RBI's Subbarao hints at rate cut as growth falters

Citing steep moderation in growth and expressing optimism that inflation will cool off from the next quarter, the RBI governor said the central bank would take into account the growth-inflation trajectory and calibrate monetary policy accordingly

Kolkata: Reserve Bank of India (RBI) Governor D Subbarao has hinted at easy monetary regime in the coming days, citing steep moderation in growth and expressing optimism that inflation will cool off from the next quarter, reports PTI.


"We are expecting that inflation will trend down starting the fourth quarter. As we go into our mid-quarter policy on 18th December and the quarterly policy on 29th January, we will take into account the growth-inflation trajectory and calibrate our monetary policy accordingly," he told reporters after the central board meeting of RBI.


He, however, said 7.5% inflation is still high, though it has come down from its peak.


He further said: "Growth has moderated certainly. Growth has come down from 8.5% and 6.5% in the last two years respectively to 5.5% and 5.3% (in the last two quarters)."


RBI is always trying to manage the balance between growth and inflation, he said, adding that fall in growth to 5.3% in the last quarter is a steep moderation.


The headline inflation was 7.45% in October.


After two revisions, the RBI had projected the year-end headline inflation at 7.5%. In the beginning of the year, it had pegged inflation at 6.5%.


At the last credit policy announcement on 30th October, RBI had left the key rates unchanged at 8%. Expressing disappointment, Indian Finance Minister P Chidambaram had said that if the government had to walk alone on the growth path it would do so.


In the October monetary policy review, Subbarao had also said that "there is a reasonable likelihood of further easing in the January-March quarter."


While growth has taken a massive beating, inflation is still much above the RBI's comfort level of 5%, despite 13 successive rate hikes between March 2010 and October 2011.


BSE appoints 14 investment banks for its IPO

BSE has selected 14 investment bankers for its forthcoming IPO slated during the first half of 2013

Mumbai: Premier stock exchange BSE moved closer to its initial public offering (IPO) plan by selecting 14 investment banks, including Bank of America-Merrill Lynch, JP Morgan, Barclays and UBS, for a public issue that is slated to hit the markets in the first half of next year, reports PTI quoting a top official.


"Yes, we have selected 14 investment bankers for our forthcoming IPO slated for the first half of 2013," BSE Chief Executive and Managing Director Ashish Kumar Chauhan told PTI.


The other lead managers to the issue include domestic majors including Kotak Mahindra Capital, ICICI Securities, Edelweiss Capital, Axis Capital, and IIFL, Chauhan added.


The BSE, which had reported a net profit of Rs178 crore on a revenue of Rs578 crore last fiscal, will be second bourse to get listed after Multi Commodity Exchange of India (MCX) made its debut in March this year.


He did not divulge the details of the issue saying the investment bankers will decide on the pricing and issue size.


BSE is seeking an offering that would value it at about Rs4,000-Rs5,000 crore, sources close to the development said.


The BSE has opted for the public issue to give an exit route to existing shareholders, who hold over 41% stake in the exchange.


The IPO could fetch Rs800-Rs1,000 crore, they added.


At Rs5,000 crore, BSE's valuation would be at a 37% discount to MCX's current market capitalisation of Rs7,881 crore.


Late last month, in an interview to PTI Chauhan had said that the oldest Asian bourse, had appointed a committee to finalise the i-bankers.


The BSE had in October once again retained the No1 slot as the world's largest exchange in terms of number of companies listed last month.


What’s fair for banking industry may not be so for the customers

I recently did a word count on a new product offered by a well-known bank—the total word count was over 40,000!  Now some customers would choose to read this material before they sign. However, I would suggest that 99.9% would simply sign without reading. Is this fair?

It’s fair to say that, at the moment, consumer protection high on the agenda of many national regulators and central banks. The global financial crisis has severely dented consumer trust, with the most recent scandal—the global LIBOR rate manipulation—dealing a further blow to consumer confidence.
And as the Banking Codes and Standard Board of India (BCSBI) embarks on a “Review of the Code’s of Banks Commitment to Customers” many national regulators are introducing, reviewing and strengthening legislation and guidelines to govern the way in which financial products are developed, sold, and serviced. And, in almost all instances, the principles which underpin these guidelines are the same. The clear and simple message is this—treat your customers fairly and be prepared to prove it.
Some countries, and their financial institutions, have been on this journey for a number of years so there are plenty of lessons to be learnt. There are two key questions for banks (and indeed all types of financial services companies)


What do they need do differently?

  • How will their customers know? 
From an organisational point of view these means, for example, having a product development process that includes customer input and feedback, providing annual staff training, (and testing) relating to fair treatment, and finding ways to evidence and measure that you are identifying and dealing with customer issues in a fair manner. (And by the way, don’t get fair treatment confused with customer satisfaction.)
More importantly from a customer point of view, they should receive clear, simple, unambiguous advice, (with no high pressure sales), based on a thorough understanding of their needs and financial circumstances. It means that product literature should be simple, clear and easy to understand. It means the product does what it says on the tin. It should also mean that the service they receive should match what has been promised. These are all areas in which a customer can have a view and can use their experience to assess, not only their level of satisfaction, but also how fairly they have been treated. 
Now this is all sounds well and good and, to be honest, relatively straightforward... or so you might think. Here’s the conundrum: what you think is ‘fair’ may be completely different to what customers think as fair.
Let me illustrate this by using a non-financial services example.
You’ve purchased a first-class train ticket. The carriage is half-empty... 
1 The guard discovers that a passenger in the first-class compartment has a second -class ticket and asks that passenger to leave. Is this fair? 
2 It then transpires that there are no seats in the second-class. Is it still fair to ask the passenger to leave? 
3 The train company has just announced large profits and is refusing to put on extra carriages. Is it still fair? 
4 The passenger being asked to leave is a woman aged 80 who is infirm and nobody in the second class has given up their seat for her. Is it fair to eject her from first class or do you just hide behind your laptop? 
I put this to a group of colleagues recently and the responses were 100% in favour of scenario one and progressed down to one person who rather sheepishly insisted on ejecting the elderly lady. So fairness in this case depends on the circumstances and, crucially, on your own attitude to train companies, first-class travel and elderly people, which is why fairness in general is so hard to define and presumably why many companies might find it difficult to acknowledge that their practices might be unfair. 
This example also illustrates the certainty that rules give; no first-class ticket, no seat in first class. And the uncertainty, but potential for greater fairness, of principles; an elderly person with no ticket ought, perhaps, to be allowed to stay.
You may also want to read about customer service in the hospitality industry.
If we return to financial services, an obvious situation that might generate very different points of view is the quality of product literature. Regulators have made repeated calls for customers to be “fully informed” of the details relating the product they’ve purchased—brochures, key facts, terms and conditions, etc.  This all sounds fair and reasonable and one might be excused for thinking that such action reflects well on a firm that’s putting the customers’ interests first. However, when you consider this from the customers’ perspective it paints quite a different picture. Think about how much information you’re asking the customer read and, even more importantly, understand. I recently did a word count on a new product offered by a well-known bank—the total word count was over 40,000!  Now some customers, (although I suspect very few), would choose to read this material before they sign, however, I would suggest that 99.9% would simply sign. Is this fair?
It’s not enough to get into the customers shoes; you also need to change your mindset.
In essence, the guidelines have the potential to deliver substantial improvements for consumers. The banks must hope, however, that their interpretation of ‘fairness’ matches that of their local regulator. 
(Stephen Rosling has worked in the UK financial services sector for over 25 years holding senior management positions in Aviva, Friends Life, and Friends Provident International. He is a qualified customer services professional with experience in running and improving customer service functions. His experience extends to employee engagement and leadership development.)




4 years ago

Not an appropriate example

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