US Commerce Secretary Gary Locke's robust meetings in Mumbai, includes a bilateral with the Governor of the RBIndia Dr D Subbarao and senior officials at the Department of Atomic Energy and the Nuclear Power Corporation of India, in addition to speeches to the Federation of the Indian Chambers of Commerce and Industry and the National Association of Software and Service Companies, will also be punctuated with an interaction with the dabbawallahs or tiffin caterers.
Finance Minister Pranab Mukherjee sought to soothe the frayed nerves of India's financial regulators by saying the government would not undermine their autonomy. Mukherjee's assurance came a day after Reserve Bank of India Governor D Subbarao went public with his "concerns" over dilution of the central bank's role in dealing with inter-regulatory disputes in the Ordinance issued last month.
The stronger than expected monsoon has not yet softened food inflation as much as it should have and in particular, vegetable prices have been impacted by weather-driven supply disruptions, said RBI Governor D Subbarao while unveiling the first quarter monetary policy review.
The central board of Reserve Bank of India (RBI) has opposed a government move to have control over the central bank's staff-related matters. The proposal to make staff regulations statutory and bring them under the subordinate regulation of Parliament was discussed at RBI's board meeting in Kolkata last week.
Blaming high cash balance with the Government for aggravating liquidity strain in the system, the Reserve Bank on Thursday asked it to loosen purse strings for easing the situation. "On Wednesday, the government cash balance stood at Rs 92,000 crore (Rs 920 billion).
The Reserve Bank on Thursday said it is considering the possibility of allowing Islamic financial institutions to function as NBFCs since Islamic banks are not permitted under the present laws.
While the common citizen will benefit from the central bank's action, the policy stance is consistent with sustaining high growth in the medium term.
The International Monetary Fund and the World Bank had forecast that India's economy would grow at 8 per cent and 9 per cent, respectively.
The loan by the banks to MFIs for on-lending to small borrowers will fall under 'priority sector' category if the RBI guidelines are met.
"Bank loans to all MFIs, including NBFCs working as MFIs on or after April 1, 2011, will be eligible for classification as priority sector loans if, and only if, they conform to the regulations formulated by the Reserve Bank," RBI Governor D Subbarao said in the 'Monetary Policy Statement for 2011-12'.
In an interview with Business Standard, RBI Governor justifies action against the real estate sector, saying home prices in most metros have crossed pre-crisis levels.
There was a near-unanimous view that the time was right for an increase of 50 basis points in policy rates. Some even suggested that the rates be raised by 75 basis points.
Subbarao's annual statement will be of unusual interest this year
MFI tactics have even prompted Andhra Pradesh Cabinet to approve an ordinance to rein them in.
RBI is also considering a proposal to re-introduce inflation-indexed bonds.
The Reserve Bank on Thursday said the country's wholesale price-based inflation and industrial production data should be improved and employment data availed for effective monetary policy management.
Reserve Bank of India Governor D Subbarao has said India, being a current account-deficit country, is more vulnerable to sudden reversals in capital flows and short-term overseas portfolio money than nations which have a current account surplus.
Ahead of the monetary policy review, RBI governor D Subbarao is expected to meet Prime Minister Manmohan Singh and finance minister Pranab Mukherjee on October 23.
RBI said the continuing sluggishness of the global economy led to some moderation in exports growth and invisible receipts, while import growth accelerated due to the strong domestic recovery.
Asserting that the withdrawal of stimulus is in the best interest of the economy in the current scenario of high inflation, the RBI said that it has started unwinding the emergency measures plugged in during the financial crisis.
The discussion on new banking licences will be posted on the website of the central bank for public comments, RBI governor D Subbarao said while unveiling the monetary policy for 2010-11.
India had registered an economic growth of 6.7 per cent in FY'09 after posting over 9 per cent growth in the three preceding year, because of the global economic crisis.
Reserve Bank of India (RBI) Governor Duvvuri Subbarao said inflation would determine the future policy and the effort would be to manage the balance between growth and inflation.
Stating that counter-cyclical measures to combat the impact of the global financial meltdown were important, Subbarao said the government borrowings had gone up 'rapidly and abruptly' hindering transmission of monetary measures to bring about lowering of interest rates.
Currently, banks pay up to 9.5 per cent interest on fixed deposits.
Subbarao also warned of attrition in PSBs, saying, "PSBs will lose talent to the private sector."
With budgetary preparations on in full swing, the Reserve Bank of India on Friday advised the Finance Minister to at least partially roll back the stimulus that was provided to help the industry cope with the financial crisis.
As the first quarter review of the credit policy approaches, voices from the market are getting louder by the day that 'baby steps' may not be sufficient to fight rising prices.
'Three external members of the first MPC are respected researchers with excellent academic background, but there is no harm in considering academicians with diverse backgrounds such as finance and labour along with economists for this body,' recommends Tamal Bandyopadhyay.
The Reserve Bank on Friday said the new UPA government, which is slated present the Budget some time in July, should resist pressure for another stimulus as sustained economic recovery would require fiscal consolidation in medium term.
However, since the banking system is facing tight cash conditions due to payment for spectrum for high speed telecom and broadband services and advance tax outgo, some experts are also of the view that RBI would wait for liquidity to ease before going for rate hikes.
Professional forecasters have added to Reserve Bank of India Governor Duvvurri Subbarao's dilemma on timing the exit from an accommodative monetary policy stance.
Brazil, Russia, India & China (known collectively as BRIC) on Sunday sought a re-balancing of representation on the executive board and the International Monetary and Financial Committee of the International Monetary Fund (IMF). The committee is the policy-making arm of the IMF.
Ahead of the G-20 Summit, Planning Commission Deputy Chairman Montek Singh Ahluwalia will lead a delegation to a preparatory meet on March 11 in London where deliberations on issues like liquidity crunch and reforms in international financial institutions are likely be taken up.
Managing recovery is a bigger challenge than managing crisis, says the Reserve Bank of India governor D Subbarao
Amid expectations that the Reserve Bank may keep its monetary stance unchanged, the central bank will come out with its second quarter review of the credit policy for the current fiscal on October 27.
The Reserve Bank of India Governor Duvvuri Subbarao's caution that the central bank will intervene if foreign inflows are 'lumpy and volatile' has calmed the rupee a bit. The local currency on Monday closed at 44.41 per dollar, compared to 44.44 per dollar on Friday. The rupee, which has gained about 5.7 per cent since the beginning of September, traded at its five-month high.
Bankers, who met the Reserve Bank of India Governor D Subbarao on Monday, two weeks before the annual monetary policy scheduled for April 20, said none of them was presently contemplating hike in lending rates given the 'reasonable' liquidity in the system.
Gearing up to face a difficult financial year, the Reserve Bank of India on Friday said it will explore all options to maintain comfortable liquidity position, while managing government's borrowing programme in a "least disruptive manner".
Go for short-term debt funds and fixed deposits, delay home or auto loans.
