.........That Mr. Rajan would do so even as the Indian economy is being buffeted by the vagaries of the global financial system is noteworthy. It suggests that as governor, he will not so much be setting out policy but dogma. By clinging to the thoroughly discredited dogma that “arm’s length” financial markets always know best, Mr. Rajan risks putting the RBI on the wrong side of economic history................
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 14, 2013
Banking In The Time Of Turmoil
....The Indian banking turf is set to change. The RBI set the ball rolling when they opened the stage with the intention to hand out licenses to new entrants. Undoubtedly, the official reason was to bring a large number of hitherto unbanked and under-banked population in the formal financial system, but how many aspirants will be allowed to get into the ring remains RBI’s prerogative. In 1993, when the RBI licensed some private banks, it received 113 applications but only 10 banks got the license. Till now, `financial inclusion’ was the responsibility of public sector banks but by using inclusive growth as the base for licenses, RBI has made private sector banks equally responsible in social objectives. As one can see from the table, currently, public sector banks have more branches than any other bank group in the rural and semi-urban areas..............
The pitfalls and pain for India
.........The measures put in place before the crisis by the former governor YV Reddy in the early 2005 to prevent asset price bubble in the real estate sector, however, went a long way in keeping the impact under check. Reddy knew that the economy was getting overheated. YV Reddy said in a recent interview to Rajya Sabha television, “India’s growth of 9 per cent was a sign of the economy getting a bit overheated, as the economy did not have the potential to grow at that rate. So, the growth needed to come down. The potential for the economy was to grow at 7 to 8 per cent.”................
Plastic gains currency
......According to the RBI website, credit cards are of two types. First is the general purpose cards, named platinum, gold or classic, and are based on services offered and income eligibility. These are issued under the trademark of credit card associations like Visa and MasterCard and are accepted by many merchants. The other type of card is private-label cards accepted by specific retailers only.........
Banks, lend us your tweets!
............. I did a spot poll on facebook before writing this column only to discover that twenty five percent of the respondents, most of them successful professionals and active on the social media, were not aware of the Reserve Bank of India ban on alterations in cheques. Almost fifty per cent were not informed about this important RBI circular by their banks. And forty per cent revealed that they get more promotional stuff rather than communication relevant to their banking transactions. Now this is where high public interface organisations like banks can reach out to customers. ............
BSF on anti-fake currency mission
...The circulation of fake Indian currency notes (FICN), printed in Pakistan and China and smuggled into the country through the porous border with Bangladesh and Nepal, has taken such alarming proportions that personnel of the force are at a loss on how to tackle the problem. From Tuesday, a team of BSF and RBI officials are touring the border villages in Dhubri district and holding workshops on detecting fake currency notes. The workshops will continue till Friday. .............
2nd International Workshop on Inclusive Finance organized by XLRI
2nd International Workshop on Inclusive Finance’ organized by XLRI, the premier private B School in India was inaugurated today in presence of Mr. H R Khan, Deputy Governor, Reserve bank of India, Mr. YC Nanda, former Chairman, NABARD & Chairman, National Commission on Farmers, Fr. E. Abraham. S.J., Director of XLRI and Dr. H.K. Pradhan, Professor of Finance & Economics and Coordinator, Financial Market Centre, XLRI at Jamshedpur today..................
Author rightly opined
Interest in Indian markets for investments arises basically from the strong domestic market with over 350mn middle class and heavy monetization of the rural areas through a largesse of subsidies and MNREGS. It is the lack of consolidation of efforts to strengthen the domestic markets and bring about order that is responsible, as the author rightly opined, for the current imbroglio. It is high time that we give up empirical attitude in tackling regulatory issues governing investments and also the nervous approach to inviting investments. The Indian economy need not be at the begging end but at a commanding end provided the Government improves governance and eschews corruption.
- Yerram Raju
The unbearable hotness of being Raghuram Rajan
........De is being roundly twitter-bashed for turning our poster boy of India’s economic revival into a pin-up model for her Sultry Days and Starry Nights. And ET is being pilloried for allowing De to turn their pages into True Confessions. But to be fair, she is hardly the worst offender there. Clearly our men are not far behind in their Shuddh Desi Bro-mance with this Raghu.....................
RBI governor Raghuram Rajan told he makes hearts go 'dhak dhak'
........After calling him "hot", comparing him to Bollywood heart-throb Ranbir Kapoor and saying she would "salivate from the sidelines", De, who is a regular columnist in India's newspapers, said the country should welcome a departure from the stereotype of central bankers. "Funny how quick Rajan has been slotted as a much panted-after sex symbol," she wrote, adding: "It's not often one gets an RBI Guv who makes hearts go 'dhak dhak' each time he strides into a room." Rajan, a former finance professor, who hails from the southern state of Tamil Nadu, has long been a darling of the Indian media, leading one newspaper to describe him as an "economist with rock star appeal."..........
Will Rajan mend Chidambaram’s bridge with disillusioned economists?
..........The RBI, thus, has been conservative and also pro-reforms. It has been a perch of bureaucrats. By posting a renowned economist like Raghuram Rajan there, the government is trying to mend its broken bridge with the economists who have been disillusioned with UPA’s fiscally imprudent policies............
Wait for change
My View on "Finance ministry, RBI work out informal arrangement...":
In the given circumstances, this is the minimum Dr Rajan could have clinched before taking over. Like all government programmes, it will take some time for results to start showing. But perceptible changes can be observed in the tone of North Block officials while expressing views in public. Media too will have to re-adjust. Even yesterday, an ‘advertorial’ promoting FM (not in Times Group) had comments in bad taste against RBI, though the writer wanted just to criticise Dr Subbarao.
- M.G.Warrier
Promising move
.........A fresh look at monetary policy is welcome. The last such comprehensive look was way back in 1985. It is also good that the rethink is being led by RBI rather than being imposed upon it by New Delhi. The Indian central bank has an unmatched understanding of monetary dynamics as well as of macro stability, which were underplayed or even rubbished by some recent government committees...........
Interest rate takes a U-turn
...........The RBI took several steps to stabilise the foreign exchange market. It
sucked out liquidity from banks to prevent them from speculating in
foreign exchange derivatives. But that did not have the desired effect.
The rupee still declined and, due to lack of liquidity, the rate of
interest on inter-bank borrowing began to rise. The rise in bond yields
due to continued exodus of foreign currency led to a rise in the overall
interest rate..............
Raghuram Rajan's RBI to keep monetary policy tight till rupee stabilises: PMEAC
..............."The current stance of monetary policy has to continue until stability in the rupee is achieved. Thereafter, if the current trend in the moderation of wholesale price inflation continues, which is in fact expected, the monetary authorities can switch to a policy of easing," ...............
PM's advisors differ with finance ministry
.......Council chairman C Rangarajan tried to play down the differences with the finance ministry on this front, saying the situation could improve. Gold imports, one of the reasons for the widening trade deficit, were projected to fall to $38 billion this financial year from $53.8 billion in 2012-13. However, Rangarajan cautioned there could be an increase in gold imports in the coming festive season..........
Banks to remain open on Sep 14, 15 for advance tax collection
........"With a view to facilitate collection of advance taxes for income tax and corporate tax and meeting the probable rush of tax-payers, it has been decided in consultation with the Department of Financial Services, Ministry of Finance, Government of India that all agency banks shall keep the counters of their designated branches conducting Government business open on September 14, 2013 and September 15, 2013," ............
RBI asks some foreign bks to restrict activity in NDF mkt
.....The RBI is attempting to curb speculation on rupee in the offshore non- deliverable forward market, Cogencis had reported on Jul 25 citing a finance ministry official. Many a times, corporate hedging was used as a front by certain entities to undertake speculative positions of their own. In a bid to counter such speculation, the RBI on Jun 26 issued a notification saying that foreign institutional investors, who intend to hedge the exposure of one of their sub- account holders, would have to produce a clear mandate from the sub- account holder in respect of the latter's intention to enter into the derivative transaction......
Another currency crisis waiting to happen: Mahesh Natani
...........“This led to the further depreciation of the rupee to Rs. 68.85 on August 28, 2013. The manner in which the rupee depreciated by over 11% in a short span of 12 days (from 16.08.2013 to 28.08.2013) shows that a major component of buyer’s credit has not been hedged by importers,” alleges Mr. Natani. In response to queries raised by Mr. Natani under the RTI Act, the RBI has admitted that it does not possess key details on buyer’s credit being availed by importers like the amount and date of maturity. When asked, the RBI did not respond to a detailed set of questions emailed by The Hindu on September 3, 2013............
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