By publishing on July 16, 2021, Reserve Bank of India, had amply made it clear that The Reserve Bank’s communication policy follows the guiding principles of relevance, transparency, clarity, comprehensiveness and timeliness: it strives to continuously improve public understanding of developments in the multiple domains under its ambit. Let me give you the reference of its web address for your complete learning.
https://rbi.org.in/Scripts/CommunicationPolicy.aspx
The framework of central banking policy in India has evolved around its objectives specified under the Reserve Bank of India Act, 1934, viz. “to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; and to operate a modern monetary policy framework to meet the challenge of an increasingly complex economy, where the primary objective is to maintain price stability while keeping in mind the objective of growth.” No explanation is required for this classical or standard statement in text book style.
But times have changed. Roles reversed. In stead of being guided the start ups have laid down the path of industrial development, take new courses quite unknown and history could never imagine. Yes, plain vanilla case of software financing, the hottest commodity among the banks even during the sad days of COVID 19. Start ups have shaken the foundations of Indian banking who always believed in brick and barter financing with safety of immovable properties, most secured company shares with adequate margins and management trained with the old schools of banking. Current market valuations of some new unicorns from India have admirers of investments from around the world.
So, by keeping the reality of the day in mind, the Reserve Bank’s approach to communicate its policy stance and its assessment of the evolving situation is by providing rationale as well as supporting information and analysis to all stakeholders.
In its medium-term Vision Statement for 2019-22, termed as ‘Utkarsh 2022’, the Reserve Bank has set out for itself the following mutually reinforcing objectives:
i. excellence in performance of statutory and other functions;
ii. strengthened trust of citizens and other institutions in the RBI;
iii. enhanced relevance and significance in national and global roles;
iv. transparent, accountable and ethics-driven internal governance;
v. best-in-class and environment friendly digital as well as physical infrastructure; and
v. innovative, dynamic and skilled human resources
A simple question arises. How does RBI strategize its vision statement loftily stated? Develop and implement well-thought-out actions to consolidate gains of the past, capitalize on emerging opportunities and meet future challenges. The strategic goals are aimed to be achieved through one or more tangible and time-bound milestones. The milestones are periodically announced in advance for achievement and actual position publicly discussed and put up in its web site.
Like any one, I would like to ask what are its principal goals under its communication policy?
It is very amply stated in clear terms, any- one can understand.
To quote from its text:
“The communication policy of the Reserve Bank has the following principal goals:
i. clarity on its role and responsibilities;
ii. building confidence in its policy measures;
iii. improving transparency and accountability;
iv. anchoring expectations of all economic agents to enhance the efficacy of monetary policy and to minimize undue speculation;
v. increasing awareness about financial stability;
vi. dissemination of information with minimum time lag;
vii. ensuring timeliness and credibility through effective communication; and
viii. deepening engagement with the multi-lingual and multi-cultural society.
So far, the language used in RBI communication was simple, easy to follow and to some extent almost in power point presentation style.
Now, RBI has gone back to its olden days of English with a twist if I am allowed to call, to explain its guiding principles which will be explained in my simple and layman language as below.
1. Explain its policy with arguments, and also analyze the same.
2. Announcing market information on real time basis in its web site, all stake holders friendly, in social media and pre announce the dates of future structured communication through pre released calendars with predictability. Yes, all its activities through selling of bonds have been on time and invariably carried out whether the market is friendly or otherwise.
3. Its communication is mostly by structured and periodic statements, speeches of the top management, statutory and other regular publications, research publication, committee reports as well as dissemination of regular information on important developments; Who are its target audience?
4. A long list containing who is who of the country or world adorn the list. Its target audience is e.g., (regulated entities, researchers, analysts, academics, rating agencies, media, other central banks, multilateral institutions, market participants, Government agencies and the members of public including women, senior citizens, defence personnel and school children in both urban and rural areas) through public awareness initiatives and microsite on the RBI website in eleven major regional languages apart from Hindi and English.
5. Virtually every one from a pavement seller to the biggest company on earth who has some work to do with India, the fastest developing country with the bestselling/purchasing power.
What are the aspects of its communication?
Very finely worded statements clarifying every- thing in a nut shell form.
The Communication Aspects of the Reserve Bank includes strategies on:
i. Monetary Policy communication;
ii. Financial Stability communication;
iii. Communication relating to other functional domains;
iv. Communication during times of crisis;
v. Dissemination through flagship publications; and
vi. RBI staff as ambassadors of RBI.
Two thirds of its communication document contain detailed information on above aspects. Let me explain ins simple language.
We learn that the Reserve Bank of India Act, 1934 was amended in 2016 to provide statutory basis for a monetary policy framework, the MPC and the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years.
What is a monetary policy which is associated only with RBI in all our discussions everywhere?
“The monetary policy framework aims at (a) setting the policy (repo) rate based on an assessment of the current and evolving macroeconomic situation and, (b) modulation of liquidity conditions on a day-to-day basis through appropriate actions to anchor money market rates. The operating framework responds to the evolving monetary and financial market conditions, consistent with the monetary policy stance. The Reserve Bank also holds pre-policy consultations with economists, bankers, industry groups and other stakeholders to ascertain their views on aggregate / sector-specific assessments and their policy expectations.”
One can on periodical basis learn the dates of monetary committee, its membership, the ideologies of its members, actual minutes of its meeting and the tone of the policies arrived at those meetings. Like any where in the world, RBI has moved from ivory tower approach and move with the common man through various activities which we are trying to understand.
We know that the resolution of the MPC is released on the Bank’s website and other communication channels, followed by a press conference that is broadcast live on various public media platforms, and also transparently the data used in monetary policy formulation are put in public domain after the release of the MPC resolution. One can read the resolutions at any time from RBI web site 24 hours/365 days.
The other most important function of RBI is financial stability communication which forms the backbone of the Indian/world economy setting the course of the economy.
The Reserve Bank’s communication on financial stability has the following broad dimensions:
i. publication of the statutory annual report on ‘Trend and Progress of Banking in India’ and half-yearly ‘Financial Stability Report’, to provide an assessment of performance of the Indian banking system as well as the soundness, risks and resilience of the Indian financial system, supplemented by press releases on important developments in the financial sector;
ii. organizing informal press briefings and media workshops, at both central and regional office levels, to explain the supervisory and regulatory aspects pertaining to the financial sector and to help explaining macro-prudential policy actions to stakeholders; and
iii. making communication an integral part of financial stability framework to highlight the underlying messages, beyond data and measures, to the broader audience and developing communication capacity by keeping all stakeholders apprised of the developments in the financial sector.
Frequent press release, meetings or public interactions of RBI have set the tone of the most- friendly behavior of RBI which was previously unimaginable. The full credit goes to the current RBI governor with ably knowledgeable team of the best regulatory team in the world.
How did RBI behave during the pandemic, the most damaging event of the century?
Most outstanding by the judgement of the world. It helped every one in the economy with day-to-day monitoring.
COVID 19, the most daring course of nature to be faced in the last 100 years brought the best of RBI with its ever-friendly approach but with the best policies which has already helped Indian economy to recover from the worst and move towards far better days which also helps many to expect the best economic performance of its century in the coming decades.
All major publications of the Reserve Bank are released on its website to ensure simultaneous reach of information to all the stakeholders. The statutory publications include the Bank’s ‘Annual Report’, the ‘Report on Trend and Progress of Banking in India’ and the ‘Monetary Policy Report’. I have given below some of its best publications.
- The Annual Report of the Reserve Bank is a statutory publication released within two months from the close of annual accounts
- Report on Trend and Progress of Banking in India: This is also a statutory annual publication of the Bank, which reviews the policies for and performance of the financial sector. The publication covers the data from April to March and is generally released around November/December every year.
- Monetary Policy Report: It is a bi-annual statutory publication of the Bank, generally released in April and October.
- Financial Stability Report: It is a bi-annual Report that is being published since Global financial crisis and its aftermath, e., March 2010 onwards.
- State Finances: A Study of Budgets: A thematically dedicated release, this publication provides a comprehensive analytical assessment of the finances of all State Governments. Consolidated data of all State Governments are analyzed in addition to State-wise analysis to draw policy implications.
- It contains an analysis of fiscal position at the sub-national level, assessment of risks, progress on the targets under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
- It is widely referred by Central/State governments, international institutions such as IMF, and academicians.
- Statistical Publications
- Handbook of Statistics on Indian States, Handbook of Statistics on Indian Economy, Basic Statistical Returns (BSR 1, BSR 2 and BSR 7),
- Statistical Tables Relating to Banks in India
- This comprises banks’ annual statements and contains key information on banks’ performance. It covers SCBs, rural co-operative banks, NBFCs, FIs and PDs. The document publishes balance sheet and financial indicators of these entities and gives progress on regulatory norms like CRAR, priority sector lending. The data are presented bank group-wise and state-wise. It is the only publication that provides bank-level data.
Surveys
The Bank conducts the following regular quick surveys, the results of which are presented to the MPC and are subsequently released in the public domain:
- Industrial outlook survey (IOS) of manufacturing sector – quarterly
- Order book, inventory and capacity utilization survey (OBICUS) of manufacturing sector – quarterly
- Services and Infrastructure outlook survey (SIOS) – quarterly
- Inflation expectations survey of households (IESH) – bi-monthly
- Consumer Confidence Survey (CCS) – bi-monthly
- Survey of professional forecasters (SPF) – bi-monthly
Research Publications like RBI occasional papers, RBI working papers, DRG Studies, Mini Street memos, and other releases like Monetary Policy Statement, MPC minutes, Top Management Speeches/ Interviews, Working Group /Committee Reports, Technical/Discussion Papers, manuals, vision documents, memorial lectures, monetary and credit information review-monthly, other press releases/notifications, articles, films, videos, comic books, etc.
Conclusion
Let me conclude the discussions by quoting its most important communication by quoting:
“Database on Indian Economy (DBIE): RBI’s Data Warehouse;
The Bank generates and compiles a large volume of data on various aspects of the economy, with focus on banking and financial markets. The scope and volume of data released by the Bank has increased substantially over time and the manner of their release has also changed from hard copy print to electronic version, including through web-based interactive database.
All the detailed statistics released by the Bank are made available on its data warehouse known as the ‘Database of Indian Economy’ (DBIE) portal (https://dbie.rbi.org.in). DBIE allows users to (a) access data through pre-formatted reports, where users can specify time period; and (b) create new data reports for desired variables and time period from query facilities. All data could be downloaded in Excel/CSV/PDF file format.”
Yes, if you want to know about Indian economy in toto, our RBI has the best information you can dream of obtaining.
Personally, fascinated by its publications, I try to write as much as I can to disseminate knowledge among youngsters with the clear intention to make them well versed with the best economic information for application everywhere. RBI is the store house of knowledge which has evolved admirably with time.
Finally, RBI clears lays out who is responsible for telling the public about its achievements, goals and other explanations right from the Governor, Deputy governors, Directors etc. Interested persons can easily refer to the web site quoted above for detailed information.
Yes, I am proud to be among RBI admirers who champion its transition in full glories. It has emerged among the best regulators with its transparent, and clearly worded achievements well in time, and amenable to the opinions of even minnows like me.
*****
Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc. before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author/TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.
Author Bio
