.......So, if I were you, I would go ahead and do a 50 bps rate increase in the monetary policy meeting next week and in the January meeting. That does not sound that radical, I think. I was tempted to recommend a 75 bps increase next week but even I am brave enough only to be a “practical (arm-chair) revolutionary”. India needs a Raghuram Rajan-Paul Volcker, to force genuine structural reforms on India’s public and private sectors. With politicians distracted and powerless for now, you have a unique opportunity to hasten reforms with monetary policy. ..........
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, December 17, 2013
How Rajan asserts his autonomy
............The inflation we are experiencing is not amenable to monetary policy instruments, let us recognise that. It is primarily the responsibility of the government to contain price rise. It might be difficult to have quick fix on that. But let there be a beginning for a reasonable solution. Raghuram Rajan is of course aware of this.........
Change for the RBI regime?
............Greater transparency and communication policies: As recommended by the Committee on Financial Sector Reforms (2009), the RBI could develop and make public its inflation model to give some guidance to market participants on monetary policy decisions. As price stability becomes the RBI‟s primary mandate, it could produce its own version of the inflation report, which provides detailed economic analysis and inflation projections, on the basis of which interest rate decisions are made. Detailed minutes of the RBI‟s monetary policy committee may also be publicly released. That said, it doesn’t seem unreasonable for the RBI to move and then let everyone else catch up............
Banks have national responsibility to extend liberal credit to J&K: Rather
.......Speaking at the 91st meeting of the State Level Bankers Committee (SLBC) at Jammu today the Finance Minister impressed upon the Financial Institutions to remove the persisting impression that banks in J&K are interested only in deposits least concerned about advances. He asked the Banks to improve Credit Deposit Ratio (CDR) which is yet for below the National Bench Mark adding that there should be no flight of capital from the poor state like J&K. Chief Secretary, IqbalKhandey, Chairman J&K Bank, Mushtaq Ahmed, Principal Secretary Planning and Development, B.R. Sharma, Principal Secretary Finance, B.B. Vyas, Regional Director RBI, K.K. Saraf, Chief General Manager NABARD, DR. B.G. Mukhopadhay, Representatives of various National Banking Institutions, Administrative Secretaries and heads of various departments were present in the meeting...........
Obituary
Mr.N.Ramaswamy, (Ex.RBI/NABARD) Passed away peacefully on 12.12.2013.Deeply mourned by Wife: Lakshmi Ramaswamy Son: Narayan Rukmani Kartik Daughter: Saroja Ravichandran Rahul Brothers, Relatives & Friends
TOI
'Gold'en will
My View on "All that glitters... Dr.Subir Gokarn":
The inherent fear to touch or talk about the huge domestic stock of gold in India gets interwoven even in such a well-articulated and well-researched article by a person like Subir Gokarn. The fear of gold was captured by K U B Rao in his report on Gold Management repeased in January, 2013 in the following words:
“Indians’ obsession for large investment in physical gold is the outcome of the confluence of numerous and divergent factors. Given the complexities involved in the lure for gold in India, a holistic strategy that deploys a combination of demand reduction measures, supply management measures and measures to increase monetisation of idle gold stocks needs to be put in place. Creation of an alternative asset class that may provide returns comparable to return on investment in physical gold with similar flexibility is important. A necessary pre-condition for reducing the excessive demand for the precious metal is to ensure benign inflationary environment along with achieving and maintaining macroeconomic stability.”
If there is a will, there should be some way, to exploit productively at least a small portion of the domestic stock of gold which will minimize the need for gold import. There is no escape from standardizing a major portion of non-jewellery surface gold and making it available for productive purposes. When every other asset can be accounted, government cannot be apologetic only about gold.
Establishment of the Bullion Corporation of India proposed by the Working Group can play a major role in recycling and pooling of domestic scrap gold. In this context, the Committee’s following observation is relevant:
“ Temples in India holds large quantities of gold jewellery offered by devotees to the deities. There is also significant amount of scrap gold in the country. Some estimates say that scrap gold that comes into the system is nearly 300 tonnes per annum. It would be worth trying to channel the existing supplies of scrap gold in the country into the financial system, so that the unproductive nature of the gold asset is turned into a financially-productive medium.”
- M G WARRIER, Thiruvananthapuram
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ICSI conference with NISM
The Institute of Company Secretaries of India (ICSI) in association with the National Institute of Securities Markets (NISM) organized a conference on ‘Ethics and Corporate Governance’ on December 11, 2013 in Kolkata. The Conference was inaugurated by Anand Sinha, Deputy Governor, Reserve Bank of India.......
Forensic audit of ministries, too?
.......If RBI wanted to convey the message it means business, it has gone home. Last week this correspondent met the chairmen of two public sector banks where the discussion was just about this audit. RBI has followed it up barring lending of above Rs 10 crore by the bank to a single entity and also blocked it from restructuring stressed loans............
Promotions in Public Sector Banks
Government of India has published a new policy for the promotion of employees & officers in public sector banks. Detailed notification is attached below. Pls have a look if you are aspiring to get a bank job...........
Jalan panel holds 2nd meet to shortlist bank licence awardees
The advisory committee headed by former Reserve Bank of India (RBI) Governor Bimal Jalan for vetting applications to establish new banks held its second meeting on Monday. The committee is to eliminate applicants which do not meet the ‘fit and proper’ criteria for getting a licence. It is expected to complete the entire process in three months.........
Banks may not accept scribbled notes
......Indian currency notes, arguably, the dirtiest, most soiled and most perforated ones in the world. The Reserve Bank of India (RBI) is reversing the trend by pursuing aggressively its 'clean note policy.' The Central bank has asked all the banks that in the present system of mechanized processing of banknotes, 'inscriptions or scribbling on any part of the banknote would render it to be classified as unfit for reissue from January 1...............
Insurance plan of seven banks hits hurdle
Seven commercial banks are in danger of being tripped up by a tough Reserve Bank of India guideline that stipulates only those lenders with net bad loans below 3 per cent will be eligible to become insurance brokers. The central bank had recently come out with its draft guidelines relating to banks looking to enter the lucrative insurance broking business..........
A mission to secure currency for bitcoin
.......“In India, bitcoin can help solve the problems of the unbanked rural population. It is also a potential remittance tool. We are working with lawyers to draft possible policies that we could present to the RBI and other government agencies by next month,” said Sunny Ray, Director of Business Development at Buttercoin, a free bitcoin exchange that is backed by investors including Google Ventures..........
Fait accompli
..............Coming to policy decisions - the next of which is due on Wednesday - Reserve Bank of India Governor Raghuram Rajan has already made it clear that inflation control will be his priority and that he will attach significant weight to the CPI. These numbers do not seem to make enough of a case to deviate from the path that he started going down with a repo rate increase in September. Thus, .........
Despite high inflation, India Inc for 'accommodative' stance from Raghuram Rajan's RBI
.........Voicing similar concerns, Assocham Secretary General D S Rawat said the increase in WPI inflation released today before RBI's monetary policy review on Wednesday is certainly a big dampener for India¿s macro picture. "Still, the RBI should take a contrarian call this time around and hold the interest rates, if not drop them, since the data suggests that inflation has largely come about riding on a steep rise in prices of food articles, particularly fruits and vegetables," Rawat said..........
Cereal offenders - Ila Patnaik
The RBI governor, Raghuram Rajan, has a difficult task this week. He has to decide whether to keep interest rates constant or raise them — bearing in mind the possible taper of the US Fed's bond buying programme, a decline in industrial production and a rise in inflation. The sharp increase in consumer price-based inflation, to more than 11 per cent, has significantly added to the RBI's headache. The increase in inflation is mainly due to the nearly ................
Curbing inflationary expectations to take precedence
........Taking into consideration the evolving growth and inflation dynamics, RBI may be constrained to raise the repo rate by at least 25 basis points in the next policy review, to anchor inflationary expectations. Agriculture sector growth and increased clearances to infrastructure projects may result in better second-half growth numbers. With concern about the external sector............
RBI has little choice but to raise rates after inflation data
.....Note also that Rajan has said several times that the source of inflation is not important, it’s their effect on inflationary expectations that counts. He has also consistently stressed the need to provide positive real returns to savers and bank deposit rates are still lower than retail inflation. With both ..........
Year 2013: Unexpected reversal of interest rate cycle
.......What wasn’t foreseen was a plunge in the rupee; it fell to an all-time low of 68.85/dollar on August 28. “Despite growth being a concern, with inflation remaining significantly stubborn for most of the year, the policy stance had to shift and calibrate, in terms of addressing inflationary expectations. A large part of this inflation came from supply constraints. In addition, RBI mounted an interest rate defence to impart stability to the highly-volatile currency. A hint of taper from the US Fed...........
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