercial considerations, they would most certainly had been better off.............
Directors - The weakest link?
........the crux of the problem is how directors are appointed or how they manage to get appointed on the boards of banks. There seems to be a lack of basic skills analysis of directors. Are they competent to join the board is a moot question. It is well-known that ................
Prepayment penalty on floating rate loans may come back
........... However, this position could be reversed if the recommendations of the working group set up "to examine the issues related to discrimination in pricing of credit and recommend measures for transparent and appropriate pricing of credit under a floating rate regime" are accepted. Unfortunately, their recommendations, if implemented, are unlikely to result in a fairer regime. In fact the recommendation, if accepted, might lead to a more unfair regime..............
Banks urged to conduct coin melas
....Vice-president of Coimbatore Consumer Cause M. Govinda Rao says that the RBI should ensure that banks organise special camps regularly, even once in three months, to distribute coins. Banks should also ensure that coins are distributed to customers regularly so that there is no shortage in coin availability.
Where will it settle?
......A halt at this level will mean that the rupee could remain in the band between 57 and 70 for a few years as it consolidates. But such a move will keep open the possibility of a move below 70 over the long term. The RBI has also made it clear that it does not want to ward off rupee depreciation. It is only volatile movements, with depreciation happening over a short period, which it wants to avoid. If the rupee gets past the hurdle at 57, the next resistances are at 54 and then 52. We do not envisage a move above 52, even if copious inflows enter the country. ......
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