Reserve Bank of India
07:43
Showing posts with label RBI Governor. Show all posts
Showing posts with label RBI Governor. Show all posts
Tuesday, 22 May 2018
Wednesday, 14 June 2017
Reserve Bank of India
07:06
The Reserve Bank Of India Announced Introduction of New Rs 500 Currency Notes
The Reserve Bank Of India Announced Introduction of New Rs 500 Currency Notes
The Reserve Banks of India (RBI) today announced introduction of new Rs 500 currency notes.
The new version will have few different aspects. The one noticeable aspect of the new currency notes is the inclusion of an inset letter "A".
Besides, in the new notes the signature of the RBI Governor will be on the reverse side.
"In continuation of issuing of Rs 500 denomination banknotes in Mahatma Gandhi (new) series from time to time which are currently legal tender, a new batch of banknotes with inset letter "A" in both the number panels bearing the signature of Dr. Urjit R. Patel Governor, Reserve Bank of India; with the year of printing '2017' on the reverse, are being issued," RBI said in a press release.
The design of these notes is similar in all respects to the Rs 500 banknotes in Mahatma Gandhi (New) Series, RBI added.
The current Rs 500 notes have inset letter E. The central bank had demonetised old Rs 500 and Rs 1000 notes on November 8 last year. After that RBI introduced new Rs 500 and 2000 currency notes.
Last week, RBI had said that nearly 83 per cent of the currency has been remonetised and denied there was any shortage of cash in the system.
The data on the amount of demonetised notes returned, however, is still not available.
Source:The Economic Times
Wednesday, 3 May 2017
Wednesday, 26 April 2017
RBI Governor
15:34
Public sector bank merger healthy for banking system: RBI governor
Public sector bank merger healthy for banking system: RBI governor
New York: RBI governor Urjit Patel has said the Indian banking system could be better off if some public sector banks are consolidated to have fewer but healthier entities, as it would help in dealing with the problem of stressed assets.
“As many have pointed out, it is not clear that we need so many public sector banks. The system could be better off if they are consolidated into fewer but healthier banks,” Patel said while delivering the Kotak family distinguished lecture at Columbia University. He said since there were cooperative banks and micro- financial institutions to provide community-level banking, “some banks can be merged, as a quid pro quo for timely government technical injection”. Patel said a challenge that India’s central bank was grappling with was the large stressed banking sector balance sheets.
He noted that a series of measures have been taken in the past year on resolving the problem of the non-performing assets (NPAs), including completion of a comprehensive asset quality review of the banks. Patel said in the instance of the insolvency and bankruptcy code, the RBI has been preparing actively for the next step in an orderly resolution and this will be undertaken concomitantly with the resolution of the weakest bank balance sheets under the aegis of a revised prompt corrective action framework. “One of the things that the public sector banks need to do is to raise private capital from the market and not rely on government largesse,” he said. Public sector banks have to be required to share the burden of recapitalising, Patel said. This will be a good way to restore some market discipline and get the banks and their shareholders to more seriously care about management decisions, he said.
Patel also said that consolidation of banks could also entail sale of real estate where branches are redundant as well as offering voluntary retirement schemes to manage headcount and adding younger, digital-savvy personnel. “The weaker banks are losing market share (and) that is a good thing,” Patel said. “The stronger banks are gaining market share, which is a good thing, particularly the private sector banks. In a way it is working; those who need to shrink are shrinking. “Lenders who are stronger are gaining more market share. I think there is a nice shift happening and we need to work with that to resolve this,” he said. Patel said that divestment in public sector banks would have a positive role for the sector. “Divestment measures would improve overall banking sector health,” he said. Improved market valuations would create an opportune time for the government to divest some of the ownership in the restructured banks and this would reduce the overall amount that the government needs to inject into them to deal with the problem of NPAs and stressed assets, he said.
Patel said that across the nation, forces were gathering critical mass for the launching of reforms that will help the country achieve higher growth. “The materialisation of reforms in the form of roll-out of the GST, the institution of Indian insolvency and bankruptcy code and the abolition of the foreign investment promotion board should boost investor and investment confidence,” he said. Looking ahead, Patel said India’s economic growth was getting a boost with domestic drivers and was poised to be 7.4% in 2017-18. “India will remain among the fastest-growing economies,” he said, adding that its growth acceleration was reflective of its resilience. Patel said that inflation was below target, the current account deficit was about 1% of GDP and fiscal deficit was on path of consolidation that will take it down to 3% by 2018-19. He noted that recent sharp decline in inflation was essentially the result of supply shocks.
Giving a comprehensive view of the demonetisation process undertaken by the government, Patel said its positive spillover was reflected in higher financial reintermediation. The share of low cost current account and savings account deposits in aggregated deposits with commercial banks went up to about 39%, which is a four percentage increase relative to pre-demonetisation period. “That is a large number on a large base. Financial reintermediation could be one of the biggest collateral benefits of this exercise, but time will tell. It’s too early to tell but initial statistics are interesting,” he said. In the wake of demonetisation, conventional and unconventional steps undertaken like issuance of short term cash management bills and using the large size of the RBI balance sheet helped the central bank to “manage this, otherwise interest rates would have collapsed”, the RBI governor said.
He said there seems to be very little evidence of hysteresis following demonetisation. “If we had hysteresis, it would have meant some of the bad implications in terms of lower GDP growth etc. but as the demonetisation shock was overtaken by the re-monetisation, things have come back to normal,” he said. Patel stressed that the collateral benefit of demonetisation was faster transmission of monetary policy, which strengthened in the second half of 2016-17. “Accumulating evidence points to effects of demonetisation being transitory contrary to general perception. GDP slowdown was cushioned by robust consumption and government spending,” he said, adding that despite the demonetisation shock, the GDP growth remained at 7% in Q3 and Q4 as compared to 7.2% and 7.4% in the preceding year. Patel said it was important to keep in mind that credit was more important than currency. “Credit was not affected at all. The demonetisation was essentially one mode of payment being temporarily not available to the full extent” but cheque payments were not affected, the mode of payment that banks use to settle their balances was not affected, he said.
“In retrospect, it (demonetisation) would not affect the economy that much because currency, while important, is still a small part of the transaction instrumentality that is used in a modern economy,” he said. “So the call market, GSec market, GDP growth, inflation and stock market all showed transitory impact of the demonetisation and the recovery in all these indicators has been swift,” he said.
Source:Nagpur Today
Thursday, 6 April 2017
Reserve Bank of India
19:09
After Hat-Trick Of Surprises, Will RBI Pull Another One? Decision Today
After Hat-Trick Of Surprises, Will RBI Pull Another One? Decision Today
After springing surprises in all three of its past monetary policy meetings, some analysts have not ruled out another one from the Reserve Bank of India later today. The RBI’s Monetary Policy Committee will be announcing its decision at 2:30 pm. The RBI is widely expected to keep its key lending rate or repo rate steady at 6.25 per cent. All 60 economists polled by Reuters predict that the six-member monetary policy committee will leave the repo rate unchanged at the level where it has been since October.
Here are 10 key developments:
1) Investors would be watching out for the Committee’s views on consumer inflation after prices advanced 3.65 per cent in February from a year earlier, not far below the RBI’s target of 4 per cent.
2) Investors are expecting the RBI to announce measures to drain the Rs. 4 lakh crore that has accumulated in the banking system in March, double as compared with January.
3) This has raised concerns about inflation at a time when the RBI is seeking to prevent rising prices by changing its policy stance to “neutral” from “accommodative”.
4) The demonetisation of high value notes announced last year has led to a surge in bank deposits at a time of weak credit offtake.
5) RBI Governor Urjit Patel’s comments on the rupee would also be closely monitored. The Indian currency has surged over 4.5 per cent in the March quarter against the US dollar at a time when exports are showing signs of recovery. An appreciating domestic currency hurts exporters.
6) “In our view, the main focus of the central bank is likely to be on liquidity absorption in order to signal a neutral policy approach and for gaining additional headroom to intervene in the currency market,” said HDFC Bank chief economist Abheek Barua.
7) In October, the Monetary Policy Committee unexpectedly cut rates and then it held them steady in December when the Street was betting on an easing move.
8) In February, the Committee again surprised by holding rates and switching to a “neutral” stance from “accommodative”. All decisions were taken by a unanimous 6-0 vote, further adding to the surprise.
9) In the February policy review, the RBI chief had said he would wait for more clarity on the inflation trend and the impact of demonetisation on growth before making changes to the key policy rate.
10) To justify a rate cut this year, economists say the RBI would likely need more comfort on consumer prices, either through a slump in food prices or an easing of core inflation, which has stayed at around five per cent for several months.
Source: NDTV
Sunday, 22 January 2017
Reserve Bank of India
12:07
RESERVE BANK OF INDIA WORKING ON PLAN TO REDUCE ON LINE CHARGES:REPORT
RESERVE BANK OF INDIA WORKING ON PLAN TO REDUCE ON LINE CHARGES:REPORT
Urjit Patel had met the panel to answer questions about demonetisation and its impact.
THE Reserve Bank of India (RBI) is working on a plan to reduce online transaction costs in order to encourage more digital banking, reported Reuters. Quoting two parliamentary panel members, the report said central bank Governor Urjit Patel said this Friday before the Public Accounts Committee (PAC).
“We are working on a mechanism to bring down transaction costs,” one member of the public accounts committee quoted Patel as saying. “We are speaking to all stakeholders.”
Patel had met the panel to answer questions about demonetisation and its impact.
According to ANI, Patel is also learnt to have told PAC that cash flow will normalise with the passage of time and underlined the steps being taken for this, in both rural and urban areas.
He also said that specific agencies like financial intelligence unit and income tax department are looking into abnormal deposits.
The RBI Governor also informed PAC that demonetisation will have a short-term impact on GDP but will have a positive impact in mid and long term.
In a shock move on November 8, Prime Minister Narendra Modi had announced demonetisation of old Rs 500 and Rs 1,000 notes.
Following the decision, the RBI had put curbs on withdrawal of cash from ATMs and banks to deal with shortage of new high-value currency notes.
Source:Indian Express
Saturday, 14 January 2017
trade unions
17:50
RBI employees urge governor to protect autonomy
RBI employees urge governor to protect autonomy
The employee union of the Reserve Bank of India (RBI) has urged the bank's governor to protect central bank autonomy and not allow the government to interfere in processes, after criticism over how it handled a ban on high-value currency.
The bank and Prime Minister Narendra Modi have been criticised for the implementation of their November decision to abolish high-value bills that accounted for 86 percent of currency in circulation.
Economists said slow replacement of the bills undermined the RBI's reputation for competence, while some raised doubts about the bank's independence for agreeing to implementation with limited preparation.
The RBI's employee union in a letter to the governor dated January 13 said it was "painful" the central bank was being criticised despite its staff successfully carrying out the "humongous task" of replacing the old bills.
It cited a recent local media report saying the finance ministry had sent a bureaucrat to coordinate the bank's cash operations.
"If true, this is most unfortunate and we take strong exception to this measure of the government as impinging on RBI autonomy," the union said in the letter. The RBI did not require any assistance, it said.
"Apart from showing RBI operations and its gigantic performance in poor light, the government now blatantly encroaches on its jurisdiction," the union said in the letter, a copy of which was seen by Reuters.
An RBI union member confirmed the authenticity of the letter. The RBI did not provide an immediate comment. A finance ministry spokesman declined to comment.
Modi's decision on November 8 to suddenly scrap 500 and 1,000 rupee banknotes as part of a crackdown on tax dodgers and counterfeiters has resulted in severe cash shortages, impacting companies, farmers and households alike.
The action has also sparked political concern, with some people in Modi's own party anxious that the cash crunch could hurt their prospects in states going to the polls this year.
One RBI official involved in drafting the union's letter said employees were worried that government intervention in distributing new bills could be politically influenced ahead of state polls.
Source:Reuters
Tuesday, 29 November 2016
RBI Governor
00:05
RBI head must quit for havoc
RBI head must quit for havoc
Leader of bank officers’ union
D Thomas Franco, senior vice president of
All India Bank Officers Confederation,
says Urjit Patel morally responsible for causing crisis,
deaths in country.
Written by Arun Janardhanan | Chennai | Updated: November 21, 2016 8:02 am
A TOP leader of India’s largest confederation of bank officers has called for the resignation of RBI governor Urjit Patel, whom he held responsible for causing “havoc” to the economy with the unprepared decision to demonetise currency.
D Thomas Franco, senior vice president, All India Bank Officers Confederation which represents over 2.5 lakh senior officers from all nationalised, old-generation private sector, cooperative and regional rural banks in India, told The Indian Express that it is the RBI governor who should take moral responsibility for the crisis and the deaths of people including 11 bank officers in the last 12 days.
Franco said the government could have taken lessons from other countries and from its own demonetisation drive in 1978, when then RBI governor I G Patel had advised the government against the move. “We all know that neither Prime Minister Narendra Modi nor Finance Minister Arun Jaitley is an economist,” Franco said. “We have economists in RBI to take the right decisions on matters relating to economy and people’s lives. The present governor has utterly failed in his role by taking a crucial economic decision without planning, which has brought havoc to the nation’s economy and lives of the majority.”
About the shortage of Rs 100 notes, he said, “What we are getting is mostly soiled notes, reintroduced by RBI because of this crisis. As detection machines reject most of the soiled notes, it is another herculean task for bank officers to sort these out manually. Had there been a little planning, they could have printed Rs 500 and Rs 100 notes instead of printing Rs 2,000 notes. Does it mean these economists have no clue about how transactions work and currency travels in a country like India?… All the soiled notes have to come back again as they are meant to be disposed.”
Franco said the new Rs 500 notes are not available in banks even after 11 days. “When they decided to print Rs 2,000 notes in advance, what prevented the printing of Rs 500 notes? It was the RBI governor who signed all Rs 2,000 notes. Why did his team not realise that the new Rs 2,000 notes are smaller than the old Rs 1,000, forcing the bank system to recalibrate two lakh ATMs?” he said.
Franco cited reports of “misery and despair” from the ground. “People are crying at bank counters. Eleven bank officers have died due to stress. An average bank officer has been working up to 16-18 hours… Officers in the ranks of joint custodian in the currency administration cells in banks are the most affected. Many of them couldn’t even claim a half a day’s leave after working 18 hours for 11 consecutive days,” he said.
“It was very, very poor planning on the part of RBI that has led to this crisis. They did not even have a road map. Those who sat and rolled out the demonetisation drive didn’t have a basic idea about how the Indian economy works and transactions happen. We understand that there were no discussions with experts and stakeholders before they took the decision,” he said.
“RBI has to now count and verify all these banned notes again. When we talk about deposits of several thousand crores, we do not know how many of them were forged notes. Collection of old notes in bank branches is being done in a hurry due to heavy crowds. Before they took the decision, the total currency status in all the banks and branches in the country was a single click away for them,” he said.
“The administrative hierarchies too have derailed. It is strange to see that economic affairs secretary Shaktikanta Das is announcing many decisions including the use of indelible ink without any authority while the finance secretary is mum,” he said.
“Moreover, RBI is not allowing cooperative banks to exchange currency. They are institutions with a total Rs 10 lakh crore investment and one lakh branches in the most remote areas of the country, serving a rural population of crores,” he said.
Franco said the economy is sinking; growth has been affected and think tanks predict immediate impacts will last at least 12 to 15 months.
Source:Indian Bank Kumar
Tuesday, 30 August 2016
RBI Governor
07:35
18th Meeting of the FSDC Sub-Committee held in Mumbai
18th Meeting of the FSDC Sub-Committee held in Mumbai
A meeting of the Sub-Committee of the Financial Stability and Development Council (FSDC) was held today in Mumbai. Dr. Raghuram G. Rajan, Governor, Reserve Bank of India, chaired the meeting. The meeting was attended by the members of the Sub-Committee - Shri Ashok Lavasa, Finance Secretary, Shri T. S. Vijayan, Chairman, Insurance Regulatory and Development Authority of India (IRDAI), Shri Hemant G. Contractor, Chairman, Pension Funds Regulatory and Development Authority (PFRDA), Deputy Governors of the Reserve Bank, Dr. Urjit Patel and Shri N. S. Vishwanathan, Shri Ajay Tyagi, Additional Secretary, Ministry of Finance and Shri Deepak Mohanty, Executive Director of the Reserve Bank and Member Secretary of the Sub-Committee. SEBI was represented by Shri Rajeev Kumar Agarwal, Whole Time Member. Executive Directors of the Reserve Bank as well as other officials from the Reserve Bank and the Ministry of Finance also attended the meeting.
The Sub-Committee reviewed the major developments on the global and domestic fronts that impinge on the financial stability of the country. Reports of the FSB Peer Review of India and the Working Group on Development of Corporate Bond Market in India, issues regarding the proposed Bill on setting up of a statutory Financial Data Management Centre (FDMC), Minimum Assured Return Scheme under the National Pension System (NPS) and regulation of spot exchanges were the other topics discussed during the meeting.
The meeting also reviewed the functioning of the State Level Co-ordination Committees (SLCCs) in various States/ Union Territories, the activities of the various Technical Groups of the Sub-Committee and the progress achieved on the decisions/ recommendations emanating from the earlier meetings of the Sub-Committee.
Alpana Killawala
Principal Adviser
Press Release : 2016-2017/528
Source:Reserve Bank Of India
Wednesday, 17 August 2016
Reserve Bank of India
21:39
BBB should appoint top executives in state-run banks
BBB should appoint top executives in state-run banks
Outgoing Reserve Bank of India (RBI) governor Raghuram Rajan emphasised on improving governance in public sector banks and said the task of appointing top executives and non-official directors in these entities should be left to the Bank Board Bureau (BBB). The government, at present, appoints the chief executive, executive directors as well as other board members. Mr. Rajan’s suggestion is in line with the PJ Nayak committee proposal, which was set up by the RBI to look into the issue of governance in Indian banks. “A parallel task for public sector banks was to improve the governance and management,” Mr. Rajan said in his speech at the FICCI-IBA banking seminar. He suggested that as the BBB gains experience in appointment process, the final decision relating to appointments of executives and of non-official directors on bank boards should be left to it. The government has set up the BBB in February this year under the chairmanship of former comptroller and auditor general of India, Vinod Rai. At present, the BBB is involved in the short listing and selection process of public sector bank executives but the final appointment is made by the government...
Sunday, 3 July 2016
RBI Governor
18:32
Bank NPAs may hit 8.5 % by March
Bank NPAs may hit 8.5 % by March
Banking sector gross NPA at 7.6%, highest in 12 years; Expected to rise further to 8.5% by March 2017
Gross bad loans at commercial banks could increase to 8.5 per cent of total advances by March 2017, from 7.6 per cent in March 2016, according to a baseline scenario projection by the Reserve Bank of India (RBI) in its Financial Stability Report released on Tuesday. “The macro stress test suggests that under the baseline scenario, the gross NPA may rise to 8.5 per cent by March 2017,” the RBI noted in the report. “If the macro situation deteriorates in the future, the gross NPA ratio may increase further to 9.3 per cent by March 2017.”
Asset Quality Review
The central bank has been pushing lenders to review the classification of loans given by them as part of an Asset Quality Review (AQR). The resultant sharp surge in provisions for bad debts has eroded profitability, especially at state-owned banks, in recent quarters. The gross bad loans of public sector banks increased to 9.6 per cent as of March 2016, from about 6 per cent a year earlier, RBI data showed.
There was an almost 80 per cent jump in gross bad loans in 2015-16, according to the report. Gross bad loans of Indian banks widened to 7.6 per cent from 5.1 per cent in September and from 4.6 per cent in March 2015.
In 2004, gross bad loans in the Indian banking sector touched 7.8 per cent, while the ratio was 11.1 per cent in 2002. “The stress in the banking sector, which mirrors the stress in the corporate sector, has to be dealt with in order to revive credit growth,” RBI Governor Raghuram Rajan said in the report. The rise in gross NPA is mainly because of the AQR, RBI said in the report. The AQR conducted by the banking regulator found several restructured advances, which were standard in the banks’ books, that needed to be reclassified as non-performing.
Since a large proportion of standard restructured advances slipped into the NPA category, the overall stressed assets ratio increased marginally to 11.5 per cent from 11.3 per cent in September. 5
RBI said subsequent to the AQR, gross NPAs rose 79.7 per cent year-onyear in March 2016.
Private sector banks
The net NPA of the banks also increased sharply to 4.6 per cent in March 2016, from 2.8 per cent in September 2015. Public sector banks’ net NPA was 6.1 per cent, while the ratio for private sector banks was 4.6 per cent.
On the business side, the report noted that credit and deposit growth remained in single digits for the previous financial year. While credit growth was 8.8 per cent, deposit growth was 8.1 per cent.
There was a stark difference in the credit and deposit growth of public sector banks as compared with their private sector counterparts. According to RBI data, for public sector banks, loans grew at 4 per cent while it was 24.6 per cent for private banks. Deposits of state-run banks grew by 5.2 per cent, while for private banks it was 17.3 per cent. “The relative performance of bank groups reflect their respective strengths amidst on-going industry-wise balance sheet repair and also sluggish growth in private capex,” according to the report.
Silver lining
The only silver lining is the housing sector, according to the financial stability report, which said with gross NPAs of the retail housing segment at 1.3 per cent, it does not pose any significant systemic risks in the Indian context.
Source:AIBEA
Monday, 25 April 2016
RTI Laws
07:58
Rajan must not be allowed to hide bank defaulters from public scrutiny
Rajan must not be allowed to hide bank defaulters from public scrutiny
It was rather surprising that the Supreme Court chief justice T S Thakur told the court on 12th April that his bench would examine if the total amount of defaults in repayment of bank loans running into lakhs of crores of rupees should be made public, without disclosing the defaulters name.
He said: "There is no confidentiality in figures, but the names may be kept out.”
Justice Thakur made this observation when the RBI counsel stoutly resisted the court's earlier stance to name and shame the big defaulters (each of whom has borrowed more than Rs 500 crore from different banks and has refused to pay back. And there are thousands of such defaulters).
Pray, Justice Thakur, why should you consider only disclosing the figures (total amount of the taxpayer's money swindled in this bank scam) and not the names of the white-collar criminals who are responsible for this crime? Why should you allow the dubious plea of the RBI to withhold the disclosure of the names of those who have borrowed money from banks to the tune of thousands of crores to set up business in India but bought properties abroad with that money?
That the RBI's plea is dubious has been conclusively established by a division bench of the Supreme Court barely four months ago. The RBI had then challenged the order of the Chief Information Commission (CIC) which had ruled that the RBI was duty-bound to disclose information about the Non-Performing Assets (NPAs) of the commercial banks under the RTI Act. The CIC had said that the exemptions from the disclosure of the information provided under the RTI act could not be applied to the banking sector.
Raghuram Rajan, the RBI governor, had challenged the CIC order in the Supreme Court. A Supreme Court bench consisting of Justice M Y Iqbal and Justice C Nagappan heard the matter. The RBI chief, through his counsel, placed two arguments: first, that the the central bank had a fiduciary relationship with the borrowers and therefore, under the RBI law, it was bound by the confidentiality clause and could not reveal the names of the defaulters. And the second argument was the following: "Disclosure of information would have adverse impact in the public confidence in the bank. This has serious implications for financial stability… This will also affect the economic interest of the state.”
After a careful consideration of all facts, the SC bench observed on December 16, 2015 that the RBI could not hide 'routine information' such as the names of top defaulters, the extent of losses suffered by banks and details of actions taken against banks from the public.
Justice Iqbal-led bench trashed the 'fiduciary relationship' argument advanced by the RBI chief. The Court said: 'the RBI does not place itself in a fiduciary relationship with the financial institutions because the reports of inspections, statements of banks and information related to business obtained by the RBI are not under the pretext of confidence or trust'.
The Justice Iqbal bench also came down heavily against the second argument of the RBI. It said: 'the RBI's contention that revealing the information to the public would harm public interest was absurd'. It went on to say: 'the facts reveal that banks are trying to cover up their underhand actions. Therefore, they are even more liable to be subjected to the public scrutiny'. This attitude of the RBI (hiding the information on banking activities from the public) will only attract more suspicion and disbelief in them, the court said.
The apex court bench's final indictment of the RBI was lethal: "We have surmised that many financial institutions have resorted to such acts which are neither clean nor transparent. The RBI in association with them has been trying to cover up their acts from public scrutiny.”
The RBI has been shown up for what it is -- that it is complicit in shielding the corrupt lenders and the fraudulent borrowers which has led to the siphoning off of 'lakhs of crores' of public money. This indictment has been made by none other than a Supreme Court bench in a detailed judgement, not in an off-the-cuff remark. And this indictment came only in last December.
Just four months have passed since then; in another public interest litigation that has come up before the apex court demanding the disclosure of the information about the big defaulters (incidentally, in both the cases the counsel for the petitioner has been the intrepid lawyer, Prashant Bhushan), the RBI governor is making the same old argument – that of fiduciary relationship and financial stability – to make the case once again for concealment of the information from the public.
As this argument has been decisively rejected by the apex court just four months ago, Raghuram Rajan's same old dubious plea should not be allowed to eat into the honourable chief justice's highly valuable judicial time. When the case comes up for discussion on April 26, Raghuram Rajan and his cohorts should be told in no uncertain terms that the RBI's shenanigans cannot be kept under wraps.
The Justice Iqbal bench had wisely observed that if people remained oblivious to the irregularities committed by the commercial banks and their regulator, the RBI, then the whole financial system of the country would be rigged and sooner or later it would lead to serious consequences for the Indian economy.
When that happens, Raghuram Rajan would be gone pursuing another high-flying international career, leaving a billion Indians bruised. Of course, some Indians (the likes of Vijay Mallyas who would flee the country when the situation gets too overheated for them to stay in India) would remain eternally grateful to him. These white-collar criminals would seek Rajan out when he travels to various international financial capitals and express their gratitude to him for shielding them from the public eye for as long as he held office.
Chief Justice T S Thakur must save the fellow countrymen from such sharks out to devour India when he takes up the matter on April 26.
Source:Banking Updates
Saturday, 9 April 2016
State Bank of India
07:42
Rs 500, Rs 1,000 note rumours, not polls, behind cash surge: State Bank of India
Rs 500, Rs 1,000 note rumours, not polls, behind cash surge: State Bank of India
The State Bank of India has said that RBI governor Raghuram Rajan's contention that polls are driving the surge in cash in the hands of the public does not explain the current spike, which is higher than other election years. The bank has said in a report that it is rumours of demonetisation of Rs 500 and Rs 1,000 notes that is possibly driving people to withdraw cash in order to deploy them in 'safe' assets.
"We have seen even bigger elections in earlier years but the increase in currency with the public has not been that high. This time it is hurting our deposit growth and, after a long time, our deposit growth is less than advances," said SBI chairman Arundhati Bhattacharya. She said the reason for the cash surge was still a mystery. Some have attributed it to the jewellers' strike, which is preventing cash deposits. However, Bhattacharya said the strike was recent and the increase in cash has been seen for some time.
In the research report, SBI chief economist Soumya Kanti Ghosh said that the common perception is that FY17 being an election year, people are hoarding cash. "However, had this been true, even FY14 should have shown the similar trend. In fact, that year witnessed a decline. Also in FY12, when Punjab and Uttar Pradesh went to polls, currency in circulation actually witnessed a significant decline. Does this mean that elections in Punjab and Uttar Pradesh are relatively more transparent than say other states like Bihar (reason for the possible increase in currency in 2015)"?
The report adds that elections may be only a small reason, but the bigger factor could be the trend in demonetisation. "There are suggestions in public domain and even analysis that are suggesting that higher denomination notes may be replaced. We believe as a result of that people may be using more of high-value currency to purchase safe haven assets," the report said.
Bhattacharya, however, did not have an opinion on demonetisation and said that was something that was picked up by the research department from what is being talked about in the environment.
The report warns that if demonetisation is being contemplated, a road map needs to be created. "It needs to be done in steps and be balanced with creation of necessary electronic and digital infrastructure in the country, coupled with creating awareness and financial literacy for ensuring that the man on the street is not put to undue hardship," the report said.
Going into the advantages of demonetization, the report said that demonetizing Rs 500 and Rs 1,000 currency notes will bring a huge amount of the funds kept in these denominations into the banking channels and will facilitate a reduction in domestic black money transactions. But this would also be a headache when it comes to logistics. "At the branch level, the cost of handling cash would zoom and there would be complete chaos as the funds kept in these denominations will be flushed into the banking channels," the report said. The report goes on to say that introduction of a Rs 5,000 note will also not solve the problem and would continue to result in ATMs running dry several times a day.
Source:https://www.facebook.com/BankingUpdates/posts/598546900302324
Source:https://www.facebook.com/BankingUpdates/posts/598546900302324
Sunday, 14 February 2016
RBI Governor
08:12
Reserve Bank Of India Governor : Loan Melas to Disburse Loans
Reserve Bank Of India Governor : Loan Melas to Disburse Loans
RBI governor Dr Rajan Spoken boldly.....Banks have been forced to conduct loan melas to disburse loans sacrificing quality of loaning process and banks have been forced to write off loans so that vote banks of ruling party is safe and become greater. Banks have been used to carry out all non - productive services like tax collection or salary payment or disbursing subsidy oriented loans under various government sponsored schemes or reckless branch expansion in the name of service area approach or PM Jan Dhan Yojana.
Further to make the situation worse, banks have been directed and allowed by previous government to do non- banking business like insurance, mutual fund, demat etc. In this way banks sacrificed the safety of bank's core assets and wasted time in capturing insurance business from own customers. They could earn a few crores of rupees in commission on selling insurance policies but they lost hundreds and thousands of crores of rupees by financing to bad borrowers or by neglecting monitoring loan asset or by writing off bad loans. There is a saying " Penny wise pound foolish"Naked Truth!Starting January 2014, a Reservation Clerk in Railway will earn Rs.35,370 after taking into account the recent 10% DA hike announced by the Govt.On an average there will be jump in salary to the extend of 2.6times after every pay commission.
So after 7th pay commission, if we consider the worst case scenario and suppose salary will jump by 1.6 times, from 2016 a booking clerk will get Rs.57,250 as agaisnt the 18000 drawn by Bank Clerk and 30000 drawn by Bank Officers.The entire thing has to be read against the backdrop that during the year 2012-13, Railways made aloss of Rs.24,600 and the minister was quick in attributing the loss to the gloomy Economic Scenario prevailing in the country.It is worth to mention here that IBA restricted the wage revision to 5% citing poor profitability of Banks, whereas data reveals that during the last 5 years, Gross Profit of PSBs jumped by141% to Rs.1,07,731Cr.Can anyone explain the rational prevailing in this GREAT country in giving Rs.57000 salary to a booking clerk whokey- in nothing but passenger detail and a bank officer who appraise and sanctions credit worth crores of rupees!Let us project as an example the salary received by a Booking Clerk in Railway and the working-conditions compared to a Bankers.
Source:BankingUpdates
Tuesday, 15 December 2015
Reserve Bank of India
18:31
RBI denies Message on Currency Notes circulating on Social Media
RBI denies Message on Currency Notes circulating on Social Media
The Reserve Bank of India has today denied having issued a communication circulating on social media alerting members of public that banks will not accept currency notes with scribbling on them from January 1, 2016.
The Reserve Bank has reiterated that all currency notes issued by it are legal tender and banks and members can freely and without fear accept them in exchange for goods and services.
The Reserve Bank has also stated that in pursuance of its clean note policy, it keeps requesting banks and members of public not to write on the currency notes as writing defaces them and reduces their life.
Alpana Killawala
Principal Chief General Manager
Authority: www.rbi.org.in
Wednesday, 25 November 2015
UCO Bank
22:12
Increase in non-performing assets have led several public sector banks to go slow on educational loans- Finance Ministry
Increase in non-performing assets have led several public sector banks to go slow on educational loans- Finance Ministry
Student loans dry up as bad debts climb at banks
An increase in non-performing assets have led several public sector banks to go slow on educational loans, latest data complied by the Finance Ministry shows.
“Banks have achieved 50 per cent of the disbursal targets of the year 2015-16 up to 30 September,’’ according to a note circulated among chief executives of the public sector banks before Finance Minister Arun Jaitley met the bankers on Monday. “`However, banks namely the Corporation Bank, Dena Bank, IOB , UCO Bank, SBI, State Bank of Patiala, State Bank of Hyderabad and the State Bank of Travancore have not achieved proportionate targets,” the note said.
Banks were given a target of 20 per cent growth in disbursement and 15 per cent growth in accounts for the current financial year.
Reserve Bank of India Governor Raghuram Rajan had, earlier this month at the Delhi Economic Conclave, raised a red flag over the increase in non-performing assets in education loans and said such loans should be devised in a flexible manner, providing options like automatic moratorium if borrowers were under a period of unemployment. He wanted guidelines on know-your-customer (KYC) to be made easier.
“There are lots of NPAs in the education sector. They have been rising in the last few years. It's a matter of concern,” Mr. Rajan said.
A student, under the educational loan scheme, can borrow up to Rs.10 lakh for domestic education and Rs.20 lakh for studying in foreign colleges. Borrowers need not pay during the tenure of the course and for an additional year. The repayment period is five to seven years.
For loans up to Rs.4 lakh, banks cannot demand any collateral. According to bankers, the maximum number of bad loans are in this segment.
Due to rising bad loans, the finance ministry, at the request of bankers, has created a credit guarantee fund for education loans. The Ministry of Human Resources has transferred Rs.351.09 crore to the corpus fund and Rs.112.05 crore may be transferred in the next week, according to the Finance Ministry.
It has also asked banks to integrate with the Vidya Lakshmi portal – which is a first of its kind portal providing a single window for students to access information and submit applications for educational loans to banks and for government scholarships.
While 24 banks have registered, only eight have integrated their system with the portal for providing loan processing status to the students. “All the remaining banks are requested to take steps to integrate with the portal,” according to the note.
Source:The Hindu
Wednesday, 11 November 2015
RBI Governor
22:26
Raghuram Rajan first Indian to be VC of Bank for International Settlements
Raghuram Rajan first Indian to be VC of Bank for International Settlements
MUMBAI: Reserve Bank of India governor Raghuram Rajan has become the first Indian central banker to be appointed as vice-chairman of the Bank for International Settlements (BIS) -the bank for central banks. The appointment is expected to give stronger voice to Rajan, who has been repeatedly calling for more coordination among central banks in monetary policy.
Rajan was elected to the number two position for a period of three years from November 10, 2015 at a meeting of the BIS board. Rajan had joined the BIS board in December 2013. As vice-chairman, Rajan will work with BIS chairman Jens Weid mann, who is also president of Germany's Bundesbank.
Rajan has for long been a critic of central banks in the develo ped world opening up the monetary sluice gates and flooding emerging markets with capital flows. Rajan once even had a face-off with former chairman of the Federal Reserve Ben Bernanke when he said that powerful central banks should pay attention to how their policies affect other countries.
On Tuesday , speaking at Frankfurt, Rajan forecast volatility when the Federal Reserve raises rates. However, he said that the consequences of the inaction by the Fed would be even more severe."When it happens, there will be volatility . I worry more about the consequences of staying in the ultra accommodative ... world. I think there will be volatility, but I think we have to bear it," he said.
Prior to Rajan, former RBI governor Y V Reddy had a key role as chairman of the BIS Asian Consultative Council which comprised all governors of BIS member central banks in the Asia-Pacific region.
As an organization of central banks, BIS seeks to bring more predictability and transparency in monetary policy . The framework for regulations that prescribe capital requirement for banks is also prescribed by the BIS. The capital norms are known as Basel norms, named after the location of the BIS headquarters where they were framed.
Source:TOI
On Tuesday , speaking at Frankfurt, Rajan forecast volatility when the Federal Reserve raises rates. However, he said that the consequences of the inaction by the Fed would be even more severe."When it happens, there will be volatility . I worry more about the consequences of staying in the ultra accommodative ... world. I think there will be volatility, but I think we have to bear it," he said.
Prior to Rajan, former RBI governor Y V Reddy had a key role as chairman of the BIS Asian Consultative Council which comprised all governors of BIS member central banks in the Asia-Pacific region.
As an organization of central banks, BIS seeks to bring more predictability and transparency in monetary policy . The framework for regulations that prescribe capital requirement for banks is also prescribed by the BIS. The capital norms are known as Basel norms, named after the location of the BIS headquarters where they were framed.
Source:TOI
Friday, 23 October 2015
RBI Governor
21:36
Need to check flaws in banking system: Rajan
Need to check flaws in banking system: Rajan
Reserve Bank Governor Raghuram Rajan on Friday said there was a need to check flaws in the banking system to ensure that defaulters were not let off scotfree.
"We have to check the flaws in the banking system where a defaulter cannot escape with impunity," Rajan said.
The banking sector is currently struggling with high non performing assets (NPAs).
Delivering the annual Sardar Vallabhbhai Memorial Lecture at The Sardar Vallabhbhai Patel National Police Academy in Hyderabad, Rajan also called for "focus" in implementation of economic reforms and improving capacity at every level of economy and village and national infrastructure to maintain growth and check inflation.
"Our country is today facing a number of challenges regarding implementation of economic reforms and we are putting it back on the right path by certain measures. We need to focus in implementation and improve capacity at every level of the economy. We should concentrate on village infrastructure and national infrastructure as well to keep economic growth and check inflation levels," Rajan said.
He stressed on the role of government spending in reviving growth, especially because exports are not doing as well as in the past.
"There are certain aspects like macro stability, human capital, business environment, taxation, judiciary and allocating resources that play a key role in boosting our economy.
"We need to constitute state level coordination committees to monitor unregistered and illegal operators with the Chief Secretary, DGP and District Collectors in the committees.
"Today, the new mantra in the country is transparency at all levels," Rajan was quoted as saying in a statement issued by the Academy, delivering a lecture on 'Reforming India's Economic Institutions'.
Earlier, Rajan paid homage at the Police Martyrs' Memorial.
Source :Business Standard
Friday, 25 September 2015
RBI Governor
09:14
Bankruptcy code can help resolve NPAs, deepen corporate bond market: RBI
Bankruptcy code can help resolve NPAs, deepen corporate bond market: RBI
RBI Governor Raghuram Rajan today welcomed the Finance Ministry’s move to bring in a Bankruptcy Code, saying it will help bankers resolve asset stress and also infrastructure financing by deepening the corporate bond market.
“We need a speedy Bankruptcy Code to resolve distress, while maintaining the priority structure of claims, and I am glad the Finance Ministry intends to bring in one soon,” Rajan said.
The RBI Governor further said the proposed code, on the lines of the bankruptcy laws elsewhere in the world, will not only give the creditors more ability to resolve distress, but will also help strengthen the nascent corporate bond market in the country, which is essential for the large infrastructure financing needs of the economy.
A majority of the developed economies have such a code already, and Finance Minister Arun Jaitley had last month announced that his ministry would be out with such a code anytime soon.
“The bankruptcy code was to be ready by the end of July, and I think it’s going to be ready any of these days,” Jaitley had said on August 18.
It may be noted that since the past three years, the bad loans issue has assumed alarming proportions with the combined stressed assets ratio (NPAs and restructured accounts) jumping to over 13.5 per cent of the system as of the June quarter, with the state-run banks bearing the maximum brunt.
Rajan sought to dismiss allegations of government bonds crowding out private sector issuances in the bond market, saying the “real issue is confidence”, which will come through measures like the Bankruptcy Code.
Apart from the code, the RBI is mulling various other measures to strengthen the corporate bond market, including allowing the better-rated banks to issue long-term bonds and not allowing foreign investors a greater play in G-secs which can divert some money to the corporate bonds.
Besides, the RBI is planning to soon allow banks to credit-enhance corporate bonds and is also examining the possibility of reporting high quality corporate bonds.
Source :BankingUpdates.
Source :BankingUpdates.
Sunday, 20 September 2015
Reserve Bank of India
18:03
The need for the government is to create the enabling environment in which businesses can flourish - RBI Governor
The need for the government is to create the enabling environment in which businesses can flourish
RBI Governor Raghuram Rajan talks of strong institutions, slams 'jugaad'
MUMBAI: Coming down hard on quick fixes like 'jugaad' way of working, Reserve Bank Governor Raghuram Rajan today did some plainspeak, saying the key to sustainable growth is strong institutional mechanisms that allow businesses to flourish.
"Jugaad, or working around difficulties by hook or by crook, is a thoroughly Indian way of coping, but it is predicated on a difficult or impossible business environment. And it encourages an attitude of shortcuts and evasions, none of which help the quality of final products or sustainable economic growth," Rajan said while delivering the fourth CK Prahalad memorial lecture here.
"We must have the discipline to stick to the strategy of building necessary institutions and creating a new path of sustainable growth where jugaad is no longer needed," he said.
Emphasising on the need to salute businesses for operating in tough environment, he said "we need to change the system for the better, and while doing so, the business community will have to cooperate," Rajan, the former IMF chief economist, said.
"We need the understanding and cooperation of the business community, not impatience and pressure for quick impossible fixes. Only then, I believe would we realise the true potential as a nation," the academic-turned-central banker said.
Referring to the late marketing guru Prahalad's seminal work around letting businesses find their core competencies, Rajan posed a question on whether nations need to discover their strengths, but seem to advocate against any such moves for fear of vested interests dictating policies.
"It is very hard for public authorities to determine what they are, in face of massive lobbying and disinformation by some interested parties... Remember, the licence permit raj persisted precisely because some industries were favoured over others in the so-called national interest," he said.
The need for the government is to create the enabling environment in which businesses can flourish, he said.
Rajan cited the growth of the information technology sector, saying it grew largely on its own and the government only played an enabling role through investments in technical education and the working of state-owned undertakings like Bharat Electronics.
According to some academics, one should not confuse jugaad with true innovation.
"CK Prahalad believed that Indian businesses were capable of scaling the world heights and so do I... There are no easy ways to the top," Rajan concluded.
Source :The Economic Times
