...........The government has decided to rope in international bodies for seeking assistance for the establishment of three different entities - Public Debt office, Resolution Corporation and Financial Data Management Centre. These are three among the four task forces to be set up as envisaged under the recommendation of the Financial SectorLegislative Reforms Commission. The ministry of finance is in process of signing an agreement with .........
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.
Friday, June 27, 2014
Farm loan waiver: Telangana, AP struggle for resources
.............According to government sources, the RBI is willing to consider the reschedulement of agri loans only if the government agrees to arrange for the repayment within one year. The expert panel constituted by the AP government met RBI Governor Raghuram Rajan on Wednesday to ask for rescheduling. However, no clear assurance came from the RBI even though one of the panel members, when contacted, said the regulator was in principle agreeable to the reschedulement............
RBI concerned at loan insurance, wants lending by cos in segment monitored
..............RBI said the lending activity of insurance companies, mainly life insurance ones, while not very large in comparison to total banking sector lending, is nevertheless significant. The amount was Rs 88,870 crore as at end-March, less than five per cent of the assets under management of insurance companies. A significant portion of these are secured against the surrender values of life insurance policies. “While the risk management framework and exposure limits (single issuer, group, and industry) are in place for insurance companies, there is a need to plug the possibility of any regulatory arbitrage by closely aligning the practices and regulations applicable to lending by insurance companies with those by banks,” said RBI in its report...........
NBFCs outside regulatory ambit may pose risk to financial system
...........A Shadow Banking Implementation Group carried out a preliminary study of such institutions and recommended that they be brought under some regulation. It found that there was a high degree of heterogeneity in business models and risk profiles across various non-banking financial entities in the organised as well as the unorganised (informal) sectors. It also identified “exempted” provident funds, unregulated chit funds, co-operative and credit societies and primary agricultural credit societies as groups of institutions that need a greater degree of oversight. “The study stresses on the need .......
RBI advice on bank cash course
...............In his foreword, RBI governor Raghuram Rajan said the financial system remained stable, though public sector banks faced some major challenges, mainly in terms of asset quality and liquidity. Macro stress tests show that the system level capital to risk-weighted assets ratio of banks remains well above the regulatory minimum even under adverse macroeconomic conditions, said the report............
RBI sees better days ahead for economy
................The overall tone of the report reflected optimism generated by the thumping majority scored by the Bharatiya Janata Party in the recently-concluded general elections. "Going forward, with the formation of a stable government, the prospects of recovery appear bright," the RBI said. The central bank drew comfort from reduction in both fiscal and current account deficits and moderation of consumer price index (CPI) -based inflation..................
RBI: Policy coordination needed to reduce global spillover effects
................In the Report, the RBI said that in the absence of global policy coordination, cooperation and global safety nets, EMDEs may have to resort to less than optimal policy options such as strong macro-prudential measures including capital controls and reserve accumulation. “With their enormous clout, countries whose currencies serve as reserve assets can induce negative externalities on EMDEs through changes in their monetary policies,” it said.............
CS emphasizes need to regulate NBFCs, protect investor
........The meeting convened by Reserve Bank of India was attended by Principal Secretary Home, Suresh Kumar, Regional Director RBI, K K Saraf, Secretary Law, Mohammad Ashraf Mir, IGP, Arun Chowdhary, IGP CID, Dr B. Srinivas, General Manager, RBI, Jammu A.K Mattu, Chief Financial Consultant, Ravi Mangotra and representatives from SEBI, NHB, ICAI, and Union Ministry of Corporate Affairs and other senior officers. Chief Secretary while receiving brief on the status of registered Non-Banking Financial Companies in the State emphasized the need for regulation of this sector and priority to protect the interests of the depositors. He called for greater coordination between the Reserve Bank and the other regulatory..........
SLR may be cut further
............."As the liquidity coverage ratio (LCR) requirement increases progressively, RBI may consider it desirable to further reduce the pre-emption of banks' resources through the stipulation of SLR in gradual steps, along with a commensurate decline in the held-to-maturity (HTM) dispensation," ........
Arrangement between banks, asset reconstruction firms needs a relook
.................The RBI noted that as most of the securitisation activity is taking place predominantly with the issuance of security receipts (SRs) rather than cash, there is a concern that banks may tend to use this option to evergreen their balance sheets. SRs may not carry the stigma of NPAs (their value mainly being derived from the collateral and not based on the record of recovery), although the risk of loss of income on the asset still remains, in effect, with the originator (the bank). The central bank said under the current framework, the ‘real’ incremental value addition of ARCs in the process of ‘reconstruction’ of assets,............
Invisible receipts at $232.77 billion in FY14
The country's earnings from invisible receipts, including earnings from export of services like travel, health, etc, stood at USD 232.77 billion in 2013-14, the Reserve Bank of India said Thursday.........
Time banks tapped capital market for funds
............According to certain rough estimates, Indian banks’ additional capital requirements will be to the tune of ₹4.95 lakh crore over the period of phasing in of the Basel III capital requirements. In its 9th Financial Stability Report, the RBI said the Indian banking system needs to pay urgent and greater attention to the Basel regulations, especially those relating to subjecting banks to market discipline. Swifter progress towards a more robust emphasis on market discipline will result in better pay-offs not only for the Indian banking sector but also for the overall financial system, .............
Nabard hopes for budget largesse to give long-term loans
The National Bank for Agriculture and Rural Development (Nabard) wants the government to announce a Rs.5,000 crore fund in the annual budget on 10 July so that it can facilitate long-term loans to farmers to build drip-irrigation facilities and buy tractors, assets that will boost farm output and stem a sharp decline in capital investment in the sector. The aim is to provide long-term loans at attractive interest rates to farmers for long-term asset creation in agriculture, said Harsh Kumar Bhanwala, chairman of Nabard, a development bank set up by the government to ensure credit flow to agriculture and promote rural development............
Fix Aadhaar, don’t junk it
...........It is important to remember Aadhaar is not just a number, it is an enabler. Thanks to RBI and NPCI, electronic payments infrastructure has expanded and India has platforms now that support real time online authentication and transactions which connect to even banking correspondent agents across rural areas. Linking the Aadhaar authentication platform to the benefits transfer programmes of the government has already yielded good results. A recent randomised control trial of the ...........
Microfinance sector to rebound: CRISIL
....According to CRISIL, the sector will grow at a compounded annual rate of 35% , to reach Rs450 billion by end-March 2016 “supported by stronger building blocks”. In order to to sustain the current pace of growth, micro finance instituitons (MFIs) will have to raise equity; but that will require them to “address challenges associated with low promoter shareholdings and a near-term decline in profitability”, said CRISIL......
Thursday, June 26, 2014
Why Rajan is Wrong?
One regulator too many?
..........At another place, points out Rajan, the FSLRC suggests a strengthened Financial Sector Development Council as a venue for inter-regulatory functioning. Would not this serve to conserve and strengthen the synergies that the FSLRC at other places thinks a spanking new behemoth, the UFA, would? The arguments that Rajan puts forth raises another crucial question: Unless an existing system is shown to have broken or turned dysfunctional is it necessary to replace it? The FSLRC does not sound convincing in its implicit view, that extant institutions are inefficient and need to be re-organised to prevent systemic risks and market failures. What matters is not whether a country has a single or multiple regulators. Both structural arrangements failed to prevent the financial crisis of ......
BALANCED RESPONSE
The article “One regulator too many?” by Ashoak Upadhyay (June 25) is a balanced analysis of Raghuram Rajan’s observations on positions taken by the FSLRC. Initially, the media had sensationalised the views expressed by the governor who had said the FSLRC had wandered beyond its brief by trying to superimpose a tribunal on the RBI and that he was not comfortable with reinventing regulatory architecture in the banking sector. Those who are still in doubt may visit www.rbi.org.in and read the governor's speech once again.
- MG Warrier
Make capital out of Capital Market - Dr.T.V.Gopalakrishnan
..........It is the best opportune moment for the new government to come out with some innovative ideas and facilities to enhance, convert and divert the household savings into investments in capital market. The investments in shares through IPOs have turned out to be a very bad experience for retailers during the last decade because of high and greedy pricing of the issues and they have burnt their fingers forcing them to go out of the market and seeking greener pastures elsewhere. Persisting high inflation has added .........
Does India Really Need a Women-centric Bank?
........... The four key elements of empowerment according to the World Bank are access to information, inclusion and participation, accountability, and local organizational capacity. While economic factors do certainly play a role in improving a women's financial position, the context within which empowerment occurs is also important for understanding whether a particular intervention has been effective. When it comes to financial transactions, strong patriarchal norms may reduce the role of women to a mere conduit for accessing loans and banking services, rather than effecting any real change in the prevailing social structure. A woman's "emancipation" may remain contingent..........
Subscribe to:
Posts (Atom)