...........A statement issued by the central bank said that the quiz is being conducted to increase awareness about the history and role of RBI, about banking and finance, economics, current affairs, personalities and events that have contributed to the growth and progress of India over the years. RBI also hopes to build a connect between itself and the young student community and improve financial literacy..............
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.
Saturday, September 8, 2012
PNB - Change in Directorate
Punjab National Bank has informed BSE that Govt. of India, Ministry of Finance, Department of Financial Services vide Notification dated September 06, 2012. in exercise of the powers conferred by clause (c) of sub-section (3) of Section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 of the Nationalised Banks (Management & Miscellaneous Provisions) Scheme, 1970/1980, has nominated Shri. N. S. Viswanathan, Regional Director Reserve Bank of India, Chennai, as Director on the Board of the Bank with immediate effect and till further orders, in place of Shri. Jasbir Singh.
Dena Bank - Change in Directorate
Dena Bank has informed BSE that in exercise of the powers conferred by clause (c) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980 read with sub-clause (1) of clause 3 of The Nationalised Banks (Management and Miscellaneous Provisions) scheme, 1970/ 1980, the Central Government vide notification dated September 06, 2012 have nominated Shri V. Vasanthan, Chief General Manager, Reserve Bank of India as Director on the Board of the Bank, in place of Shri N. S. Viswanathan, Director, with immediate effect tram the date of notification and until further orders. As per above notification the term of Shri. N.S. Viswanathan ceases as a Director on the Board of the Bank from September 06, 2012.
RBI sets up panel to strengthen ombudsman scheme
Reserve Bank of India (RBI) has set up a working committee to find ways for strengthening the banking ombudsman scheme in the country, according to M Sebastian, the apex bank’s Chief General Manager and Banking Ombudsman for Andhra Pradesh. “The committee headed by RBI’s Chief General Manager for Customer Services, which will have its first meeting on Friday at Mumbai, will deliberate the ways and means to empower banking ombudsman system. The committee will submit its recommendations in six months,” Sebastian, also a member of the committee, told media here on Thursday...........
Should CRR be abolished?
The answer is no; CRR remains a very relevant tool for our monetary system
.......Pratip Chaudhuri has not found significant support from other banking sector heads either. S Raman, CMD of Canara Bank expressed that CRR can not be completely abolished in India considering the high inflation rate. Echoing RBI, ICICI Bank’s non-executive Chairman, KV Kamath too disagreed with the suggestion of the SBI chief and conveyed that "...monetary authority (RBI) in its wisdom uses these tools appropriately and that is what is being done. This is nothing new. India always [has] had a CRR for as long as I can remember and I do not think honestly [that there is] an issue to be made here." Without doubt, CRR is not a new concept in the world......
Retain but reward CRR
..... there are no right or wrong answers here. Retaining CRR is a prudent move to ensure solvency of the realm, especially in times of a crisis. But rewarding banks with a return may not be a bad idea as they are already handicapped with too much pre-emption. Another argument to support this reward can be that if the same amount were to be added as a mandatory second tier of SLR that has to be held to maturity and replenished, banks would still earn a return of around 7% on such paper besides allowing the government to borrow more money. Therefore, going back to paying at least 3-3.5% would be a fair deal.
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CRR Battle Far From Over
......."We need to move towards a situation in which the level of CRR comes down and it is used as an instrument of credit control only in extraordinary circumstances,"......
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A policy out of sync
....The central bank can also influence interest rates, by raising or reducing the ‘repo’ and ‘reverse repo’ rates at which banks borrow from or park money with it. Given these far superior monetary policy options — that are, more importantly, culturally in sync with the current regulatory philosophy — the CRR is an anachronism that ought to be dispensed with, or used in “extraordinary circumstances”, as Rangarajan puts it. The CRR made sense in 2007-08, for instance, when the country was inundated by over $100 billion of capital flows, which posed unprecedented challenges to domestic liquidity management. That is hardly the case now, when forex inflows have moderated considerably and firms are battling liquidity constraints. Now that Rangarajan, a former RBI Governor himself, has favoured doing away with the CRR, it is time to make a start. By neither reducing the CRR nor the repo rate, the RBI has made it difficult for banks to bring down their cost of funds, without which they cannot lower their lending rates either. The only way out, then, is to reduce deposit rates, which is what the State Bank of India (SBI) has done and others, too, may follow..
CRR’s relevance should not be overlooked
.....In his article “An MRI on health of the economy” (Business Line, September 7) noted economist and former RBI Deputy Governor S. S. Tarapore has already explained this aspect. He had shown how payment of interest on CRR would make it ineffective as a monetary policy instrument. There could be situations when interest payments will exceed incremental funds impounded through CRR in a year, and overtime, the spiralling effect will damage the RBI’s balance-sheet. Moreover, the prevailing fiscal position of the Government also warrants not paying interest on CRR balances. If the RBI is saving Rs 21,000 crore as suggested by Chaudhuri, the entire amount will be transferred to the Government as part of the RBI’s profit......
Read - HBL
Reserve Bank of India only deferring the inevitable
.... “We feel that RBI is delaying the inevitable, as eventually interest rates will have to be lowered in the coming months. We expect another 100 bps of repo rate cut before the fiscal ends. A favourable inflation number and steps towards fiscal consolidation, if any, will increase chances of RBI bringing forward interest rate cuts.”
Read - BS
To CRR, or not to?
.....CRR was mainly used to neutralise the inflationary impact of deficit financing during the 1970s, 1980s and 1990s. Accordingly, it was gradually raised from its statutory minimum of three per cent in September 1962 to 15 per cent by July 1989 and again brought down to 4.75 per cent. Now, will the central bank reduce CRR on September 17? Or will it actually set up a committee with a mandate to submit the report after the present governor steps down? The debate continues.
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Coin shortage affects ‘change’ business
.....The supply shortage has also left businessmen paying steep commissions to coin dealers. They now pay twice as much to procure coins as they did nine months ago. "Dealers supply coins at a commission of up to 20% for 5 coins and 16% for 1 and 2 coins. The commission was 9% last year," said P Suresh, co-founder of the Sangeetha chain of restaurants. .....
.....An RBI official denied that there was a shortage. "We supply coins in bulk to industry associations through banks or through our regional offices," said Alpana Killawala, Chief General Manager, Department of Communications, RBI.
Small change, big business
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| Brokers rule the roost at RBI counters for coins and notes |
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‘Banks come across fake notes every day’
.....Mr. Ravindranath said that Superintendent of Police Labhu Ram had suggested that a workshop on fake-note detection be organised for police personnel and the public. He said that some RBI officials could be asked to participate in the workshop and educate participants about simple ways of detecting fake notes. Mr. Ravindranath said that his bank was in consultation with the RBI for conducting the workshop. According to some other bankers, fake notes are usually in circulation in bars and restaurants, mining companies and other places of work where a huge labour force is concentrated......
Pass The Loan Or Face The Bullet
This is an article in the latest India Today, which must open the eyes of RBI/NABARD/Govt and indeed all stake-holders and address the problem before our banker collegues get into deeper problems.
- K C Shashidhar, CGM, NABARD, Mumbai
……….."Banks are given a target figure for granting Kisan Credit Cards (KCC) as soft loan to farmers. This is a priority area, and though targets are seldom achieved, managers feel the threat of transfer or other tough action if they don't achieve at least 50 per cent of the goal. Unscrupulous intermediaries use these circumstances to their benefit, arrange loan seekers and bag a 'cut' in the process. The trouble begins when the go-betweens get greedy, and produce people with fake identity and land-ownership papers, and then put pressure on us for loans. More often than not, we bow to their wishes. After all, they are goons, and the state government doesn't give us any security," explains a manager of a branch in rural Patna………..
Economy still fundamentally strong, positive surprises in offing: Deutsche Bank
..... we are cautiously optimistic that between the finance ministry and the RBI, at the very least infrastructure spending, will be revived and some monetary easing would take place.
RBI Governor Subbarao to appear before JPC on 2G
RBI Governor D Subbarao, who was the Finance Secretary when 2G licences were allocated, will appear before the Joint Parliamentary Committee examining the issue as a witness on September 18. He was the Finance Secretary between April, 2007 and September, 2008. The controversial 2G radiowave licences were allocated in January, 2008.........
Will Chidambaram stick to Pranab's choice?
Finance Minister P Chidambaram will soon have to decide whether to stick by his predecessor’s choice of former Reserve Bank governor Y V Reddy for chairmanship of the 14th Finance Commission, to be set up next month. Reddy’s name was suggested by the finance ministry during Pranab Mukherjee’s tenure. Earlier, former economic affairs secretary R Gopalan’s name for one of the members of the Commission was doing the rounds but now officials say he might not be the part of the body, to recommend on sharing of funds between the Centre and the states for 2015-20.......
Urgent need to act on fiscal front to stabilize economy: former RBI Governor
At a time when the markets and investors continue to await action from the government on various fronts including on fuel prices, former RBI Governor, Dr. Bimal Jalan feels there is an urgent need for the government to act, particularly on the fiscal front. He feels that politics and political compulsions are continuing to come in the way of economic progress and calls for political reforms to ensure smoother functioning of the economy.......
Needed: Financial literacy for regulators
There are thousands of similar customers who have been looted by these insurance companies. I am sure IRDA gets hundreds of such complaints every day. Why is the regulator not taking any action against such fraud in the country? I am a well-educated MBA from IIM-Ahmedabad, having been taught by Mr Rangarajan, Dr KP Krishnan and such seniors…”
Read - Moneylife
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