The monetary policy committee (MPC) of the <a href="https://www.wionews.com/india-news/reserve-bank-of-india-to-transfer-surplus-of-rs-176-lakh-crore-to-government-key-points-246060">Reserve Bank of India</a> (RBI) on Friday has cut its benchmark repo rate by 25 basis points to 5.15 per cent, in the fifth straight interest rate cut.

The central bank maintained its accommodative policy stance.&nbsp;The&nbsp;GDP growth for 2019-20 has been revised downwards from 6.9 per cent in the August policy to 6.1 per cent.

RBI has said that there is space to cut repo rates further.

Watch: RBI credit policy - central bank cuts rate by 25 bps to 5.15%

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The reverse repo rate has been reduced to 4.9 per cent, and the bank rate stands at 5.40 per cent.&nbsp;

The six-member <a href="https://www.wionews.com/india-news/social-media-rumours-of-banks-shutting-down-false-reserve-bank-of-india-252026">monetary policy committee</a> (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting.&nbsp;

Earlier on February 7, April 4, June 6 and Aug 7, the central bank had reduced the key lending rate to infuse liquidity and push economic growth.

Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans.

India's economy grew by only 6.8 per cent in 2018-19, according to government data. GDP growth slumped lower to 5 per cent in the April to June quarter as against an 8 per cent in the year-ago period due to weak household spending, muted corporate investments, and a crippling slowdown in manufacturing and construction activity. Industry leaders say a substantial cut in the repo rate and bank lending rates are needed to boost manufacturing and domestic demand for economic growth.

(With inputs from ANI)

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Friday has cut its benchmark repo rate by 25 basis points to 5.15 per cent, in the fifth straight interest rate cut.

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Friday has cut its benchmark repo rate by 25 basis points to 5.15 per cent, in the fifth straight interest rate cut. The central bank maintained its accommodative policy stance. The GDP growth for 2019-20 has been revised downwards from 6.9 per cent in the August policy to 6.1 per cent. RBI has said that there is space to cut repo rates further. Watch: RBI credit policy - central bank cuts rate by 25 bps to 5.15% × The reverse repo rate has been reduced to 4.9 per cent, and the bank rate stands at 5.40 per cent. The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting. Earlier on February 7, April 4, June 6 and Aug 7, the central bank had reduced the key lending rate to infuse liquidity and push economic growth. Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans. India's economy grew by only 6.8 per cent in 2018-19, according to government data. GDP growth slumped lower to 5 per cent in the April to June quarter as against an 8 per cent in the year-ago period due to weak household spending, muted corporate investments, and a crippling slowdown in manufacturing and construction activity. Industry leaders say a substantial cut in the repo rate and bank lending rates are needed to boost manufacturing and domestic demand for economic growth. (With inputs from ANI)

Reserve Bank of India cuts repo rate by 25 bps,  from 5.40 per cent to 5.15 per cent

The Indian government may request an interim dividend of around 300 billion rupees ($4.3 billion) from the Reserve bank of India (RBI) in order to meet its fiscal deficit target, a leading business&nbsp;daily reported on Sunday citing news agency Press Trust of India (PTI).

The government is likely to seek the dividend payment towards the end of the April-March financial year to meet the government's fiscal deficit target of 3.3 per cent of gross domestic product, government sources told the PTI.

The federal government could request an interim dividend of 250 billion to 300 billion rupees from the RBI during the current fiscal year, one source said, adding that a final assessment would be made in early January.

The Finance Ministry and the RBI were not immediately available for comment.

As the manager of government finances, the central bank pays the government a dividend each year to help the government meet its financial targets.

Last year the RBI paid the government an interim dividend of 280 billion rupees.

Expectations of the government missing its fiscal deficit target have risen following a number of measures taken to lift growth from six-year lows of 5 per cent in the first quarter of the current financial year.

Analysts also say the government could resort to stake sales in state-run companies to bridge its revenue deficit and avoid a fiscal slippage.

The Indian government may request an interim dividend of around 300 billion rupees ($4.3 billion) from the Reserve bank of India (RBI) in order to meet its fiscal deficit target, a leading business daily reported on Sunday citing news agency Press Trust of India (PTI).

The Indian government may request an interim dividend of around 300 billion rupees ($4.3 billion) from the Reserve bank of India (RBI) in order to meet its fiscal deficit target, a leading business daily reported on Sunday citing news agency Press Trust of India (PTI). The government is likely to seek the dividend payment towards the end of the April-March financial year to meet the government's fiscal deficit target of 3.3 per cent of gross domestic product, government sources told the PTI. The federal government could request an interim dividend of 250 billion to 300 billion rupees from the RBI during the current fiscal year, one source said, adding that a final assessment would be made in early January. The Finance Ministry and the RBI were not immediately available for comment. As the manager of government finances, the central bank pays the government a dividend each year to help the government meet its financial targets. Last year the RBI paid the government an interim dividend of 280 billion rupees. Expectations of the government missing its fiscal deficit target have risen following a number of measures taken to lift growth from six-year lows of 5 per cent in the first quarter of the current financial year. Analysts also say the government could resort to stake sales in state-run companies to bridge its revenue deficit and avoid a fiscal slippage.

Government may seek $4.3 billion interim dividend from RBI: Report

In a relief for Punjab and Maharashtra Cooperative (PMC) Bank customers, the Reserve Bank of India (RBI) on Thursday increased the withdrawal limit from Rs 1,000 to 10,000.

"The relaxation has been granted to reduce the hardship of depositors. The RBI is closely monitoring the position and will continue to take further steps as are necessary to safeguard the interest of depositors," it said in a statement.

On Monday, the <a href="https://www.wionews.com/business-economy/rbi-restricts-activities-of-pmc-bank-due-to-heightened-risks-251703">central bank had restricted activities of PMC Bank</a> for six months. It capped the withdrawals at Rs 1,000 per account and asked the bank to not grant or renew any loans and advances, make any investment or incur any liability, including borrowal of funds and acceptance of fresh deposits.

The crackdown caused panic among depositors. However, the RBI said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong or under-reporting of its exposures under various off-site surveillance reports.

"Other terms and conditions of the directive will remain unchanged. With the above relaxation, more than 60 per cent of the bank depositors will be able to withdraw their entire account balance," it said in a statement.

The RBI has sacked the bank`s board of directors under sub-sections 1 and 2 of section 36 AAA read with section 56 of the Banking Regulation Act 1949.

An administrator has been appointed to take charge. PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country. 
&nbsp;

In a relief for Punjab and Maharashtra Cooperative (PMC) Bank customers, the Reserve Bank of India (RBI) on Thursday increased the withdrawal limit from Rs 1,000 to 10,000.

In a relief for Punjab and Maharashtra Cooperative (PMC) Bank customers, the Reserve Bank of India (RBI) on Thursday increased the withdrawal limit from Rs 1,000 to 10,000. "The relaxation has been granted to reduce the hardship of depositors. The RBI is closely monitoring the position and will continue to take further steps as are necessary to safeguard the interest of depositors," it said in a statement. On Monday, the central bank had restricted activities of PMC Bank for six months. It capped the withdrawals at Rs 1,000 per account and asked the bank to not grant or renew any loans and advances, make any investment or incur any liability, including borrowal of funds and acceptance of fresh deposits. The crackdown caused panic among depositors. However, the RBI said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong or under-reporting of its exposures under various off-site surveillance reports. "Other terms and conditions of the directive will remain unchanged. With the above relaxation, more than 60 per cent of the bank depositors will be able to withdraw their entire account balance," it said in a statement. The RBI has sacked the bank`s board of directors under sub-sections 1 and 2 of section 36 AAA read with section 56 of the Banking Regulation Act 1949. An administrator has been appointed to take charge. PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.

RBI increases withdrawal limit from Rs 1,000 to 10,000 for PMC Bank customers

The government and Reserve Bank of India (RBI) denied reports on Wednesday that the regulator is closing down at least nine commercial banks soon.

"There are mischievous rumours on social media about RBI closing some banks," said Finance Secretary Rajeev Kumar.

He said, "There is no question of closing any public sector bank, which are articles of faith. Rather the government is strengthening public sector banks with reforms and infusion of capital to better serve its customers."

The RBI too said reports appearing in some sections of social media about closing down certain commercial banks are false.

Several Twitter posts said nine banks will be closed permanently by the RBI Corporation Bank, IDBI Bank, Bank of Maharashtra, UCO Bank, Andhra Bank, Indian Overseas Bank, Central Bank of India, Dena Bank and United Bank of India.

The development came a day after the Punjab and Maharashtra Cooperative Bank (PMC Bank) was barred from routine business transactions for the next six months, and its withdrawal limit was capped at Rs 1,000.

The RBI, however, had made it clear that the directions to PMC Bank should not be construed as cancellation of banking licenses. PMC Bank can continue to undertake banking business with restrictions till further notice/instructions, it said.

But the move sparked outrage among customers who staged protests at some of PMC's branches across the country.

PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.

The government and Reserve Bank of India (RBI) denied reports on Wednesday that the regulator is closing down at least nine commercial banks soon. "There are mischievous rumours on social media about RBI closing some banks," said Finance Secretary Rajeev Kumar.

The government and Reserve Bank of India (RBI) denied reports on Wednesday that the regulator is closing down at least nine commercial banks soon. "There are mischievous rumours on social media about RBI closing some banks," said Finance Secretary Rajeev Kumar. He said, "There is no question of closing any public sector bank, which are articles of faith. Rather the government is strengthening public sector banks with reforms and infusion of capital to better serve its customers." The RBI too said reports appearing in some sections of social media about closing down certain commercial banks are false. Several Twitter posts said nine banks will be closed permanently by the RBI Corporation Bank, IDBI Bank, Bank of Maharashtra, UCO Bank, Andhra Bank, Indian Overseas Bank, Central Bank of India, Dena Bank and United Bank of India. The development came a day after the Punjab and Maharashtra Cooperative Bank (PMC Bank) was barred from routine business transactions for the next six months, and its withdrawal limit was capped at Rs 1,000. The RBI, however, had made it clear that the directions to PMC Bank should not be construed as cancellation of banking licenses. PMC Bank can continue to undertake banking business with restrictions till further notice/instructions, it said. But the move sparked outrage among customers who staged protests at some of PMC's branches across the country. PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.

Social media rumours of banks shutting down false: Reserve Bank of India

The Reserve Bank of India (RBI) has restricted activities of Punjab and Maharashtra Cooperative Bank (PMC Bank) for six months and asked it to not grant or renew any loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits.

"According to the directions, depositors will be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI directions," the central bank said in a statement on Tuesday.

The issuance of RBI directions should not be construed as a cancellation of PMC Bank's licence.

The bank will continue to undertake banking business with restrictions till further notice, said the RBI.

The directions are imposed in exercise of powers vested with the RBI under sub-section (1) of Section 35A of the Banking Regulation Act 1949 read with section 56 of the act.

PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh.

With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.&nbsp; 
&nbsp;

The Reserve Bank of India (RBI) has restricted activities of Punjab and Maharashtra Cooperative Bank (PMC Bank) for six months and asked it to not grant or renew any loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits.

The Reserve Bank of India (RBI) has restricted activities of Punjab and Maharashtra Cooperative Bank (PMC Bank) for six months and asked it to not grant or renew any loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits. "According to the directions, depositors will be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI directions," the central bank said in a statement on Tuesday. The issuance of RBI directions should not be construed as a cancellation of PMC Bank's licence. The bank will continue to undertake banking business with restrictions till further notice, said the RBI. The directions are imposed in exercise of powers vested with the RBI under sub-section (1) of Section 35A of the Banking Regulation Act 1949 read with section 56 of the act. PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.

RBI restricts activities of PMC Bank due to heightened risks

Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said that there was no recession as of today in the global economy but there was a hostile environment to which India's external sector had shown great resilience and viability.

"India's external sector has exhibited resilience and viability. The current account deficit has averaged 1.4 per cent of GDP over the last 5 years and remains comfortably financed in spite of global spillovers imparting risk-on-risk-off volatility to portfolio flows," Das said in his keynote address at the Bloomberg India Economic Forum 2019 here.

"The level of foreign exchange reserves was at $429 billion on September 13, sufficient to cover close to 10 months of imports or 21 months of debt of residual maturity up to 1 year," added Das.

"The Indian economy remains a preferred habitat for foreign direct investment (FDI) and is among the top 10 destinations for greenfield projects," said Das.

Praising India's service exports, Das said, "In line with the expanding share of services in domestic output, India's services exports have grown rapidly over the past two decades."

He said that in fact, India's services exports have shown a higher degree of resilience to global shocks than merchandise exports.

"At $81.9 billion, net services exports financed 45 per cent of India's trade deficit in 2018-19," he said.

He also said that India still was the world leader in software exports and information technology (IT) enabled services, accounting for around 12 per cent of world software exports.

"The global environment is challenging, but it offers opportunities as well. By the IMF's assessment, India will account for a sixth of global growth in 2020," said the RBI chief.

"Trade wars are presenting new business relocation avenues that seem to be favorable to India from the point of view of the economies of scale and scope. Indian entrepreneurship, the rupee, and our people are progressively but inexorably internationalising," added Das.&nbsp;

 
&nbsp;

Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said that there was no recession as of today in the global economy but there was a hostile environment to which India's external sector had shown great resilience and viability.

Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said that there was no recession as of today in the global economy but there was a hostile environment to which India's external sector had shown great resilience and viability. "India's external sector has exhibited resilience and viability. The current account deficit has averaged 1.4 per cent of GDP over the last 5 years and remains comfortably financed in spite of global spillovers imparting risk-on-risk-off volatility to portfolio flows," Das said in his keynote address at the Bloomberg India Economic Forum 2019 here. "The level of foreign exchange reserves was at $429 billion on September 13, sufficient to cover close to 10 months of imports or 21 months of debt of residual maturity up to 1 year," added Das. "The Indian economy remains a preferred habitat for foreign direct investment (FDI) and is among the top 10 destinations for greenfield projects," said Das. Praising India's service exports, Das said, "In line with the expanding share of services in domestic output, India's services exports have grown rapidly over the past two decades." He said that in fact, India's services exports have shown a higher degree of resilience to global shocks than merchandise exports. "At $81.9 billion, net services exports financed 45 per cent of India's trade deficit in 2018-19," he said. He also said that India still was the world leader in software exports and information technology (IT) enabled services, accounting for around 12 per cent of world software exports. "The global environment is challenging, but it offers opportunities as well. By the IMF's assessment, India will account for a sixth of global growth in 2020," said the RBI chief. "Trade wars are presenting new business relocation avenues that seem to be favorable to India from the point of view of the economies of scale and scope. Indian entrepreneurship, the rupee, and our people are progressively but inexorably internationalising," added Das.

No recession in global economy, India's external sector shows great resilience, viability: RBI governor

Indian shares settled higher on Wednesday, ahead of key inflation data, with shares of Yes Bank Ltd witnessing its best session in over six months.

The broader NSE Nifty ended 0.3 per cent&nbsp;higher at 11,035.70, while the benchmark BSE Sensex closed up 0.34 per cent&nbsp;at 37,270.82.

Investors await consumer price index data due on Thursday.

The country's retail inflation likely rose to a 10-month high in August, while staying below the Reserve Bank of India's medium-term target of 4 per cent, a Reuters poll of economists showed.

The Nifty banking index, which tracks both state-owned and private-sector lenders, closed nearly 1 per cent&nbsp;higher with Yes Bank shares gaining as much as 19.57 per cent, it is&nbsp;biggest intraday spike since February&nbsp;14.

Automakers were among the top gainers on the blue-chip index, with Tata Motors Ltd finishing the session 10.6 per cent&nbsp;higher and Eicher Motors Ltd closing nearly 5 per cent&nbsp;up.

Real estate stocks gained too, with the Nifty real estate index adding 4.14 per cent, its biggest intraday rise since May.

Indian shares settled higher on Wednesday, ahead of key inflation data, with shares of Yes Bank Ltd witnessing its best session in over six months. The broader NSE Nifty ended 0.

Indian shares settled higher on Wednesday, ahead of key inflation data, with shares of Yes Bank Ltd witnessing its best session in over six months. The broader NSE Nifty ended 0.3 per cent higher at 11,035.70, while the benchmark BSE Sensex closed up 0.34 per cent at 37,270.82. Investors await consumer price index data due on Thursday. The country's retail inflation likely rose to a 10-month high in August, while staying below the Reserve Bank of India's medium-term target of 4 per cent, a Reuters poll of economists showed. The Nifty banking index, which tracks both state-owned and private-sector lenders, closed nearly 1 per cent higher with Yes Bank shares gaining as much as 19.57 per cent, it is biggest intraday spike since February 14. Automakers were among the top gainers on the blue-chip index, with Tata Motors Ltd finishing the session 10.6 per cent higher and Eicher Motors Ltd closing nearly 5 per cent up. Real estate stocks gained too, with the Nifty real estate index adding 4.14 per cent, its biggest intraday rise since May.

Nifty, Sensex end higher; auto stocks among top gainers

The <a href="https://www.wionews.com/business-economy/fixing-weak-growth-is-highest-priority-rbi-policy-minutes-244660">Reserve Bank of India</a> on Thursday released its annual report wherein it stated that the number of frauds reported by banks has shot up by 15 per cent in the financial 2018-19 on a year-on-year basis.&nbsp;

The amount involved in such frauds rose by 73.8 per cent, though mostly related to occurrences in earlier years.&nbsp;The banking sector reported 6,801 frauds involving Rs 71,542.93 crore in the financial year 2018-19 as opposed to 5,916 cases involving Rs 41,167.04 crore reported in the previous financial year.

"The average lag between the date of occurrence and its detection by banks was 22 months," while the "average lag for large frauds, i.e. Rs 1 billion and above, amounting to Rs 522 billion reported during 2018-19, was 55 months," the top bank stated in its report which was uploaded on its website.&nbsp;

The bulk of frauds reported in 2018-19 come from bank groups PSBs that constitute the largest market share in bank lending, followed by private sector banks and foreign banks.&nbsp;

"The Reserve Bank would coordinate with various agencies including Ministry of Corporate Affairs to examine the feasibility of interlinking various databases and information systems to improve the system of fraud monitoring and take necessary corrective regulatory and supervisory action," it said.

The RBI, in its report, also enumerated ways to improve the fraud risk management framework for banks.

- It proposed to revise the master directions on frauds to incorporate new instructions in the light of experience gained.

- Conduct workshops on frauds for the bankers based on comprehensive reviews, to sensitise them on fraud prevention, prompt/ accurate reporting and follow up action.

- Create a more user-friendly fraud registry and improve the current system of fraud analytics.

The RBI also proposed to create a mechanism "for sharing of fraud-related information among UCBs on similar lines of CFR that is in place for commercial banks."

It said that the move will "enable the sharing of information on frauds in a timely and uniform manner across the sector".

The Reserve Bank of India on Thursday released its annual report wherein it stated that the number of frauds reported by banks has shot up by 15 per cent in the financial 2018-19 on a year-on-year basis.

The Reserve Bank of India on Thursday released its annual report wherein it stated that the number of frauds reported by banks has shot up by 15 per cent in the financial 2018-19 on a year-on-year basis. The amount involved in such frauds rose by 73.8 per cent, though mostly related to occurrences in earlier years. The banking sector reported 6,801 frauds involving Rs 71,542.93 crore in the financial year 2018-19 as opposed to 5,916 cases involving Rs 41,167.04 crore reported in the previous financial year. "The average lag between the date of occurrence and its detection by banks was 22 months," while the "average lag for large frauds, i.e. Rs 1 billion and above, amounting to Rs 522 billion reported during 2018-19, was 55 months," the top bank stated in its report which was uploaded on its website. The bulk of frauds reported in 2018-19 come from bank groups PSBs that constitute the largest market share in bank lending, followed by private sector banks and foreign banks. "The Reserve Bank would coordinate with various agencies including Ministry of Corporate Affairs to examine the feasibility of interlinking various databases and information systems to improve the system of fraud monitoring and take necessary corrective regulatory and supervisory action," it said. The RBI, in its report, also enumerated ways to improve the fraud risk management framework for banks. - It proposed to revise the master directions on frauds to incorporate new instructions in the light of experience gained. - Conduct workshops on frauds for the bankers based on comprehensive reviews, to sensitise them on fraud prevention, prompt/ accurate reporting and follow up action. - Create a more user-friendly fraud registry and improve the current system of fraud analytics. The RBI also proposed to create a mechanism "for sharing of fraud-related information among UCBs on similar lines of CFR that is in place for commercial banks." It said that the move will "enable the sharing of information on frauds in a timely and uniform manner across the sector".

Bank frauds climb 74% to Rs 71,543 Crore In FY19: RBI annual report

Will Surplus Transfer Hurt RBI's Financial Resilience? Is A Stimulus Package On The Cards?

Gravitas: RBI Transfers Rs. 1.76 Lakh Cr. Record surplus to Government

1. The Reserve Bank of India (RBI) has approved the surplus transfer of Rs 1,76,051 crore to the central government. Out of the total sum, Rs 1,23,414 crore was the surplus from the year 2018-2019 and Rs 52, 637 was from the surplus reserves, identified by the committee as per the revised Economic Capital Framework (ECF).

2. The amount is more than 300 per cent of what was transferred last year. The central bank had transferred Rs 50,000 crore in 2017-18

3.&nbsp;Rs 28,000 crore has already been paid as an interim dividend in the previous financial year. Thus, Rs 95000 crore remains to be transferred this fiscal.

4. In simple terms, RBI is sharing a one-time profit with the Indian government. The RBI earns profits through various means including interest on securities held and currency swaps i.e when one nation's currency is used in place of the dollar by another country. Here the RBI provides the Indian Rupee to be used as swap against foreign currencies

5. The top bank's decision is in line with the recommendations of the Bimal Jalan Committee. The committee, in December 2018, tried to find out if the central bank has excess reserves that can be transferred to the Indian government. The committee made observation that economic capital should be between 20 to 24.5 per cent of RBI balance sheet. It was 23.3 per cent in June 2019 proving that RBI was one of the most resilient central banks when it comes to the economic capital or keeping reserves

6. According to the RBI Act, the central government may give such directions to the central bank in the public interest, after consultation with the Governor of the bank. Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank

7. The Indian government can use this surplus money in many ways including maintaining a fiscal deficit target of 3 per cent of GDP. The 'windfall' can also be used to solve the liquidity crisis behind the current slowdown. Also, the government can increase public investments on welfare schemes and infrastructure development. Government-owned banks can be recapitalised and the excess money can also compensate the government for the low GST collections this year. 
 
(With inputs from agencies)

1. The Reserve Bank of India (RBI) has approved the surplus transfer of Rs 1,76,051 crore to the central government. Out of the total sum, Rs 1,23,414 crore was the surplus from the year 2018-2019 and Rs 52, 637 was from the surplus reserves, identified by the committee as per the revised Economic Capital Framework (ECF).

1. The Reserve Bank of India (RBI) has approved the surplus transfer of Rs 1,76,051 crore to the central government. Out of the total sum, Rs 1,23,414 crore was the surplus from the year 2018-2019 and Rs 52, 637 was from the surplus reserves, identified by the committee as per the revised Economic Capital Framework (ECF). 2. The amount is more than 300 per cent of what was transferred last year. The central bank had transferred Rs 50,000 crore in 2017-18 3. Rs 28,000 crore has already been paid as an interim dividend in the previous financial year. Thus, Rs 95000 crore remains to be transferred this fiscal. 4. In simple terms, RBI is sharing a one-time profit with the Indian government. The RBI earns profits through various means including interest on securities held and currency swaps i.e when one nation's currency is used in place of the dollar by another country. Here the RBI provides the Indian Rupee to be used as swap against foreign currencies 5. The top bank's decision is in line with the recommendations of the Bimal Jalan Committee. The committee, in December 2018, tried to find out if the central bank has excess reserves that can be transferred to the Indian government. The committee made observation that economic capital should be between 20 to 24.5 per cent of RBI balance sheet. It was 23.3 per cent in June 2019 proving that RBI was one of the most resilient central banks when it comes to the economic capital or keeping reserves 6. According to the RBI Act, the central government may give such directions to the central bank in the public interest, after consultation with the Governor of the bank. Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank 7. The Indian government can use this surplus money in many ways including maintaining a fiscal deficit target of 3 per cent of GDP. The 'windfall' can also be used to solve the liquidity crisis behind the current slowdown. Also, the government can increase public investments on welfare schemes and infrastructure development. Government-owned banks can be recapitalised and the excess money can also compensate the government for the low GST collections this year. (With inputs from agencies)

Reserve Bank of India to transfer surplus of Rs 1.76 lakh crore to government: Key points

Fixing India's weak growth has become the highest priority while a benign inflation outlook has given the central bank room to cut rates although transmission remains inadequate, monetary policy committee meeting minutes showed.

The Reserve Bank of India (RBI) lowered its benchmark interest rates for a fourth straight meeting this month with a slightly bigger than expected cut, underscoring its worries about the near-five year low economic growth pace.

The six-member monetary policy committee (MPC) cut the repo rate by an unconventional 35 basis points (bps) to 5.40 per cent.

"Given the current and evolving inflation and growth scenario at this juncture, it can no longer be business as usual approach. The economy needs a larger push," Governor Shaktikanta Das said in the minutes, released on Wednesday.

Annual retail inflation in July was 3.15 per cent, down from an eight-month high of 3.18 per cent in June and staying below the central bank's 4 per&nbsp;medium-term target for a 12th straight month, raising expectations for a cut in October.

Last week, a Reuters poll predicted the RBI would ease its benchmark rate by 25 basis points again to 5.15 per cent&nbsp;at its October meeting, followed by a 15 basis point cut in the first quarter of 2020.

Since February, the RBI has cut the repo rate by a total 110 basis points (bps), but most Indian banks have not come close to the following suit.

"Under prevailing circumstances, the immediate transmission should be considered not so much in terms of the bank deposit and lending rates but more specific rates influencing new investments such as housing loans, vehicle loans and long term bonds," said one MPC member, Ravindra Dholakia.

Most members of the committee, however, felt rate transmission would be faster in the coming weeks and months aided by surplus liquidity in the banking system.

The RBI is also looking to get banks to link some new loans to its key policy rate or other external benchmarks, Das said on Monday, as he pushes them to cut rates faster to stimulate growth.

"While they are giving stylised arguments to justify their recommendations, none of them has made a clear statement on the outlook or possible timelines for recovery," said Rupa Rege Nitsure, chief economist at L&amp;T Financial Holdings.

"A lot depends on how promptly fiscal authorities undertake remedial measures."

Finance Minister Nirmala Sitharaman has recently held several meetings with industry leaders, who have called for stimulus measures, including tax rebates, to support consumer demand and private investment.

Pami Dua, another member of the MPC, said while monetary policy can impact cyclical factors, it has its limits when the slowdown is structural in nature.

"Therefore, investment-focused fiscal policy and the active continuation of structural reforms are imperative at this juncture," Dua said.

The government was looking into policy issues such as exempting foreign portfolio investor trusts from recently imposed high tax, deferring a proposal to raise minimum public shareholding in listed companies to 35 per cent from 25 per cent and easing of banking credit, a source told Reuters on Friday.

"Given the evolving growth-inflation risk picture, monetary policy should be used judiciously," member Chetan Ghate said.

Fixing India's weak growth has become the highest priority while a benign inflation outlook has given the central bank room to cut rates although transmission remains inadequate, monetary policy committee meeting minutes showed.

Fixing India's weak growth has become the highest priority while a benign inflation outlook has given the central bank room to cut rates although transmission remains inadequate, monetary policy committee meeting minutes showed. The Reserve Bank of India (RBI) lowered its benchmark interest rates for a fourth straight meeting this month with a slightly bigger than expected cut, underscoring its worries about the near-five year low economic growth pace. The six-member monetary policy committee (MPC) cut the repo rate by an unconventional 35 basis points (bps) to 5.40 per cent. "Given the current and evolving inflation and growth scenario at this juncture, it can no longer be business as usual approach. The economy needs a larger push," Governor Shaktikanta Das said in the minutes, released on Wednesday. Annual retail inflation in July was 3.15 per cent, down from an eight-month high of 3.18 per cent in June and staying below the central bank's 4 per medium-term target for a 12th straight month, raising expectations for a cut in October. Last week, a Reuters poll predicted the RBI would ease its benchmark rate by 25 basis points again to 5.15 per cent at its October meeting, followed by a 15 basis point cut in the first quarter of 2020. Since February, the RBI has cut the repo rate by a total 110 basis points (bps), but most Indian banks have not come close to the following suit. "Under prevailing circumstances, the immediate transmission should be considered not so much in terms of the bank deposit and lending rates but more specific rates influencing new investments such as housing loans, vehicle loans and long term bonds," said one MPC member, Ravindra Dholakia. Most members of the committee, however, felt rate transmission would be faster in the coming weeks and months aided by surplus liquidity in the banking system. The RBI is also looking to get banks to link some new loans to its key policy rate or other external benchmarks, Das said on Monday, as he pushes them to cut rates faster to stimulate growth. "While they are giving stylised arguments to justify their recommendations, none of them has made a clear statement on the outlook or possible timelines for recovery," said Rupa Rege Nitsure, chief economist at L&T Financial Holdings. "A lot depends on how promptly fiscal authorities undertake remedial measures." Finance Minister Nirmala Sitharaman has recently held several meetings with industry leaders, who have called for stimulus measures, including tax rebates, to support consumer demand and private investment. Pami Dua, another member of the MPC, said while monetary policy can impact cyclical factors, it has its limits when the slowdown is structural in nature. "Therefore, investment-focused fiscal policy and the active continuation of structural reforms are imperative at this juncture," Dua said. The government was looking into policy issues such as exempting foreign portfolio investor trusts from recently imposed high tax, deferring a proposal to raise minimum public shareholding in listed companies to 35 per cent from 25 per cent and easing of banking credit, a source told Reuters on Friday. "Given the evolving growth-inflation risk picture, monetary policy should be used judiciously," member Chetan Ghate said.

Fixing weak growth is highest priority: RBI policy minutes

The Reserve Bank of India (RBI) cut repo rate by 35 basis points to 5.40 per cent on Wednesday.

Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers on loans, and lowers equal monthly instalments on home loans, car loans and personal loans.&nbsp;

The current cut in rates would mean loans would get cheaper.

India's central bank adjusted the country's GDP projection to 6.9 per cent for the current fiscal year from the earlier projection of 7 per cent.

The RBI said in a statement that the cut would help "address growth concerns by boosting aggregate demand" and target private investment as a "priority".

In June, the RBI had cut the repo rate by 0.25 per cent while also cutting down&nbsp;India's GDP growth forecast for FY20 from 7.2 per cent to 7 per cent.

The Reserve Bank of India (RBI) cut repo rate by 35 basis points to 5.40 per cent on Wednesday. Repo rate is the rate at which the RBI lends money to commercial banks.

The Reserve Bank of India (RBI) cut repo rate by 35 basis points to 5.40 per cent on Wednesday. Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers on loans, and lowers equal monthly instalments on home loans, car loans and personal loans. The current cut in rates would mean loans would get cheaper. India's central bank adjusted the country's GDP projection to 6.9 per cent for the current fiscal year from the earlier projection of 7 per cent. The RBI said in a statement that the cut would help "address growth concerns by boosting aggregate demand" and target private investment as a "priority". In June, the RBI had cut the repo rate by 0.25 per cent while also cutting down India's GDP growth forecast for FY20 from 7.2 per cent to 7 per cent.

RBI cuts repo rate by 35 basis points to 5.40%; loans to get cheaper

Indian shares were little changed on a volatile Wednesday as investors awaited the central bank's monetary policy decision, where it is expected to cut interest rates by 25 basis points.

The broader NSE Nifty was lower by 0.08 per cent at 10,936.50 as of 0405 GMT and the benchmark BSE Sensex was down 0.01 per cent&nbsp;at 36,966.28. Both indexes swung between marginal gains and losses in early trading.

A Reuters poll last month showed the Reserve Bank of India (RBI) would cut rates, as Asia's third-biggest economy grapples with slowing growth, higher taxes and a credit squeeze.

However, investors were wary as most banks have not passed on the central bank's rate cuts to the consumers and that there were no announcements from the RBI regarding the crisis among India's shadow banks. 
 
"The RBI has already axed rates by 75 bps but that hasn't led to any meaningful transmission in the economy as banks didn't lower rates," said Saurabh Jain, assistant vice-president (research), SMC Global Securities.

"One can sense that nothing meaningful is in the offing in policy announcement and hence may be a dampener for the markets."

The Nifty metals index was the top drag for the day as it fell 1.38 per cent, while the commodities index fell 0.7 per cent.

The public sector bank index, which was up 0.66 per cent, and the IT index that rose 0.56 per cent&nbsp;were among the gaining sectors for the day.

Among stocks, Indiabulls Housing Finance fell 7 per cent after the company reported a fall in June-quarter profit on Tuesday.

Titan Company was also among the top NSE losers, as the stock declined 3.9 per cent.

Central Bank of India rose as much as 10 per cent&nbsp;after the lender reported better-than-expected earnings on Tuesday.

Yes Bank, which rose 2.23 per cent, was the top gainer among NSE stocks. 
&nbsp;

Indian shares were little changed on a volatile Wednesday as investors awaited the central bank's monetary policy decision, where it is expected to cut interest rates by 25 basis points.

Indian shares were little changed on a volatile Wednesday as investors awaited the central bank's monetary policy decision, where it is expected to cut interest rates by 25 basis points. The broader NSE Nifty was lower by 0.08 per cent at 10,936.50 as of 0405 GMT and the benchmark BSE Sensex was down 0.01 per cent at 36,966.28. Both indexes swung between marginal gains and losses in early trading. A Reuters poll last month showed the Reserve Bank of India (RBI) would cut rates, as Asia's third-biggest economy grapples with slowing growth, higher taxes and a credit squeeze. However, investors were wary as most banks have not passed on the central bank's rate cuts to the consumers and that there were no announcements from the RBI regarding the crisis among India's shadow banks. "The RBI has already axed rates by 75 bps but that hasn't led to any meaningful transmission in the economy as banks didn't lower rates," said Saurabh Jain, assistant vice-president (research), SMC Global Securities. "One can sense that nothing meaningful is in the offing in policy announcement and hence may be a dampener for the markets." The Nifty metals index was the top drag for the day as it fell 1.38 per cent, while the commodities index fell 0.7 per cent. The public sector bank index, which was up 0.66 per cent, and the IT index that rose 0.56 per cent were among the gaining sectors for the day. Among stocks, Indiabulls Housing Finance fell 7 per cent after the company reported a fall in June-quarter profit on Tuesday. Titan Company was also among the top NSE losers, as the stock declined 3.9 per cent. Central Bank of India rose as much as 10 per cent after the lender reported better-than-expected earnings on Tuesday. Yes Bank, which rose 2.23 per cent, was the top gainer among NSE stocks.

Nifty, Sensex little changed ahead of RBI policy decision

Reserve Bank of India (RBI) has cut repo rate by 0.35% in its June policy. Watch this video to know more.

India: RBI cuts repo rate by 0.35%

Indian shares reversed early losses to trade higher on Tuesday, a day after the government scrapped the special status of long-disputed Kashmir, while investors awaited the central bank's monetary policy decision scheduled on Wednesday.

The broader NSE Nifty rose 0.62% to 10,930.40 as of 0409 GMT, while the benchmark BSE Sensex was up 0.57% at 36,909.50.

India on Monday revoked a constitutional provision giving Kashmir the authority to make its own laws, potentially stoking tension in the Himalayan region, which has been a flashpoint in ties with neighbouring Pakistan.

The move further raised investor uncertainty at a time when they are already grappling with slowing economic growth and a credit squeeze.

Investors were also awaiting the Reserve Bank of India's (RBI) policy decision on Wednesday. A Reuters poll last month showed the central bank was set to cut interest rates further as the country looks to stimulate growth and spending.

Finance minister Nirmala Sitharaman also said her department would hold talks with foreign portfolio investors (FPIs) about the tax surcharge on certain high-value investments, Mint reported.

"Domestically, the negative news flow may be behind us for the time being. There is hope in markets that the government may revive the economy and they are rallying on that hope," said Neeraj Dewan, a director at Quantum Securities.

"People are expecting the RBI to cut rates and the finance minister's statements about FPIs are also giving hope."

Banks and auto indexes led gains. The Nifty public sector banks index rose 1.5%, while the auto index was up 1%.

The IT index was flat in early trade as the rupee firmed after touching a five-month low on Monday.

Indiabulls Housing Finance led the gains among NSE stocks, rising 1.8%, while Yes Bank and IndusInd Bank rose about 1.5% each. Tata Motors rose 1.8%.

Among losers, IT heavyweight Tata Consultancy Services dropped 0.7%, while Zee Entertainment Enterprises was down 1.8%

Meanwhile, Asian peers languished after the Chinese yuan fell to a 11-year low in an escalating trade war between Beijing and Washington.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5% to its lowest level since January.

Indian shares reversed early losses to trade higher on Tuesday, a day after the government scrapped the special status of long-disputed Kashmir, while investors awaited the central bank's monetary policy decision scheduled on Wednesday.

Indian shares reversed early losses to trade higher on Tuesday, a day after the government scrapped the special status of long-disputed Kashmir, while investors awaited the central bank's monetary policy decision scheduled on Wednesday. The broader NSE Nifty rose 0.62% to 10,930.40 as of 0409 GMT, while the benchmark BSE Sensex was up 0.57% at 36,909.50. India on Monday revoked a constitutional provision giving Kashmir the authority to make its own laws, potentially stoking tension in the Himalayan region, which has been a flashpoint in ties with neighbouring Pakistan. The move further raised investor uncertainty at a time when they are already grappling with slowing economic growth and a credit squeeze. Investors were also awaiting the Reserve Bank of India's (RBI) policy decision on Wednesday. A Reuters poll last month showed the central bank was set to cut interest rates further as the country looks to stimulate growth and spending. Finance minister Nirmala Sitharaman also said her department would hold talks with foreign portfolio investors (FPIs) about the tax surcharge on certain high-value investments, Mint reported. "Domestically, the negative news flow may be behind us for the time being. There is hope in markets that the government may revive the economy and they are rallying on that hope," said Neeraj Dewan, a director at Quantum Securities. "People are expecting the RBI to cut rates and the finance minister's statements about FPIs are also giving hope." Banks and auto indexes led gains. The Nifty public sector banks index rose 1.5%, while the auto index was up 1%. The IT index was flat in early trade as the rupee firmed after touching a five-month low on Monday. Indiabulls Housing Finance led the gains among NSE stocks, rising 1.8%, while Yes Bank and IndusInd Bank rose about 1.5% each. Tata Motors rose 1.8%. Among losers, IT heavyweight Tata Consultancy Services dropped 0.7%, while Zee Entertainment Enterprises was down 1.8% Meanwhile, Asian peers languished after the Chinese yuan fell to a 11-year low in an escalating trade war between Beijing and Washington. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5% to its lowest level since January.

Nifty, Sensex edge higher ahead of RBI's policy outcome

The <a href="https://www.wionews.com/india-news/ayodhya-case-mediation-failed-to-yield-results-daily-hearing-from-august-6-240161">Supreme Court</a> has given the <a href="https://www.wionews.com/india-news/reserve-bank-of-india-to-cut-rates-again-in-august-as-doves-prevail-report-238360">central bank</a> six weeks to report on whether <a href="https://www.wionews.com/business-economy/whatsapp-to-roll-out-payments-feature-in-india-this-year-238593">WhatsApp</a> had complied with data localisation norms as the Facebook-owned messenger gears up to launch a payments service in the country, a person involved in the matter said.

WhatsApp has been testing a peer-to-peer payments service for over a year in India, its biggest market by users, but local data storage norms have delayed an official launch.

Foreign payment companies were caught off guard last year by the <a href="https://www.wionews.com/business-economy/india-seen-set-for-fourth-interest-rate-cut-of-2019-240215">Reserve Bank of India</a>'s (RBI) directive that said all payments data should be stored "only in India" for "unfettered supervisory access".

This June it clarified the rules saying foreign payment firms can process transactions made in India outside of the country but the related data should be brought back for local storage within 24 hours.

WhatsApp faced an additional hurdle as a Delhi-based think-tank, the Centre For Accountability And Systemic Change, alleged in a petition to the Supreme Court last year that the firm was not compliant with payments data localisation rules.

It is in regard to this petition that the Supreme Court has now asked the RBI to file a response.

WhatsApp did not immediately respond to a request for comment while the Reserve Bank of India declined to comment.

Last week, WhatsApp's global head Will Cathcart said WhatsApp was all set to roll out its payments service in India this year and that it was now in full compliance with the data localisation norms.

On Friday, the Supreme Court also asked the federal government to make clear, within six weeks, its position on whether the company's grievance officer should be based in India, according to the person.

WhatsApp has a California-based grievance officer who handles India-related issues. Current Indian rules do not mandate a tech company to have such an executive stationed in the country - a rule the government wants to change.

The country's technology minister has said in parliament that New Delhi is seriously considering that social media firms "be required to locate their grievance officer in India".

WhatsApp has previously said it is working on having a grievance officer based in India.

The Supreme Court has given the central bank six weeks to report on whether WhatsApp had complied with data localisation norms as the Facebook-owned messenger gears up to launch a payments service in the country, a person involved in the matter said.

The Supreme Court has given the central bank six weeks to report on whether WhatsApp had complied with data localisation norms as the Facebook-owned messenger gears up to launch a payments service in the country, a person involved in the matter said. WhatsApp has been testing a peer-to-peer payments service for over a year in India, its biggest market by users, but local data storage norms have delayed an official launch. Foreign payment companies were caught off guard last year by the Reserve Bank of India's (RBI) directive that said all payments data should be stored "only in India" for "unfettered supervisory access". This June it clarified the rules saying foreign payment firms can process transactions made in India outside of the country but the related data should be brought back for local storage within 24 hours. WhatsApp faced an additional hurdle as a Delhi-based think-tank, the Centre For Accountability And Systemic Change, alleged in a petition to the Supreme Court last year that the firm was not compliant with payments data localisation rules. It is in regard to this petition that the Supreme Court has now asked the RBI to file a response. WhatsApp did not immediately respond to a request for comment while the Reserve Bank of India declined to comment. Last week, WhatsApp's global head Will Cathcart said WhatsApp was all set to roll out its payments service in India this year and that it was now in full compliance with the data localisation norms. On Friday, the Supreme Court also asked the federal government to make clear, within six weeks, its position on whether the company's grievance officer should be based in India, according to the person. WhatsApp has a California-based grievance officer who handles India-related issues. Current Indian rules do not mandate a tech company to have such an executive stationed in the country - a rule the government wants to change. The country's technology minister has said in parliament that New Delhi is seriously considering that social media firms "be required to locate their grievance officer in India". WhatsApp has previously said it is working on having a grievance officer based in India.

Supreme Court asks RBI to confirm WhatsApp's compliance with local data rules

The Indian government had 789.43 billion rupees ($11.47 billion) outstanding loans with the central bank under ways and means advances in the week ended July 12, according to the Reserve Bank of India's (RBI) weekly statistical supplement released on Friday.

The central government had 667.93 billion rupees outstanding loans in the week earlier.

State governments had loans worth 69.94 billion rupees from the RBI in the week ended July 12, compared with 55.66 billion rupees in the previous week, the release showed.

Indian banks' loans rose 12 per cent&nbsp;in the two weeks ended July 5 from a year earlier, while deposits rose 10.3 per cent, the Reserve Bank of India's weekly statistical supplement showed on Friday.

Outstanding loans rose 487.8 billion rupees ($7.09 billion)to 96.98 trillion rupees in the two weeks ended July 5. Non-food credit rose 494.3 billion rupees to 96.27 trillion rupees, while food credit fell 6.5 billion rupees to 707.7 billion rupees.

Bank deposits rose 1.82 trillion rupees to 126.75 trillion rupees in the two weeks ended July 5.

The Indian government had 789.43 billion rupees ($11.47 billion) outstanding loans with the central bank under ways and means advances in the week ended July 12, according to the Reserve Bank of India's (RBI) weekly statistical supplement released on Friday.

The Indian government had 789.43 billion rupees ($11.47 billion) outstanding loans with the central bank under ways and means advances in the week ended July 12, according to the Reserve Bank of India's (RBI) weekly statistical supplement released on Friday. The central government had 667.93 billion rupees outstanding loans in the week earlier. State governments had loans worth 69.94 billion rupees from the RBI in the week ended July 12, compared with 55.66 billion rupees in the previous week, the release showed. Indian banks' loans rose 12 per cent in the two weeks ended July 5 from a year earlier, while deposits rose 10.3 per cent, the Reserve Bank of India's weekly statistical supplement showed on Friday. Outstanding loans rose 487.8 billion rupees ($7.09 billion)to 96.98 trillion rupees in the two weeks ended July 5. Non-food credit rose 494.3 billion rupees to 96.27 trillion rupees, while food credit fell 6.5 billion rupees to 707.7 billion rupees. Bank deposits rose 1.82 trillion rupees to 126.75 trillion rupees in the two weeks ended July 5.

Government's outstanding loans from RBI at 789.43 billion rupees in July 12 week

The central bank for all the world’s central banks - the Bank for International Settlements (BIS) - has gone on the offensive against unjustified criticism that a head-strong monetary policy of central banks was responsible for the global economic slowdown.

In its just-published annual report, Basel-based BIS contends that following the gains from a decade of extraordinary monetary policies that helped to restore global growth, there has been a slowdown in the pace of expansion since the last year.&nbsp;

For the world economy to stay on course, other policies need to play a bigger role. Policy wonks must take a longer-term view, it suggests bluntly, lamenting that monetary policy alone could not do the heavy-lifting.&nbsp;

BIS general manager, Agustin Carsten, put it candidly when he said that a better mix is needed between monetary policy, fiscal policy, macro-prudential measures and structural reforms. Macro-prudential tools range from system-wide stress tests and counter-cyclical capital requirements to maximum loan-to-value and debt-to-income ratios.

Stating that monetary policy alone cannot become the engine of higher sustainable economic growth as it works better as a backstop, Carsten picturesquely said that to look past the clouds to spot the blue sky, a plane cannot only fly on a single-engine!&nbsp;

Amplifying this point, the report says that while authorities can help where space is available, fiscal policy needs to be used judiciously to boost sustainable growth, supporting aggregate demand. It believes that the composition of spending needs to be growth-friendlier, especially by boosting well-chosen infrastructure investments.&nbsp;

In the process, it is crucial to preclude the trap of carrying out pro-cyclical policies. It is, however, best to undertake structural fiscal reforms like reducing the bias of tax systems in favour of debt. Nirmala Sitharaman, presenting her maiden Union Budget in a couple of days, may benefit from this advice. She must persuade her officers in the North Block not to view Mint Street officials as adversaries. &nbsp;&nbsp;

Referring to operations of the financial system, the report maintains that all over the world, banks face the challenge to improve profitability. Costs remain stubbornly high, relative to income. Business models have yet to be restructured on a sustainable basis—in particular, adapting to a lower and flatter yield curve.&nbsp;

Banks are also facing increasing competition from non-traditional players such as big techs, who are taking advantage of digital innovation.&nbsp;

There is also the negative impact that historically low interest rates in advanced countries may have on financial intermediation and credit supply. Over the longer term, low rates tend to sap interest margins, profits and hence banks’ ability to build up capital, which is essential for their lending to the productive economy. &nbsp;&nbsp;

The report singles out praise for inflation targeting frameworks in emerging market economies, including India, which have generally been successful. These frameworks have been combined with varying degrees of foreign exchange intervention, coupled with the active use of macro-prudential tools.

Interestingly, the BIS report focusses especially on the entry of large technology companies such as Facebook, Amazon, Alibaba, Google and Tencent, into financial services. These firms have already established platforms in their respective businesses, such as in e-commerce or special networking.&nbsp;

The business model of big tech firms rests on enabling direct interactions among a large number of users. An essential byproduct of their business is the stock of user data. The data is then utilised as input to offer a range of services that exploit natural networks, generating further user activity, which then completes the circle, as it generates yet more data. Big techs can glean additional data from their own ecosystems in social networking, search engines and e-commerce that are outside the financial services they operate.&nbsp;

Since data has increasing returns to scope and scale, big techs will be able to make far more effective use of any incremental data. It is small wonder that Facebook recently outlined its intent to upend the financial system through the launch of Libra, a ‘global digital currency’.&nbsp;

FB has touted Libra as a means to improve financial inclusion for the world’s 1.7 billion people without access to bank accounts. Amazon, which lends to companies, contends that it wants to fill the gap left by banks increasingly reluctant to lend to small businesses.

While acknowledging the potential benefits of big techs entering the financial system with their superior customer data and efficient decision-making, which lowers barriers to the provision of financial services to the unbanked and bypassed sections of society, BIS has also raised concerns over the potential misuse of that data. This it said, would spawn, ‘adverse, economic and welfare effects”. Firms could, for example, exclude high-risk groups from socially desirable insurance markets by working out the maximum rate a borrower would be willing to pay for a loan.&nbsp;

Finally, the report is right when it argues that wide access to data could, in principle, be beneficial. Digital data can be used by many, including competitors, without loss of content. Besides, since data is obtained at zero marginal cost as a byproduct of big techs’ services, it would be socially desirable to share them freely. &nbsp;Provided that markets are competitive, open access to data can help to lower the switching costs for customers, alleviate hold-up problems and generally foster competition and financial inclusion. &nbsp;

This is easier said than done and in the face of the rapid and global digitisation of the economy, coordination 
 
(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-monetary-policy-not-enough-2767466">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp;

&nbsp;

The central bank for all the world’s central banks - the Bank for International Settlements (BIS) - has gone on the offensive against unjustified criticism that a head-strong monetary policy of central banks was responsible for the global economic slowdown.

The central bank for all the world’s central banks - the Bank for International Settlements (BIS) - has gone on the offensive against unjustified criticism that a head-strong monetary policy of central banks was responsible for the global economic slowdown. In its just-published annual report, Basel-based BIS contends that following the gains from a decade of extraordinary monetary policies that helped to restore global growth, there has been a slowdown in the pace of expansion since the last year. For the world economy to stay on course, other policies need to play a bigger role. Policy wonks must take a longer-term view, it suggests bluntly, lamenting that monetary policy alone could not do the heavy-lifting. BIS general manager, Agustin Carsten, put it candidly when he said that a better mix is needed between monetary policy, fiscal policy, macro-prudential measures and structural reforms. Macro-prudential tools range from system-wide stress tests and counter-cyclical capital requirements to maximum loan-to-value and debt-to-income ratios. Stating that monetary policy alone cannot become the engine of higher sustainable economic growth as it works better as a backstop, Carsten picturesquely said that to look past the clouds to spot the blue sky, a plane cannot only fly on a single-engine! Amplifying this point, the report says that while authorities can help where space is available, fiscal policy needs to be used judiciously to boost sustainable growth, supporting aggregate demand. It believes that the composition of spending needs to be growth-friendlier, especially by boosting well-chosen infrastructure investments. In the process, it is crucial to preclude the trap of carrying out pro-cyclical policies. It is, however, best to undertake structural fiscal reforms like reducing the bias of tax systems in favour of debt. Nirmala Sitharaman, presenting her maiden Union Budget in a couple of days, may benefit from this advice. She must persuade her officers in the North Block not to view Mint Street officials as adversaries. Referring to operations of the financial system, the report maintains that all over the world, banks face the challenge to improve profitability. Costs remain stubbornly high, relative to income. Business models have yet to be restructured on a sustainable basis—in particular, adapting to a lower and flatter yield curve. Banks are also facing increasing competition from non-traditional players such as big techs, who are taking advantage of digital innovation. There is also the negative impact that historically low interest rates in advanced countries may have on financial intermediation and credit supply. Over the longer term, low rates tend to sap interest margins, profits and hence banks’ ability to build up capital, which is essential for their lending to the productive economy. The report singles out praise for inflation targeting frameworks in emerging market economies, including India, which have generally been successful. These frameworks have been combined with varying degrees of foreign exchange intervention, coupled with the active use of macro-prudential tools. Interestingly, the BIS report focusses especially on the entry of large technology companies such as Facebook, Amazon, Alibaba, Google and Tencent, into financial services. These firms have already established platforms in their respective businesses, such as in e-commerce or special networking. The business model of big tech firms rests on enabling direct interactions among a large number of users. An essential byproduct of their business is the stock of user data. The data is then utilised as input to offer a range of services that exploit natural networks, generating further user activity, which then completes the circle, as it generates yet more data. Big techs can glean additional data from their own ecosystems in social networking, search engines and e-commerce that are outside the financial services they operate. Since data has increasing returns to scope and scale, big techs will be able to make far more effective use of any incremental data. It is small wonder that Facebook recently outlined its intent to upend the financial system through the launch of Libra, a ‘global digital currency’. FB has touted Libra as a means to improve financial inclusion for the world’s 1.7 billion people without access to bank accounts. Amazon, which lends to companies, contends that it wants to fill the gap left by banks increasingly reluctant to lend to small businesses. While acknowledging the potential benefits of big techs entering the financial system with their superior customer data and efficient decision-making, which lowers barriers to the provision of financial services to the unbanked and bypassed sections of society, BIS has also raised concerns over the potential misuse of that data. This it said, would spawn, ‘adverse, economic and welfare effects”. Firms could, for example, exclude high-risk groups from socially desirable insurance markets by working out the maximum rate a borrower would be willing to pay for a loan. Finally, the report is right when it argues that wide access to data could, in principle, be beneficial. Digital data can be used by many, including competitors, without loss of content. Besides, since data is obtained at zero marginal cost as a byproduct of big techs’ services, it would be socially desirable to share them freely. Provided that markets are competitive, open access to data can help to lower the switching costs for customers, alleviate hold-up problems and generally foster competition and financial inclusion. This is easier said than done and in the face of the rapid and global digitisation of the economy, coordination (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Union Budget 2019: Monetary policy not enough

The government is considering giving more powers to the central bank to regulate the struggling shadow banking sector, Finance Minister Nirmala Sitharaman informed Parliament on Monday.

The government does not have any plans to infuse funds in privately-held shadow banks, she said in a written reply.

"Government has received a proposal from RBI to strengthen RBI's regulatory and supervisory powers under the Reserve Bank of India Act, 1934, and the same is under consideration," Sitharaman said.

The outlook on the shadow banking sector has been bleak ever since the state-run Infrastructure Leasing &amp; Financial Services defaulted on a series of debt obligation triggering New Delhi to take over the control of the company.

The government is considering giving more powers to the central bank to regulate the struggling shadow banking sector, Finance Minister Nirmala Sitharaman informed Parliament on Monday.

The government is considering giving more powers to the central bank to regulate the struggling shadow banking sector, Finance Minister Nirmala Sitharaman informed Parliament on Monday. The government does not have any plans to infuse funds in privately-held shadow banks, she said in a written reply. "Government has received a proposal from RBI to strengthen RBI's regulatory and supervisory powers under the Reserve Bank of India Act, 1934, and the same is under consideration," Sitharaman said. The outlook on the shadow banking sector has been bleak ever since the state-run Infrastructure Leasing & Financial Services defaulted on a series of debt obligation triggering New Delhi to take over the control of the company.

Government considering more powers for RBI to regulate shadow banking sector

Reserve Bank of India Deputy Governor Viral Acharya has put in his papers about six months ahead of the completion of his term.

RBI Deputy Governor Viral Acharya quits

The Indian economy has been clearly losing traction and needs a decisive monetary policy to promote growth, said Reserve Bank of India Governor Shaktikanta Das while voting for a 25 basis points (bps) rate cut along with other five members at the MPC meet earlier this month.

Das, as per the minutes of the June 3-6 Monetary Policy Committee, said that since the last meeting of the rate-setting panel in April 2019, greater clarity has emerged about the evolving macroeconomic situation.

The RBI released the minutes of the meeting Thursday.

Overall, there is clear evidence of economic activity "losing traction" with the GDP growth in the fourth quarter of the last financial year slowing to 5.8 per cent, he said.

"In sum, growth impulses have clearly weakened, while the headline inflation trajectory is projected to remain below 4.0 per cent throughout 2019-20 even after considering the expected transmission of the past two policy rate cuts.

"Keeping in view the evolving growth inflation dynamics, there is a need for decisive monetary policy action. Hence, my vote is to reduce the policy repo rate by 25 basis points," he said.

He also favoured shifting the stance of monetary policy from neutral to accommodative to send a clear signal, indicating that more measures could be taken in the near future to boost growth.

It was for the third time in a row that the RBI cut the key lending rate (repo) by 25 bps.

MPC member and RBI Deputy Governor Viral Acharya said the mixed picture on economic growth has morphed into one where at least some aspects have weakened considerably over the past two quarters. He also flagged some upside risks, including deficiency in monsoon and volatality in crude oil prices, to inflation.

"In spite of my dilemma, I vote 'albeit with some hesitation'&nbsp;to frontload the policy rate cut from 6 per cent to 5.75 per cent..." the minutes quoted him as saying.

Another member and Executive Director Michael Debabrata Patra said the risks to the primary target of monetary policy are distinctly on the ebb.

Inflation expectations, he said, are also better anchored than before.

"In fact, if one were to step back a little in time, it is evident that if the 2019-20 projections materialise, the MPC would have steered inflation at or below target on average for four years in a row in its five-year term of office," he said.

Other three members of the MPC -- Ravindra H Dholakia, Pami Dua, and Chetan Ghate -- also voted in favour of reducing the key lending rate.

Das also said quite a sizable part of loan portfolio of banks continues at the base rate, which impedes monetary transmission.

Interest rates on small savings are also higher than the prescribed formula, he said.

The transmission of the cumulative reduction of 50 basis points in the policy repo rate in February and April 2019 to fresh rupee loans has been 21 basis points.

However, the weighted average lending rate on outstanding loans has increased by 4 basis points.

"Going forward, the transmission is expected to improve, given the lags with which banks adjust their deposit and lending rates in response to changes in the policy rate," the RBI governor said.

The Indian economy has been clearly losing traction and needs a decisive monetary policy to promote growth, said Reserve Bank of India Governor Shaktikanta Das while voting for a 25 basis points (bps) rate cut along with other five members at the MPC meet earlier this month.

The Indian economy has been clearly losing traction and needs a decisive monetary policy to promote growth, said Reserve Bank of India Governor Shaktikanta Das while voting for a 25 basis points (bps) rate cut along with other five members at the MPC meet earlier this month. Das, as per the minutes of the June 3-6 Monetary Policy Committee, said that since the last meeting of the rate-setting panel in April 2019, greater clarity has emerged about the evolving macroeconomic situation. The RBI released the minutes of the meeting Thursday. Overall, there is clear evidence of economic activity "losing traction" with the GDP growth in the fourth quarter of the last financial year slowing to 5.8 per cent, he said. "In sum, growth impulses have clearly weakened, while the headline inflation trajectory is projected to remain below 4.0 per cent throughout 2019-20 even after considering the expected transmission of the past two policy rate cuts. "Keeping in view the evolving growth inflation dynamics, there is a need for decisive monetary policy action. Hence, my vote is to reduce the policy repo rate by 25 basis points," he said. He also favoured shifting the stance of monetary policy from neutral to accommodative to send a clear signal, indicating that more measures could be taken in the near future to boost growth. It was for the third time in a row that the RBI cut the key lending rate (repo) by 25 bps. MPC member and RBI Deputy Governor Viral Acharya said the mixed picture on economic growth has morphed into one where at least some aspects have weakened considerably over the past two quarters. He also flagged some upside risks, including deficiency in monsoon and volatality in crude oil prices, to inflation. "In spite of my dilemma, I vote 'albeit with some hesitation' to frontload the policy rate cut from 6 per cent to 5.75 per cent..." the minutes quoted him as saying. Another member and Executive Director Michael Debabrata Patra said the risks to the primary target of monetary policy are distinctly on the ebb. Inflation expectations, he said, are also better anchored than before. "In fact, if one were to step back a little in time, it is evident that if the 2019-20 projections materialise, the MPC would have steered inflation at or below target on average for four years in a row in its five-year term of office," he said. Other three members of the MPC -- Ravindra H Dholakia, Pami Dua, and Chetan Ghate -- also voted in favour of reducing the key lending rate. Das also said quite a sizable part of loan portfolio of banks continues at the base rate, which impedes monetary transmission. Interest rates on small savings are also higher than the prescribed formula, he said. The transmission of the cumulative reduction of 50 basis points in the policy repo rate in February and April 2019 to fresh rupee loans has been 21 basis points. However, the weighted average lending rate on outstanding loans has increased by 4 basis points. "Going forward, the transmission is expected to improve, given the lags with which banks adjust their deposit and lending rates in response to changes in the policy rate," the RBI governor said.

Economic activity clearly losing traction: RBI Governor Shaktikanta Das at MPC meet

Finance Minister Nirmala Sitharaman on Wednesday held a preparatory meeting for the upcoming G20 summit slated to be held in Osaka and Japan on June 28 and 29.

Commerce Minister Piyush Goyal, Telecom Minister Ravi Shankar Prasad, External Affairs Minister S Jaishankar and RBI Governor Shaktikanta Das attended the meeting.

Speaking to media persons after the meeting, Das said,&nbsp;"It was a Financial Stability and Development Council (FSDC) meeting.

We reviewed the current state of the economy, the overall macro-economic situation and global development.

"The RBI Governor further said that various budget-related suggestions and proposals were also discussed.

"Regulators and concerned secretaries of the government were present during the meeting," said Das.

Finance Minister Nirmala Sitharaman on Wednesday held a preparatory meeting for the upcoming G20 summit slated to be held in Osaka and Japan on June 28 and 29. Commerce Minister Piyush Goyal, Telecom Minister Ravi Shankar Prasad, External Affairs Minister S Jaishankar and RBI Governor Shaktikanta Das attended the meeting.

Finance Minister Nirmala Sitharaman on Wednesday held a preparatory meeting for the upcoming G20 summit slated to be held in Osaka and Japan on June 28 and 29. Commerce Minister Piyush Goyal, Telecom Minister Ravi Shankar Prasad, External Affairs Minister S Jaishankar and RBI Governor Shaktikanta Das attended the meeting. Speaking to media persons after the meeting, Das said, "It was a Financial Stability and Development Council (FSDC) meeting. We reviewed the current state of the economy, the overall macro-economic situation and global development. "The RBI Governor further said that various budget-related suggestions and proposals were also discussed. "Regulators and concerned secretaries of the government were present during the meeting," said Das.

Nirmala Sitharaman holds preparatory meeting for upcoming G20 summit

The Reserve Bank on Friday asked banks to ensure their ATMs are grouted to a wall, pillar, or floor by September-end, except those installed in high secured premises such as airports, to enhance the security of the cash vending machines.

In 2016, the RBI had set up a Committee on Currency Movement (CCM) to review the entire gamut of security of treasure in transit. Based on the recommendations of the panel, the central bank has now issued instructions aimed at mitigating risks in ATM operations and enhancing security.

As part of the security measures, all "ATMs shall be operated for cash replenishment only with digital One Time Combination (OTC) locks". Also, "All ATMs shall be grouted to a structure (wall, pillar, floor, etc.) by September 30, 2019, except for ATMs installed in highly secured premises such as airports, etc. which have adequate CCTV coverage and are guarded by state/central security personnel".

Further, banks may also consider rolling out a comprehensive e-surveillance mechanism at the ATMs to ensure timely alerts and quick response, it said.

The new measures to be adopted by banks are in addition to the existing instructions, practices and guidance issued by the RBI and law enforcement agencies. The RBI also warned the banks that non-adherence of timelines or non-observance of the instructions would attract regulatory action including levy of penalty.

The Reserve Bank on Friday asked banks to ensure their ATMs are grouted to a wall, pillar, or floor by September-end, except those installed in high secured premises such as airports, to enhance the security of the cash vending machines.

The Reserve Bank on Friday asked banks to ensure their ATMs are grouted to a wall, pillar, or floor by September-end, except those installed in high secured premises such as airports, to enhance the security of the cash vending machines. In 2016, the RBI had set up a Committee on Currency Movement (CCM) to review the entire gamut of security of treasure in transit. Based on the recommendations of the panel, the central bank has now issued instructions aimed at mitigating risks in ATM operations and enhancing security. As part of the security measures, all "ATMs shall be operated for cash replenishment only with digital One Time Combination (OTC) locks". Also, "All ATMs shall be grouted to a structure (wall, pillar, floor, etc.) by September 30, 2019, except for ATMs installed in highly secured premises such as airports, etc. which have adequate CCTV coverage and are guarded by state/central security personnel". Further, banks may also consider rolling out a comprehensive e-surveillance mechanism at the ATMs to ensure timely alerts and quick response, it said. The new measures to be adopted by banks are in addition to the existing instructions, practices and guidance issued by the RBI and law enforcement agencies. The RBI also warned the banks that non-adherence of timelines or non-observance of the instructions would attract regulatory action including levy of penalty.

RBI asks banks to grout ATMs to wall, pillar or floor to enhance security

The Manipur government is facing an acute financial crisis. At the root of this crisis is the Reserve Bank of India (RBI) which monitors and controls the banking system in India.

The crisis stems from an order of the RBI to stop all kinds of payments to the Manipur government since it has withdrawn more than the approved amount of overdraft cash.

The overdraft cash is a kind of arrangement made by state governments with the Centre where they can withdraw certain amount of cash. The Manipur government is reportedly facing overdraft of nearly Rs 300 crore.

Most of the state governments are usually in deficit and they keep borrowing from Centre. So, a mechanism of overdraft has been created by the Centre to help state governments financially.

A letter by RBI assistant general manager Anita Kumari to State Bank of India has asked all the payments to Manipur government to be stopped (bills and cheques).

As a result of this order, Chief Minister N Biren Singh has put on hold all the appointments and is meeting his Cabinet ministers and bank officials to find a way to deal with the crisis.

The salaries of government employees in Manipur will also be affected due to this.

The Manipur government is facing an acute financial crisis. At the root of this crisis is the Reserve Bank of India (RBI) which monitors and controls the banking system in India.

The Manipur government is facing an acute financial crisis. At the root of this crisis is the Reserve Bank of India (RBI) which monitors and controls the banking system in India. The crisis stems from an order of the RBI to stop all kinds of payments to the Manipur government since it has withdrawn more than the approved amount of overdraft cash. The overdraft cash is a kind of arrangement made by state governments with the Centre where they can withdraw certain amount of cash. The Manipur government is reportedly facing overdraft of nearly Rs 300 crore. Most of the state governments are usually in deficit and they keep borrowing from Centre. So, a mechanism of overdraft has been created by the Centre to help state governments financially. A letter by RBI assistant general manager Anita Kumari to State Bank of India has asked all the payments to Manipur government to be stopped (bills and cheques). As a result of this order, Chief Minister N Biren Singh has put on hold all the appointments and is meeting his Cabinet ministers and bank officials to find a way to deal with the crisis. The salaries of government employees in Manipur will also be affected due to this.

Overdraft haunts Manipur government, employees to suffer

The Reserve Bank of India(RBI) today cut repo rate for the third consecutive time this year to 5.75 per cent from the current 6 per cent amid falling economic growth and uncertain global scenario.

The central bank changed its policy stance to accommodative&nbsp;from neutral.

The RBI cut interest rates by 0.25 per cent. India's central bank also cut GDP growth forecast for FY20 from 7.2 per cent to 7 per cent.

"The MPC (monetary policy committee) notes that growth impulses have weakened significantly, a sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern," the policy resolution said.&nbsp;

The central bank&nbsp;raised inflation projection to 3-3.1 per cent for April-September.&nbsp;

The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das concluded its second meeting for the fiscal year 2019-20. On February 7 and April 4, the central bank had reduced the key lending rate by 25 basis points to infuse liquidity and push growth.

Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers on loans, and lowers equal monthly instalments on home loans, car loans and personal loans.

India's economy grew just 6.8 per cent in 2018-19, according to government data. In the fourth quarter (January to March), the growth dipped to 5.8 per cent, marking a five-year low.

The Reserve Bank of India(RBI) today cut repo rate for the third consecutive time this year to 5.75 per cent from the current 6 per cent amid falling economic growth and uncertain global scenario.

The Reserve Bank of India(RBI) today cut repo rate for the third consecutive time this year to 5.75 per cent from the current 6 per cent amid falling economic growth and uncertain global scenario. The central bank changed its policy stance to accommodative from neutral. The RBI cut interest rates by 0.25 per cent. India's central bank also cut GDP growth forecast for FY20 from 7.2 per cent to 7 per cent. "The MPC (monetary policy committee) notes that growth impulses have weakened significantly, a sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern," the policy resolution said. The central bank raised inflation projection to 3-3.1 per cent for April-September. The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das concluded its second meeting for the fiscal year 2019-20. On February 7 and April 4, the central bank had reduced the key lending rate by 25 basis points to infuse liquidity and push growth. Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers on loans, and lowers equal monthly instalments on home loans, car loans and personal loans. India's economy grew just 6.8 per cent in 2018-19, according to government data. In the fourth quarter (January to March), the growth dipped to 5.8 per cent, marking a five-year low.

RBI cuts repo rates to boost growth; lowers GDP growth forecast to 7% in FY20

The BSE benchmark <a href="https://www.wionews.com/business-economy/sensex-tanks-over-500-points-after-rbi-policy-outcome-financial-stocks-drag-224917">Sensex</a> plunged 554 points Thursday, dragged down by losses in banking, energy and capital goods stocks even as the RBI cut the policy rate to shore up growth.

Slashing benchmark lending rate for the third time this year, the central bank cut the repo rate by 0.25 per cent and changed its monetary policy stance from 'neutral' to 'accommodative'.

The RBI, however, lowered the economic growth forecast for the current fiscal to 7 per cent due to slow down in domestic activities and escalation in a global trade war. Following the announcement, the 30-share index cracked 553.82 points, or 1.38 per cent, to settle at 39,529.72. The bourse hit an intra-day low of 39,481.15 and a high of 40,159.26.

In similar movement, the NSE Nifty plunged 177.90 points, or 1.48 per cent, to end at 11,843.75. During the day, it hit a low of 11,830.25 and high of 12,039.80. Top losers in the Sensex pack included IndusInd Bank, Yes Bank, SBI, L&amp;T, Tata Steel, M&amp;M, Bajaj Finance, Vedanta, Tata Motors and RIL, tumbling up to 6.97 per cent.

Bucking the negative market trend, Coal India, PowerGrid, NTPC, HUL, Hero MotoCorp, Asian Paints and Infosys gained up to 1.92 per cent.

"The rate cut could not infuse positivity, and the decline steepened as focus shifted from policy rates to new emerging short-term tight liquidity situation due to issues like IL&amp;FS, DHFL and its impending impact on other financial institutions if any," said Narendra Solanki, Head-Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares &amp; Stock Brokers.

Lowered GDP forecast for the current year and failure to get any cue from RBI on the liquidity front except general assurance of addressing the situation added to the selling pressure later in the day, he added. The Indian rupee fell marginally to 69.28 against the US dollar.

Meanwhile, other Asian bourses ended on a mixed note, while Europe was trading in the green in opening deals. 
Brent crude futures, the global oil benchmark, fell 0.76 per cent to 61.09 per barrel.&nbsp;

The BSE benchmark Sensex plunged 554 points Thursday, dragged down by losses in banking, energy and capital goods stocks even as the RBI cut the policy rate to shore up growth.

The BSE benchmark Sensex plunged 554 points Thursday, dragged down by losses in banking, energy and capital goods stocks even as the RBI cut the policy rate to shore up growth. Slashing benchmark lending rate for the third time this year, the central bank cut the repo rate by 0.25 per cent and changed its monetary policy stance from 'neutral' to 'accommodative'. The RBI, however, lowered the economic growth forecast for the current fiscal to 7 per cent due to slow down in domestic activities and escalation in a global trade war. Following the announcement, the 30-share index cracked 553.82 points, or 1.38 per cent, to settle at 39,529.72. The bourse hit an intra-day low of 39,481.15 and a high of 40,159.26. In similar movement, the NSE Nifty plunged 177.90 points, or 1.48 per cent, to end at 11,843.75. During the day, it hit a low of 11,830.25 and high of 12,039.80. Top losers in the Sensex pack included IndusInd Bank, Yes Bank, SBI, L&T, Tata Steel, M&M, Bajaj Finance, Vedanta, Tata Motors and RIL, tumbling up to 6.97 per cent. Bucking the negative market trend, Coal India, PowerGrid, NTPC, HUL, Hero MotoCorp, Asian Paints and Infosys gained up to 1.92 per cent. "The rate cut could not infuse positivity, and the decline steepened as focus shifted from policy rates to new emerging short-term tight liquidity situation due to issues like IL&FS, DHFL and its impending impact on other financial institutions if any," said Narendra Solanki, Head-Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares & Stock Brokers. Lowered GDP forecast for the current year and failure to get any cue from RBI on the liquidity front except general assurance of addressing the situation added to the selling pressure later in the day, he added. The Indian rupee fell marginally to 69.28 against the US dollar. Meanwhile, other Asian bourses ended on a mixed note, while Europe was trading in the green in opening deals. Brent crude futures, the global oil benchmark, fell 0.76 per cent to 61.09 per barrel.

Sensex dives 554 points despite RBI rate cut; financial stocks crack

In a move that may lead to lower home, auto and other loan EMIs, the<a href="https://www.wionews.com/business-economy/reserve-bank-cuts-rates-lowers-gdp-growth-forecast-to-7-in-fy20-224861"> RBI Thursday cut interest rates for the third time this year</a> by 25 basis points to their lowest level in nine years and signalled more easing as it looked to support an economy growing at the slowest pace since the BJP first came to power in 2014.

The Reserve Bank of India (RBI) cut the repo rate to 5.75 per cent and reverse repo rate to 5.50 per cent and expected banks to transmit these to home, auto and other loan borrowers faster.

With all the six members of the Monetary Policy Committee (MPC) voting unanimously for a rate cut and switching of its stance to "accommodative" from neutral, RBI Governor Shaktikanta Das said the shift in the stance meant that an increase in interest rates is "off the table."

He wanted banks to expedite the transmission of the current reduction in rates as well as similar ones that happened in February and April.

In three back-to-back bi-monthly monetary policies, the RBI has lowered interest rates by 75 basis points (0.75 percentage point).

With India's GDP growth slipping to a five-year low of 5.8 per cent in the January-March quarter - the first instance of growth falling below China's in last few quarters, the RBI lowered its growth forecast for the economy to 7 per cent from the April view of 7.2 per cent for the 2019-20 April-March fiscal year. 
"Growth impulses have weakened significantly," the RBI said in the monetary policy statement.

The reduction in interest rate will help boost credit growth, helping arrest the slowdown in the economy ahead of the new Finance Minister Nirmala Sitharaman presenting Modi-2.0 government's first budget next month that is widely expected to announce measures to generate jobs and revive the economy.

While inflation remained below its medium-term target to give "scope" to the MPC "to accommodate growth concerns by supporting efforts to boost aggregate demand", the RBI marginally raised its retail inflation outlook for the first half of 2019-20 to a range of 3-3.1 per cent from 2.9-3 per cent that it had outlined in last monetary policy in April, due to a broad-based pickup in food prices.

It, however, slightly trimmed its inflation outlook for the second half of the year to 3.4-3.7 per cent from its earlier projection of 3.5-3.8 per cent.

"The headline inflation trajectory remains below the target mandated to the MPC even after taking into account the expected transmission of the past two policy rate cuts. Hence, there is scope for the MPC to accommodate growth concerns by supporting efforts to boost aggregate demand, and in particular, reinvigorate private investment activity, while remaining consistent with its flexible inflation targeting mandate," the MPC said.

RBI's medium-term inflation target is 4 per cent.

"A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern," it said.

With the 0.25 percentage point cut Thursday, the repo rate, at which the central bank lends to the system, comes down to 5.75 per cent, as was widely expected. Earlier, the repo rate was at 5.75 per cent in July 2010.

Consequently, the reverse repo rate under the LAF stands adjusted to 5.50 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.0 per cent.

MPC noted that political stability, high capacity utilisation, buoyant stock markets, an uptick in business expectations in the second quarter and financial flows are positive from a growth perspective.

It made its disappointment clear at the transmission of rate cuts, saying the weighted average lending rate has gone down by only 0.21 per cent, while the same for older loans has increased 0.04 per cent, as against policy rate cuts of 0.50 percentage point.

The central bank also announced doing away with charges on fund transfers through RTGS and NEFT routes to boost digital transactions and asked banks to pass on the benefits to customers.

In a move that may lead to lower home, auto and other loan EMIs, the RBI Thursday cut interest rates for the third time this year by 25 basis points to their lowest level in nine years and signalled more easing as it looked to support an economy growing at the slowest pace since the BJP first came to power in 2014.

In a move that may lead to lower home, auto and other loan EMIs, the RBI Thursday cut interest rates for the third time this year by 25 basis points to their lowest level in nine years and signalled more easing as it looked to support an economy growing at the slowest pace since the BJP first came to power in 2014. The Reserve Bank of India (RBI) cut the repo rate to 5.75 per cent and reverse repo rate to 5.50 per cent and expected banks to transmit these to home, auto and other loan borrowers faster. With all the six members of the Monetary Policy Committee (MPC) voting unanimously for a rate cut and switching of its stance to "accommodative" from neutral, RBI Governor Shaktikanta Das said the shift in the stance meant that an increase in interest rates is "off the table." He wanted banks to expedite the transmission of the current reduction in rates as well as similar ones that happened in February and April. In three back-to-back bi-monthly monetary policies, the RBI has lowered interest rates by 75 basis points (0.75 percentage point). With India's GDP growth slipping to a five-year low of 5.8 per cent in the January-March quarter - the first instance of growth falling below China's in last few quarters, the RBI lowered its growth forecast for the economy to 7 per cent from the April view of 7.2 per cent for the 2019-20 April-March fiscal year. "Growth impulses have weakened significantly," the RBI said in the monetary policy statement. The reduction in interest rate will help boost credit growth, helping arrest the slowdown in the economy ahead of the new Finance Minister Nirmala Sitharaman presenting Modi-2.0 government's first budget next month that is widely expected to announce measures to generate jobs and revive the economy. While inflation remained below its medium-term target to give "scope" to the MPC "to accommodate growth concerns by supporting efforts to boost aggregate demand", the RBI marginally raised its retail inflation outlook for the first half of 2019-20 to a range of 3-3.1 per cent from 2.9-3 per cent that it had outlined in last monetary policy in April, due to a broad-based pickup in food prices. It, however, slightly trimmed its inflation outlook for the second half of the year to 3.4-3.7 per cent from its earlier projection of 3.5-3.8 per cent. "The headline inflation trajectory remains below the target mandated to the MPC even after taking into account the expected transmission of the past two policy rate cuts. Hence, there is scope for the MPC to accommodate growth concerns by supporting efforts to boost aggregate demand, and in particular, reinvigorate private investment activity, while remaining consistent with its flexible inflation targeting mandate," the MPC said. RBI's medium-term inflation target is 4 per cent. "A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern," it said. With the 0.25 percentage point cut Thursday, the repo rate, at which the central bank lends to the system, comes down to 5.75 per cent, as was widely expected. Earlier, the repo rate was at 5.75 per cent in July 2010. Consequently, the reverse repo rate under the LAF stands adjusted to 5.50 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.0 per cent. MPC noted that political stability, high capacity utilisation, buoyant stock markets, an uptick in business expectations in the second quarter and financial flows are positive from a growth perspective. It made its disappointment clear at the transmission of rate cuts, saying the weighted average lending rate has gone down by only 0.21 per cent, while the same for older loans has increased 0.04 per cent, as against policy rate cuts of 0.50 percentage point. The central bank also announced doing away with charges on fund transfers through RTGS and NEFT routes to boost digital transactions and asked banks to pass on the benefits to customers.

RBI cuts interest rates to 9-year low, expects banks to quickly lower home, auto loan EMIs

The Reserve Bank of India is likely to cement its position as Asia’s most dovish central bank with a third straight interest-rate cut Thursday. The six-member monetary policy committee led by Governor Shaktikanta Das will reduce the repurchase rate by 25 basis points to 5.75 per cent on Thursday, say 31 of 43 economists

WION Wallet: RBI cuts repo rate by 25 bps to 5.75%, Changes policy as GDP slows to 5-year lowv

The Reserve Bank of India (RBI) Monetary Police Committee Thursday unanimously cut repo rate — the rate at which it lends to banks — by 25 basis points from 6 per cent to 5.75 per cent.

RBI slahes Repo rates again; cuts by 0.25%

The Reserve Bank will issue a revised circular on bad loan recognition within the next three-four days, replacing the February 12 circular that was struck down by the apex court.

On April 2, the Supreme Court had declared as "ultra vires" the February 12 circular that mandated banks to label even a day's default as NPA.

"The revised circular on February 12 on NPA classification will be issued very shortly, in three to four days," Das told reporters at the customary post-policy announcement.

The RBI on February 12, 2018, issued a framework on resolution of stressed assets under which banks were asked to disclose defaults even of a day and have to find a resolution plan within 180 days in case of large account of Rs 2,000 crore and above failing which it would send for bankruptcy.

The Reserve Bank will issue a revised circular on bad loan recognition within the next three-four days, replacing the February 12 circular that was struck down by the apex court.

The Reserve Bank will issue a revised circular on bad loan recognition within the next three-four days, replacing the February 12 circular that was struck down by the apex court. On April 2, the Supreme Court had declared as "ultra vires" the February 12 circular that mandated banks to label even a day's default as NPA. "The revised circular on February 12 on NPA classification will be issued very shortly, in three to four days," Das told reporters at the customary post-policy announcement. The RBI on February 12, 2018, issued a framework on resolution of stressed assets under which banks were asked to disclose defaults even of a day and have to find a resolution plan within 180 days in case of large account of Rs 2,000 crore and above failing which it would send for bankruptcy.

New NPA resolution norms in 3-4 days: RBI Governor Shaktikanta Das

India Ratings and Research (Ind-Ra) said on Wednesday that an interest rate cut by the Reserve Bank of India (RBI), which is almost certain in the second bi-monthly monetary policy statement for 2019-20, is unlikely to stimulate demand in the near-term due to the absence of quick resonance in the financial market.

"Despite the RBI cutting policy rate by 50 basis points so far in 2019, banks have not adjusted their lending and deposit rate accordingly," it said in a statement.

"On the contrary, a number of banks have raised their deposit rates to mobilise funds."

At the core of this mismatch between the RBI's action and the banks'&nbsp;inability to pass on the benefit to borrowers is the slowdown in household savings, said Ind-Ra.

Increased government borrowing and elevated small savings rate have rendered deposit and investment mobilisation by banks and non-banking finance companies expensive.

Also, India's consumption demand is still not a pronounced credit-fuelled or leveraged demand. Outstanding personal loan (excluding housing loan) and private final consumption expenditure ratio was 35.7 per cent in the fourth quarter of fiscal year-end 19 (28.2 per cent at first quarter fiscal year-end 12).

However, Ind-Ra believes that more than the rate cut, it is the transmission of rate cut into the economy that has emerged as a bigger challenge.

"It is well known that the impact of the monetary policy on the Indian economy is felt with a significant lag, but the situation at the current juncture has become further complicated due to the ongoing crisis in both -&nbsp;the banking and the shadow banking sectors."

While banks are struggling with high non-performing assets, non-banking finance companies are struggling with solvency issues leading to a credit freeze.GDP growth fell to a five-year low in FY19.

Even on a quarterly basis, GDP witnessed a growth slowdown over the fourth quarter of FY18 to the fourth quarter of FY19, continuing the trend observed over the first quarter of FY17 to the first quarter of FY18.On the other hand, inflation is undershooting RBI's targeted four per cent mark consecutively for nine months now.

With the softening of global crude oil prices and adequate food grain stock, there is clearly scope for the RBI to announce at least a 25 basis points rate cut.

This will be the third consecutive rate cut adding up to 75 basis points reduction in the policy rate so far in 2019.&nbsp;

India Ratings and Research (Ind-Ra) said on Wednesday that an interest rate cut by the Reserve Bank of India (RBI), which is almost certain in the second bi-monthly monetary policy statement for 2019-20, is unlikely to stimulate demand in the near-term due to the absence of quick resonance in the financial market.

India Ratings and Research (Ind-Ra) said on Wednesday that an interest rate cut by the Reserve Bank of India (RBI), which is almost certain in the second bi-monthly monetary policy statement for 2019-20, is unlikely to stimulate demand in the near-term due to the absence of quick resonance in the financial market. "Despite the RBI cutting policy rate by 50 basis points so far in 2019, banks have not adjusted their lending and deposit rate accordingly," it said in a statement. "On the contrary, a number of banks have raised their deposit rates to mobilise funds." At the core of this mismatch between the RBI's action and the banks' inability to pass on the benefit to borrowers is the slowdown in household savings, said Ind-Ra. Increased government borrowing and elevated small savings rate have rendered deposit and investment mobilisation by banks and non-banking finance companies expensive. Also, India's consumption demand is still not a pronounced credit-fuelled or leveraged demand. Outstanding personal loan (excluding housing loan) and private final consumption expenditure ratio was 35.7 per cent in the fourth quarter of fiscal year-end 19 (28.2 per cent at first quarter fiscal year-end 12). However, Ind-Ra believes that more than the rate cut, it is the transmission of rate cut into the economy that has emerged as a bigger challenge. "It is well known that the impact of the monetary policy on the Indian economy is felt with a significant lag, but the situation at the current juncture has become further complicated due to the ongoing crisis in both - the banking and the shadow banking sectors." While banks are struggling with high non-performing assets, non-banking finance companies are struggling with solvency issues leading to a credit freeze.GDP growth fell to a five-year low in FY19. Even on a quarterly basis, GDP witnessed a growth slowdown over the fourth quarter of FY18 to the fourth quarter of FY19, continuing the trend observed over the first quarter of FY17 to the first quarter of FY18.On the other hand, inflation is undershooting RBI's targeted four per cent mark consecutively for nine months now. With the softening of global crude oil prices and adequate food grain stock, there is clearly scope for the RBI to announce at least a 25 basis points rate cut. This will be the third consecutive rate cut adding up to 75 basis points reduction in the policy rate so far in 2019.

Reserve Bank of India's interest rate cut in monetary policy unlikely to stimulate growth: Report

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