The Reserve Bank of India has done well to communicate a stern message. It has said in its new report on the economy that India could face what it calls “a lasting growth collapse” unless macroeconomic stability is secured...........
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Tuesday, October 29, 2013
Liquidity key to restoring relevance of repo rate
....And, he showed intent — the central bank reduced the marginal standing facility (MSF) rate further in October (after cutting it in the September review) and opened another liquidity window. Now, it is widely expected RBI would restore the 100-basis-point corridor between the repo and the MSF rates in Tuesday’s second quarter review of monetary policy...........
RBI policy review: Inflation focus may herald rate hike
.....According to the RBI report, such high inflation “eroded real consumption, lowered savings, caused financial disintermediation, widened the current account gap and placed additional pressures for subsidized safety nets for the vulnerable population”. “Against this backdrop, monetary policy will have to tread a carefully charted course to support reasonable real interest rates and avert financial repression,” the RBI report said.....
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%..........
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............
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...........
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.......
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..........
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...........
‘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..........
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,”.........
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........
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............
Monday, October 28, 2013
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...........
Walk alone but don’t dance alone: Chidambaram to Subbarao
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.”
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 ...............
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 ........
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.............
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