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RBI identity has been damaged: Former governor Y V Reddy

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New Delhi, January 10: Former Reserve Bank of India Governor Y V Reddy expressed his deep concerns regarding the current state of affairs at the central bank and said that the institutional identity of the hallowed organisation has been sacrificed.

In a TV interview to the CNBC TV18, Reddy who served as RBI governor from September 2003 to 2008 said that the central bank is now only responsible for the monetary policy while it was a strong portfolio earlier.

“Now, there is a committee where the Cabinet secretary is the chair and the governor is a member,” he said.

Eversince Prime Minister Narendra Modi announced noteban on November 8, the U-turns and flip flops of RBI directives and Finance Ministry’s explanations thereof has put a big question on the autonomy of RBI as an institution. Indeed Governor Urjit Patel’s silence on demonetisation in the initial days of note ban made more noise than any of the central government’s Union Minister’s remark on the same.

Reddy pointed out that Modi government in May 2016 formed a search-cum-selection panel headed by Cabinet Secretary Pradeep Kumar Sinha to select deputy governors of RBI which is “a significant infringement” on the autonomy of the central bank. Earlier, reddy said, the RBI governor was the head of the panel for selection of his deputies.

“To be very frank, my own suspicion is that the institutional identity of the RBI has been damaged. Earlier, the RBI was the monetary authority. But it was a full-service central bank. The recent emphasis is that monetary policy is the main function,” Reddy said.

Raising some of the valid questions about Governor’s responsibility and accountability Reddy said, “Then is he not accountable to regulation? Is he not accountable to currency coins? There is confusion about relative importance. That relative importance is being decided more outside than within.”

He added, “The procedure applicable for a regulator has to be different from the procedure applicable to the monetary authority. In a central bank, regulation is one function. There is some lack of clarity.”

He further said that the fall in the in the status of RBI is not a recent event, and it has come “across political affiliations.”

Talking about the rampant criticism of RBI by media, economists and credit rating agencies, he said “reputational risk” is the worst risk and this time RBI’s credibility is at risk which is the worst risk. He added all this, “happening in the international opinion…is a national problem now and it is not just a political issue.”

Drawing an interesting comparison with the Army who is liable for the security of a country, the former governor said that RBI is responsible for the financial and monetary security of a country.

“The limited point is, the role of central bank in our economy is under threat and it is a national problem which has to be addressed as a national problem,” said Reddy.

The ex RBI governor also said demonetisation would incidentally benefit in the fight against black money by unearthing banking information of people. “So, demonetisation and black money link is not direct, it is indirect and incidental analytically. There are a lot of other implications as we go along,” he said.

If I have to be analytical, conceptual, academic and not ex-governor, the way I look at it is from a practical point of view, the pain has happened, going forward to the extent possible we would quickly relieve the pain. More important is gain, how do you maximise the gain? In that sense therefore I would say this is the beginning of handling the problem of black money,” he said.

The ex-governor refused to take any names and said that black money is a result of two most important factors– one being the administration and the other is the people. “Unless both are in some ways colluding it won’t happen.”

Wefornews Bureau

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Petrol, diesel touch all time highs as oil companies hike rates

Apart from Karnataka politics, crude oil prices which have lately been around the $80 per barrel-mark are expected to impact investor sentiments.

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Mumbai, May 20 : Persistently high global crude oil prices, along with the rupee’s movement against the US dollar and the ongoing quarterly results season are expected to drive the trajectory of the key Indian equity indices in the coming week.

However, analysts predict a negative reaction from investors on the formation of a non-BJP government in Karnataka and any further outflow of foreign funds.

“Markets will closely track the floor test results in Karnataka,” Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.

“Globally USD, US interest rates and crude oil prices need to be monitored due to their influence on the local markets.”

Apart from Karnataka politics, crude oil prices which have lately been around the $80 per barrel-mark are expected to impact investor sentiments.

As per the latest estimates of the Finance Ministry, the rise in oil prices may inflate India’s import bill by around $25 billion to $50 billion. The surge has already pushed the cost of petrol in the national capital to Rs 75.32 per litre.

Besides, the rupee’s price movement against the US dollar will also be crucial for the market, especially in the backdrop of a continuous outflow of foreign funds.

“Rupee continues to weaken against the US dollar as outflows continue across the emerging markets. However, high oil prices and political risk premium in a pre-election year is ensuring that the rupee remains as an underperformer in the EM basket,” Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

“Developments in Karnataka are not going to have any lasting adverse impact on the rupee bit come Monday, but there is a risk of a knee-jerk sell-off in the INR against the USD.”

On a weekly basis, the Indian rupee weakened by 68 paise to close at 68.01 against the US dollar from its previous close of 67.33 per greenback.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 1,496.79 crore during the trade week ended May 18.

According to the National Securities Depository (NSDl), foreign portfolio investors (FPIs) divested equities worth Rs 799.88 crore, or $117.63 million.

In addition to the rupee’s movement, companies like Bata India, Bharat Forge, Bosch, Cipla, Dr Reddys lab, Future Consumer, IndianOil, State Bank of India, Jet Airways and Tata Motors are expected to announce their fourth quarter (Q4) earning results in the coming week.

“We are also expecting to see a mixed bag of result for Q4 going forward. With Q4 results below estimates, there are concerns of downgrade in FY19 estimates,” said Vinod Nair, Head of Research at Geojit Financial Services.

Technical charts showed the National Stock Exchange’s (NSE) Nifty50 in a downtrend.

“Technically, with the Nifty ending lower for the fourth consecutive session and closing below the short term trend reversal levels of 10,630 points, the underlying uptrend has reversed,” said Deepak Jasani, Head of Retail Research for HDFC Securities.

“The coming week could see further downsides towards 10,514 points and lower. On the upside bounces, 10,692 points-level can offer resistance.”

The political stand-off in Karnataka, consistent rise in global crude oil prices and outflow of foreign funds, pulled the key Indian equity indices deep into the red in the week just-ended.

Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the BSE declined by 687.49 points or 1.93 per cent to 34,848.30 points.

Similarly, the wider NSE Nifty50 edged-lower. It ended at 10,596.40 points — down 210.1 points or 1.94 per cent — from its previous close.

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Vodafone brings exciting offers for IPL fan

All it takes is – to download the MyVodafoneApp and participate in the Vodafone Unofficial Sponsor of Fans contest by answering a few simple questions,

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New Delhi, May 19 : Telecom major Vodafone has come up with bagful of offers for the Vodafone customers in Delhi and NCR this IPL season.

With the playoff matches around the corner, the company has floated Unofficial Sponsor of Fans contest for Vodafone pre-paid and post paid customers.

All it takes is – to download the MyVodafoneApp and participate in the Vodafone Unofficial Sponsor of Fans contest by answering a few simple questions, a Vodafone release said.

There are 80 match tickets which can be won by Delhi & NCR Vodafone customers.

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Karnataka’s political crisis, oil prices plunge equities

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Mumbai, May 18: The uncertain political environment in Karnataka along with high global crude oil prices pulled the key Indian equity indices deep in the red on Friday.

According to market observers, heavy selling pressure was witnessed in capital goods, auto and metal counters.

At 3.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) provisionally closed at 10,596.40 points, down 86.30 points or 0.81 per cent from the previous close of 10,682.70 points.

Similarly, the barometer 30-scrip Sensitive Index (Sensex) of the BSE ended in the red. It had opened at 35,143.59 points, closed at 34,848.30 points (3.30 p.m.) — down 300.82 points or 0.86 per cent — from its previous session’s close of 35,149.12 points.

In the intra-day trade, barometer S&P BSE Sensex touched a high of 35,163.11 and a low of 34,821.62 points. The BSE market breadth was bearish with 1,856 declines against 765 advances.

The major gainers on the BSE were Hindustan Unilever, Kotak Mahindra Bank, IndusInd Bank, ITC and Yes Bank, while Sun Pharma, Wipro, Tata Steel, Larsen and Toubro, Tata Motors and ICICI Bank were the major losers.

On the NSE, the top gainers were Bajaj Finance, Tech Mahindra and Bajaj Finserv. The major losers were Cipla, Wipro and Indiabulls Housing Finance.

IANS

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