..............In the larger context of financial sector reform, which Reserve Bank of India Governor Raghuram Rajan has set so much store by, this is the third in a series of reports - following the Nachiket Mor and Urjit Patel Committee reports - blueprinting significant changes in the system. Like the previous two, its recommendations are worth serious consideration; they do offer the government a way out of an increasingly difficult situation, which does no good for anybody. However, like the other two, this report is also likely to step on a number of toes, perhaps even more so...........
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.
Thursday, May 15, 2014
The BIC bank reform
.......But irrespective of its political feasibility, the idea of a BIC — a separate state-owned holding company for PSBs similar to Singapore’s Temasek or the UK government’s UK Financial Investments Ltd (UKIL) — is worth replicating across public sector undertakings. The BIC model will firstly free PSBs from the regime of dual regulation by the Finance Ministry in addition to the RBI. It will allow the PSBs to become fully professional board-managed entities, hopefully immune from North Block directives. The appointment of CEOs, independent and whole-time directors, recruitment to senior management positions, policies pertaining to salaries and promotions, and all other strategic managerial functions would become the responsibility of bank boards..........
Sensible banking
......Without dwelling too much on the past—why public sector lenders are poorly supervised, why they have become so inefficient and financially fragile—it is more than evident that boards of banks need to be revamped, professionalised and made more accountable. But for this to happen, there needs to be a drastic overhaul of rules and regulations. Which is probably why the committe believes the way out is for banks to be incorporated under the Companies Act and for the government to transfer its holdings to a Bank Investment Company (BIC). The BIC, will over a period of time, say, three years, pass on several of its powers to the boards of banks; that way banks cam be spared the damage being caused by dual regulation—by RBI and the finance ministry...........
Withdraw RBI panel report: AIBEA
......“It is sad that the panel had recommended public sector banks to be handed over to private hands at a time when the bulk of the bad loans are attributable to the private sector. More than four lakh crore rupees of bad loans are due from the big private corporate and business enterprises. Given the bad track record of the private banks in our country, all the private banks should be nationalised and brought under public sector banking.”...........
RBI, not FinMin, should oversee PSU bank regulations: Panel
The PJ Nayak-led panel on governance of bank boards has recommended that public sector banks should be answerable only to the RBI, and not to both RBI and the Finance Ministry as is the case now. This would provide a level playing field for state-owned banks vis-à-vis their private sector counterparts, the panel said............
Nayak panel wants RBI to let banks decide when to go public
...In its report presented yesterday, the Nayak committee said three years is a short time to gauge whether a bank has the management skills to create a value proposition, while factors such as market interest in the stock and determining the future financial trajectory are also difficult. The committee said insistence on a three-year window for listing incentivises "poor governance" promoters to exit, while "good governance" promoters who want to grow a business slowly are disincentivised..........
PSU bank boards reasonably professional
...........In an interview to CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, Chaudhuri said boards of PSU banks were reasonably professional as of now. On whether the recommendations of the PJ Nayak panel on governance of bank boards would be accepted, Chaudhuri said it would depend on the political leanings of the next government.
All govt banks violate Sebi listing norms: PJ Nayak
............In an interaction with Business Standard – his first after submitting the report to the Reserve bank of India on Wednesday – Nayak said there was an urgent need to remove the discriminatory external shackles so that they could compete fairly with their private sector peers, one of them being the dual regulation of public sector banks............
Critical vacancies in regulatory posts stare at the new govt
............Topping the list is the appointment of two deputy governors at the Reserve Bank of India. These will be the two successors to KC Chakrabarty and HR Khan. The deputy governors will, in turn, be members of the selection committees that will recruit public sector bank chairmen and executive directors. Around 12 such posts will come up till March 2015...........
The Manmohan decade
I was an employee of the RBI and Dr. Singh was the Governor for a brief period. In this role, he was simplicity personified, and anyone could meet him in his room. His car never sported a red beacon. He was always graceful and never harsh. It is unfortunate that he fell into the web of politics and became easy prey for politicians. He is free now but has retired hurt.
- S. Venugopalan, Chennai
The HinduForget firing, he is needed for fire fighting......
My View on "Far from sacking him, Raghuram Rajan is the man th...":
A well researched article. The penultimate para quoted here is significant. For those who may not read the full article, let me quote the concluding two paragraphs:
"However, there is one indisputable fact: far from thinking of replacing the RBI governor, the new government would do well to allow him the flexibility and freedom to keep a close watch on inflation so that any future reform measures do not lead to serious inflationary consequences.
Rajan knows this only too well, as he demonstrated last week when he said the government could fire him if it wanted but it was he as RBI governor who would set interest rates. A smart government will know that in this situation Rajan is one of the men the economy will depend on the most. Forget firing him, the government will need him for fire fighting. There are quite a few fires still to be fought."
- M.G.Warrier
‘Motivated’ Media discussion
My View on "Could RBI Governor Rajan Be Ousted By a New Govern...":
It is not the lack of RBI’s allegiance to legislative supremacy of the government of the day that made Dr Rajan assert his eagerness to protect the mandated role(in deciding monetary policy) of RBI. The assertion of ‘ownership rights’ by lower level functionaries of GOI over all public sector organisations including statutory bodies like RBI and their interference in the legitimate functioning of institutions even in HR issues deny the top managements of these institutions a level playing field with their counterparts elsewhere. There is no point in sidetracking the issue of ‘political interference’. Even the present ‘motivated’ media discussion on continuance of present incumbent as Governor, post-16 May serves perhaps only one purpose. It gives an opportunity to those who are not generally RBI-watchers and to those who are really serious about understanding the ‘equation’ between RBI Governor and the finance ministry to ponder deeper. Suffice to say that the debate may not affect the continuity at Mint Road or more specifically the broad policy perspectives of RBI.
- M.G.Warrier
RBL Bank appoints Rama Bijapurkar as independent director
............."Rama is well recognised as one of India's most respected thought leaders on market strategy...As we have embarked on an aggressive growth path with a keen eye on our consumer business, we look forward to her deep insights to aid our board decisions in achieving these goals," Vishwavir Ahuja, managing director and chief executive officer of RBL Bank, said in a statement................
May 16 holiday plea
.......This must be one of the most unusual requests the Election Commission has received. A traders' body has asked the Commission to declare May 16 a national holiday so that people can watch live updates of the election results without the interruption of office work..........
Painting for a cause
My Multi Talented Daughter Ms Priya Kumar has started painting for a cause. Proceeds of sales will go for Under Privileged Children. Will you like to join hands with her by buying/promoting?
With Regards,
Mrs.Sona Kumar, Ex-AM, Insp.Dept. Mumbai
(Ex-RBITES)
+9198201 95874
Sona Sarovar Trust - What began with just a bowl of water, is now a full fledged initiative to aid the underprivileged. Join hands to add your share of goodness to the world. To know more, click here
Otta kaal anna finds pride of place here
..........He sells ‘otta kaal anna’ (coin with a hole in the centre), ‘oru anna’ (one anna), and five and ten paise coins, among others. Students, cinema production teams and coin collectors frequently approach him for purchasing the coins. “When I worked in a shop earlier, I would keep aside coins of different shapes. My interest in coins began then,” he says. The coins are priced according to their value, ranging between Rs. 3 and Rs. 1,000. He goes to various districts and States to collect the coins. “Most coins are found on river beds as there used to be a practice of dropping coins while bathing. I have found many coins in Thanjavur, Karaikudi, Mumbai and Kolkata,”.........
India Post to re-apply under new guidelines: Fin Min
......"India Post was not considered under these guidelines due to the special nature of India Post," the finance ministry said. It said that on the issue of capitalisation of India Post no view has been taken by the finance ministry nor has the communication been sent to RBI.........
FM to meet financial advisors today
.............As he is likely to resign on May 17 to make way for the next finance minister, the exercise would not have much repercussion. The new government might take a fresh look at the Budget Estimates (BE) for 2014-15 in the Budget to be presented in late June or early July...............
Show me real money
..............Money is something we use to purchase something we want. It is issued and guaranteed by the government and the central bank (the RBI in our country). But what happens when unscrupulous people, for their own greed, produce money that is not real or issued by the government or RBI? Does it still hold the same value? Counterfeit money or fake currency is illegitimate currency and its actual value is much lower. Printing or even possessing fake currency notes is a punishable offence. So not only does it decrease the real value of money, but it also creates a situation where people are reluctant to accept currency of higher denominations. Even though, counterfeit money is being printed in large quantities, there are ways you can identify fake notes. .............
Ponzi schemes out
This refers to the editorial "Probing Saradha" (May 13). If we have to plug the regulatory gaps in deposit schemes, we may consider vesting all residual responsibilities with the Reserve Bank of India (RBI) that has the capacity to punish the wrongdoers. RBI can also have district-level sub offices where anybody can go to seek clarifications about such schemes. ........
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