Indian government officials are very upset with the central bank for publicly talking about a rift with the government, fearing it could tarnish the country's image among investors, senior officials said on Monday.

On Friday night, Reserve Bank of India (RBI) Deputy Governor Viral Acharya warned that undermining a central bank's independence could be "<a href="http://www.wionews.com/india-news/a-govt-that-does-not-respect-rbis-independence-will-incur-wrath-of-markets-rbi-deputy-governor-173752">potentially catastrophic</a>", in an indication that it is pushing back hard against government pressure to relax its policies and reduce its powers.

In a speech to top industrialists Acharya cited the Argentine government's meddling in its central bank's affairs in 2010 as an example of what can go wrong. That led to a surge in bond yields that badly hurt the South American economy.

"Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution," Acharya said.

The government officials Reuters spoke to on Monday declined to be identified because of the sensitivity of the subject.

One said that it was vital that what happened between the government in New Delhi and the RBI in Mumbai was kept confidential. "The government respects the autonomy and independence of the RBI but they must understand their responsibility," the official said.

A second official, based in Indian Prime Minister Narendra Modi's office, said it was "very unfortunate" that the RBI took the matters public. "The government is very upset. It was not expected from the RBI," the official added.

An RBI spokesman was not immediately available for comments after business hours.

Government officials have recently called for the RBI to relax its lending restrictions on some banks, and New Delhi has also been trying to trim the RBI's regulatory powers by setting up a new regulator for the country's payments system.

The Modi administration has also been pushing the central bank to part with some of its 3.6 trillion rupees ($49 billion)surplus to help bridge the fiscal deficit and finance its welfare programmes.

JAPAN TRIP

The officials in New Delhi were particularly angry that Acharya launched the attack while Modi was about to head to Japan for talks with Prime Minister Shinzo Abe, the first source said.

Finance ministry officials remained largely silent in response to the speech at the weekend, as they didn't want to aggravate the issue when Modi and top officials were in Japan, this official said.

Government officials believe that RBI Governor Urjit Patel has some responsibility for the controversy, and he cannot expect an extension of his current three-year term - which ends next September - "as his right", one of the officials added.

Acharya had three of his fellow deputy governors in the audience and also thanked Governor Patel for his "suggestion to explore this theme for a speech", in a show of unity from an institution typically known for its restraint.

The official in the prime minister's office said Patel could face a tough time when he appears before a parliamentary standing committee on Nov. 12.

Top government officials said they were surprised that Patel, who was appointed by the Modi administration in 2016, and initially cooperated with New Delhi, is creating tensions when the government is facing criticism over handling of the economy before a national election, due by next May.

On Monday, a third government source said the finance ministry was worried how markets would respond to Acharya's public comments, but felt more relaxed after they rose. The gains were largely a result of a separate announcement by the RBI about an injection of liquidity through government bond buying.

The benchmark stock index rose as much as 2.15 percent and the yields on the 10-year benchmark fell to 7.81 percent, compared with 7.88 percent on Friday.

Modi's government is pushing the central bank to relax lending norms for small businesses and pump more liquidity into the market to bolster economic growth before key state elections due in the next few weeks and the general election.

It is worried that the central bank's hawkish monetary stance and stringent regulations on lending by state banks could push economic growth below 7 percent in the October-December quarter - the last quarter for which data would be available ahead of the general election.

"When we are facing problems on the external front like high crude oil prices, trade tensions putting pressure on our current account balance, can we afford another domestic crisis?" the third government source said.

Indian government officials are very upset with the central bank for publicly talking about a rift with the government, fearing it could tarnish the country's image among investors, senior officials said on Monday.

Indian government officials are very upset with the central bank for publicly talking about a rift with the government, fearing it could tarnish the country's image among investors, senior officials said on Monday. On Friday night, Reserve Bank of India (RBI) Deputy Governor Viral Acharya warned that undermining a central bank's independence could be "potentially catastrophic", in an indication that it is pushing back hard against government pressure to relax its policies and reduce its powers. In a speech to top industrialists Acharya cited the Argentine government's meddling in its central bank's affairs in 2010 as an example of what can go wrong. That led to a surge in bond yields that badly hurt the South American economy. "Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution," Acharya said. The government officials Reuters spoke to on Monday declined to be identified because of the sensitivity of the subject. One said that it was vital that what happened between the government in New Delhi and the RBI in Mumbai was kept confidential. "The government respects the autonomy and independence of the RBI but they must understand their responsibility," the official said. A second official, based in Indian Prime Minister Narendra Modi's office, said it was "very unfortunate" that the RBI took the matters public. "The government is very upset. It was not expected from the RBI," the official added. An RBI spokesman was not immediately available for comments after business hours. Government officials have recently called for the RBI to relax its lending restrictions on some banks, and New Delhi has also been trying to trim the RBI's regulatory powers by setting up a new regulator for the country's payments system. The Modi administration has also been pushing the central bank to part with some of its 3.6 trillion rupees ($49 billion)surplus to help bridge the fiscal deficit and finance its welfare programmes. JAPAN TRIP The officials in New Delhi were particularly angry that Acharya launched the attack while Modi was about to head to Japan for talks with Prime Minister Shinzo Abe, the first source said. Finance ministry officials remained largely silent in response to the speech at the weekend, as they didn't want to aggravate the issue when Modi and top officials were in Japan, this official said. Government officials believe that RBI Governor Urjit Patel has some responsibility for the controversy, and he cannot expect an extension of his current three-year term - which ends next September - "as his right", one of the officials added. Acharya had three of his fellow deputy governors in the audience and also thanked Governor Patel for his "suggestion to explore this theme for a speech", in a show of unity from an institution typically known for its restraint. The official in the prime minister's office said Patel could face a tough time when he appears before a parliamentary standing committee on Nov. 12. Top government officials said they were surprised that Patel, who was appointed by the Modi administration in 2016, and initially cooperated with New Delhi, is creating tensions when the government is facing criticism over handling of the economy before a national election, due by next May. On Monday, a third government source said the finance ministry was worried how markets would respond to Acharya's public comments, but felt more relaxed after they rose. The gains were largely a result of a separate announcement by the RBI about an injection of liquidity through government bond buying. The benchmark stock index rose as much as 2.15 percent and the yields on the 10-year benchmark fell to 7.81 percent, compared with 7.88 percent on Friday. Modi's government is pushing the central bank to relax lending norms for small businesses and pump more liquidity into the market to bolster economic growth before key state elections due in the next few weeks and the general election. It is worried that the central bank's hawkish monetary stance and stringent regulations on lending by state banks could push economic growth below 7 percent in the October-December quarter - the last quarter for which data would be available ahead of the general election. "When we are facing problems on the external front like high crude oil prices, trade tensions putting pressure on our current account balance, can we afford another domestic crisis?" the third government source said.

Government very upset with RBI for making rift public: Sources

What the government giveth, the government taketh. Beginning 1934, the Reserve Bank of India has enjoyed uninterrupted and unquestionable primacy in all things monetary in India.&nbsp;

The sudden volte-face by the government, has therefore shaken the RBI to its very foundations. When the inter-ministerial committee (IC) was constituted in October 2017, little did the RBI realise that it would result in ending its long era of dominance over regulating payment systems in India.

A quick flashback takes us to the RBI Act of 1934, which vested all matters monetary and regulatory with the central bank. This was consolidated with the Payment and Settlement Systems Act, 2007 (PSS Act) designating RBI, the banking regulator, as the over seer for all forms of payment systems.

The IC Report with its recommendation for a Payment Regulatory Board (PRB) with RBI being a minority stakeholder, has truly shaken and stirred the regulator, who till date exercised a monopoly over proceedings.&nbsp;

Even under the PSS Act of 2007, there was a central board comprised only of RBI representatives with its governor in the chair. The PRB, first mooted under the Finance Act 2017, paved the first step towards the dilution of RBI’s monopoly with its inclusion of equal representation of three central government representatives along with three RBI officials. The Finance Act, however, still vested the RBI governor with the position of ex-officio chairperson.

Then came the blow through the IC Report, which proposes for any “Person appointed by the government in consultation with the RBI”, to be appointed as the ex-officio chairperson.&nbsp;

Further, with the increase in the composition of the PRB to seven members with four (including the chairperson) being central government representatives, RBI clearly becomes a minority presence.

The central bank has not questioned government representation on the proposed PRB, but has voiced strong dissent against the dilution of its powers – especially of the chairperson no longer being only the RBI governor.&nbsp;

It has therefore insisted on this as also for veto powers to the chairperson, to ensure its majority. Its claim is based inter alia on its role as the banking regulator and hence the need for harmonious regulations.

The IC’s concessions to RBI’s dissent is to include the need for the chairperson to have “experience in the central banking function” and for RBI to have the power to “make a reference” to the PRB for consideration of issues pertaining to monetary policies. Neither of these meets the RBI’s pitch for retaining its power over regulating payment systems.

RBI faces a strong threat to unfettered primacy over regulating payment systems and its fear that this is only the beginning, may also not be misconceived. After all, RBI is no stranger to trespassing on alternate turfs, as was evident from its April 6, 2018, circular on financial data localisation by all payment systems, upstaging the then awaited government committee report.

The possibilities facing RBI now are (a) divestment of powers over payment systems, (b) dilution of its monopoly over regulating payment systems to merely a recommendatory role and (c) being reduced from a monopolistic regulatory position to that of an advisory one.&nbsp;

The implications for the nation are larger with the central government taking back the power to regulate payment systems instead of the settled construct of a unitary regulatory body exercising powers over all things monetary.&nbsp;

On one hand, this may reduce the now palpable friction between government policies or intent and regulatory execution (through RBI) and ensure harmony. On the other, monetary policies will seesaw with every change in the government. &nbsp;

Such state of flux may not augur well for certainty or stability in monetary policies. Internal turf wars then become a definitive possibility.

Legally speaking, RBI would be hard pressed to prove its claim to retain its monopolistic regulatory right. The sovereign right over deciding India’s monetary policy vests with the central government.

RBI’s right to regulate payment systems is through statutory authority vested under the PSS Act of 2007. This, of course, can or may be modified through parliamentary process, which is what the proposed amendments to the PSS Act envisages.&nbsp;

Prolonged vesting of authority in RBI by itself is therefore not going to be sufficient for the central bank to sustain its claim. The separation of powers argued by the RBI in its dissent note is one of vested authority and not a constitutional one.&nbsp;

The RBI dissent is that of a singular minority in the report of the IC and the majority view may therefore prevail. In any event, the report itself is merely a recommendation. It is for the houses of Parliament (or the Finance Act route) to decide the future of regulation of payment systems.&nbsp;

Payment systems now permeate chat apps and online games. In just a decade, private, especially international players, have slowly become the primary or preferred payment mechanisms, as opposed to banks. Despite tightening of regulation, private players have consistently found loopholes.

The recent thrust has been towards digital payment alternatives, especially after demonetisation.&nbsp;

In a world ill-equipped to deal with evolving technologies – abject digital illiteracy, poor enforcement mechanisms against evolving cyber-crimes, financial frauds, Ponzi schemes and technology-enabled crimes, the urgent need is for a strong regulator with sufficient powers to not only prevent, but to also protect and punish.&nbsp;

 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-rocking-the-central-bank-2680325">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

What the government giveth, the government taketh. Beginning 1934, the Reserve Bank of India has enjoyed uninterrupted and unquestionable primacy in all things monetary in India.

What the government giveth, the government taketh. Beginning 1934, the Reserve Bank of India has enjoyed uninterrupted and unquestionable primacy in all things monetary in India. The sudden volte-face by the government, has therefore shaken the RBI to its very foundations. When the inter-ministerial committee (IC) was constituted in October 2017, little did the RBI realise that it would result in ending its long era of dominance over regulating payment systems in India. A quick flashback takes us to the RBI Act of 1934, which vested all matters monetary and regulatory with the central bank. This was consolidated with the Payment and Settlement Systems Act, 2007 (PSS Act) designating RBI, the banking regulator, as the over seer for all forms of payment systems. The IC Report with its recommendation for a Payment Regulatory Board (PRB) with RBI being a minority stakeholder, has truly shaken and stirred the regulator, who till date exercised a monopoly over proceedings. Even under the PSS Act of 2007, there was a central board comprised only of RBI representatives with its governor in the chair. The PRB, first mooted under the Finance Act 2017, paved the first step towards the dilution of RBI’s monopoly with its inclusion of equal representation of three central government representatives along with three RBI officials. The Finance Act, however, still vested the RBI governor with the position of ex-officio chairperson. Then came the blow through the IC Report, which proposes for any “Person appointed by the government in consultation with the RBI”, to be appointed as the ex-officio chairperson. Further, with the increase in the composition of the PRB to seven members with four (including the chairperson) being central government representatives, RBI clearly becomes a minority presence. The central bank has not questioned government representation on the proposed PRB, but has voiced strong dissent against the dilution of its powers – especially of the chairperson no longer being only the RBI governor. It has therefore insisted on this as also for veto powers to the chairperson, to ensure its majority. Its claim is based inter alia on its role as the banking regulator and hence the need for harmonious regulations. The IC’s concessions to RBI’s dissent is to include the need for the chairperson to have “experience in the central banking function” and for RBI to have the power to “make a reference” to the PRB for consideration of issues pertaining to monetary policies. Neither of these meets the RBI’s pitch for retaining its power over regulating payment systems. RBI faces a strong threat to unfettered primacy over regulating payment systems and its fear that this is only the beginning, may also not be misconceived. After all, RBI is no stranger to trespassing on alternate turfs, as was evident from its April 6, 2018, circular on financial data localisation by all payment systems, upstaging the then awaited government committee report. The possibilities facing RBI now are (a) divestment of powers over payment systems, (b) dilution of its monopoly over regulating payment systems to merely a recommendatory role and (c) being reduced from a monopolistic regulatory position to that of an advisory one. The implications for the nation are larger with the central government taking back the power to regulate payment systems instead of the settled construct of a unitary regulatory body exercising powers over all things monetary. On one hand, this may reduce the now palpable friction between government policies or intent and regulatory execution (through RBI) and ensure harmony. On the other, monetary policies will seesaw with every change in the government. Such state of flux may not augur well for certainty or stability in monetary policies. Internal turf wars then become a definitive possibility. Legally speaking, RBI would be hard pressed to prove its claim to retain its monopolistic regulatory right. The sovereign right over deciding India’s monetary policy vests with the central government. RBI’s right to regulate payment systems is through statutory authority vested under the PSS Act of 2007. This, of course, can or may be modified through parliamentary process, which is what the proposed amendments to the PSS Act envisages. Prolonged vesting of authority in RBI by itself is therefore not going to be sufficient for the central bank to sustain its claim. The separation of powers argued by the RBI in its dissent note is one of vested authority and not a constitutional one. The RBI dissent is that of a singular minority in the report of the IC and the majority view may therefore prevail. In any event, the report itself is merely a recommendation. It is for the houses of Parliament (or the Finance Act route) to decide the future of regulation of payment systems. Payment systems now permeate chat apps and online games. In just a decade, private, especially international players, have slowly become the primary or preferred payment mechanisms, as opposed to banks. Despite tightening of regulation, private players have consistently found loopholes. The recent thrust has been towards digital payment alternatives, especially after demonetisation. In a world ill-equipped to deal with evolving technologies – abject digital illiteracy, poor enforcement mechanisms against evolving cyber-crimes, financial frauds, Ponzi schemes and technology-enabled crimes, the urgent need is for a strong regulator with sufficient powers to not only prevent, but to also protect and punish. (This article was originally published on 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)

Rocking the central bank

Pitching for "effective independence", RBI Deputy Governor Viral Acharya Friday said governments that do not respect central bank's independence would sooner or later incur the wrath of <a href="http://www.wionews.com/opinions/markets-need-rbis-assurance-169531">financial markets</a>.

Amid instances of apparent differences between the government and the RBI, Acharya emphasised that undermining a central bank's independence is akin to committing a "self goal" for any government.

Wiser politicians will give a central bank necessary autonomy so that they reap electoral benefits of stable macroeconomic conditions which such independence will bring, Acharya said here.

Delivering the AD Shroff Memorial Lecture, he said, "What matters is the effective independence with which these powers (vested in the Acts governing the RBI or any central bank) can be exercised in practice."

"Governments that do not respect central bank's independence will sooner or later incur the wrath of financial markets, ignite economic fire and come to rue the day they undermined an important regulatory institution," Acharya said.

Noting that markets have a keen eye on this aspect, he said that if uncertainty grows and confidence in central bank's independence and credibility erodes, "then markets rap bond yields and exchange rate on the knuckles!"

"Wiser governments which accord the necessary leeway will benefit through lower costs of borrowing, the love of international investors and longer life spans," he said.&nbsp;

In recent months, the RBI and the government have been apparently differing on approach to certain issues, such as those pertaining to payment systems regulator and Prompt Corrective Action (PAC) norms for banks.

In his over 85-minute long speech, the academic-turned-central banker seemed to be expressing some satisfaction with the level of independence achieved by the RBI but underlined the need for more leeway, especially for regulating state-run banks where the RBI cannot effect any management changes, balance sheet management where fiscally pressured government eyes the surplus, and "regulatory scope" like its ongoing tussle on who manages the payments landscape with government.

To illustrate the achievements, he pointed out the inflation targeting framework and the setting up of the rate setting panel and introduction of bankruptcy laws.

He termed the RBI as a "friend" of the government, which will "tell the government unpleasant but brutally honest truths and correct, to the extent it can, any adverse long-term consequences of government policies".

Acharya cited global experience to point out that not maintaining independence of central banks has led to deep economic troubles as in Argentina in 2010 and also pointed out that issues faced by countries like Turkey have their roots in central bank's independence.

The basic difference between a central bank and a "myopic" government is of the time horizon for which decisions are made, he said, comparing central banks with cricket Test teams and the executive arms of the government as T-20 teams looking for quick results.

The speech comes amid a host of issues on which the RBI is reportedly sparring with the government.

It comes exactly a week after it decided to go public with its displeasure on who will regulate payment systems by posting a dissent note, and amid pressure from the government to relax the prompt corrective action (PCA) norms which restrict lenders' activities for having high levels of dud assets and depleting capital reserves.

"Sweeping bank loan losses under the rug by compromising supervisory and regulatory standards can create a facade of financial stability in the short run, but inevitably cause the fragile deck of cards to fall in a heap at some point in future, likely with a greater taxpayer bill and loss of potential output," he said, pointing to the over&nbsp; 
Rs 10.50 lakh crore NPAs the banking system is plagued with.

He also spoke about the scenarios which can compromise the central bank's independence such as appointment of government officials rather than technocrats to key positions such as governor, erosion of its powers through "piece-meal legislative amendments", blocking of rule-based central bank policies and setting up of parallel regulatory agencies.

Acharya concluded his speech asserting that "independent central bankers will remain undeterred", making clear the institutional resolve.&nbsp;

Pitching for "effective independence", RBI Deputy Governor Viral Acharya Friday said governments that do not respect central bank's independence would sooner or later incur the wrath of financial markets.

Pitching for "effective independence", RBI Deputy Governor Viral Acharya Friday said governments that do not respect central bank's independence would sooner or later incur the wrath of financial markets. Amid instances of apparent differences between the government and the RBI, Acharya emphasised that undermining a central bank's independence is akin to committing a "self goal" for any government. Wiser politicians will give a central bank necessary autonomy so that they reap electoral benefits of stable macroeconomic conditions which such independence will bring, Acharya said here. Delivering the AD Shroff Memorial Lecture, he said, "What matters is the effective independence with which these powers (vested in the Acts governing the RBI or any central bank) can be exercised in practice." "Governments that do not respect central bank's independence will sooner or later incur the wrath of financial markets, ignite economic fire and come to rue the day they undermined an important regulatory institution," Acharya said. Noting that markets have a keen eye on this aspect, he said that if uncertainty grows and confidence in central bank's independence and credibility erodes, "then markets rap bond yields and exchange rate on the knuckles!" "Wiser governments which accord the necessary leeway will benefit through lower costs of borrowing, the love of international investors and longer life spans," he said. In recent months, the RBI and the government have been apparently differing on approach to certain issues, such as those pertaining to payment systems regulator and Prompt Corrective Action (PAC) norms for banks. In his over 85-minute long speech, the academic-turned-central banker seemed to be expressing some satisfaction with the level of independence achieved by the RBI but underlined the need for more leeway, especially for regulating state-run banks where the RBI cannot effect any management changes, balance sheet management where fiscally pressured government eyes the surplus, and "regulatory scope" like its ongoing tussle on who manages the payments landscape with government. To illustrate the achievements, he pointed out the inflation targeting framework and the setting up of the rate setting panel and introduction of bankruptcy laws. He termed the RBI as a "friend" of the government, which will "tell the government unpleasant but brutally honest truths and correct, to the extent it can, any adverse long-term consequences of government policies". Acharya cited global experience to point out that not maintaining independence of central banks has led to deep economic troubles as in Argentina in 2010 and also pointed out that issues faced by countries like Turkey have their roots in central bank's independence. The basic difference between a central bank and a "myopic" government is of the time horizon for which decisions are made, he said, comparing central banks with cricket Test teams and the executive arms of the government as T-20 teams looking for quick results. The speech comes amid a host of issues on which the RBI is reportedly sparring with the government. It comes exactly a week after it decided to go public with its displeasure on who will regulate payment systems by posting a dissent note, and amid pressure from the government to relax the prompt corrective action (PCA) norms which restrict lenders' activities for having high levels of dud assets and depleting capital reserves. "Sweeping bank loan losses under the rug by compromising supervisory and regulatory standards can create a facade of financial stability in the short run, but inevitably cause the fragile deck of cards to fall in a heap at some point in future, likely with a greater taxpayer bill and loss of potential output," he said, pointing to the over Rs 10.50 lakh crore NPAs the banking system is plagued with. He also spoke about the scenarios which can compromise the central bank's independence such as appointment of government officials rather than technocrats to key positions such as governor, erosion of its powers through "piece-meal legislative amendments", blocking of rule-based central bank policies and setting up of parallel regulatory agencies. Acharya concluded his speech asserting that "independent central bankers will remain undeterred", making clear the institutional resolve.

A govt that does not respect RBI's independence will incur wrath of markets: RBI Deputy Governor

The Reserve Bank of India on Friday eased lending norms related to certain non-banking finance companies (NBFCs) as liquidity concerns in the sector persist and markets continue to question the viability of some of the firms following the IL&amp;FS debacle.

The central bank on Friday said it would allow banks to allocate up to 15 percent of their lending to NBFCs that do not finance infrastructure projects, up from an earlier limit of 10 percent. The move is effective up to Dec. 31, the Reserve Bank of India said in a statement.&nbsp;

The relaxation in lending norms by RBI follows worries over tightening credit lines to NBFCs after a series of defaults at India`s Infrastructure Leasing &amp; Financial Services Ltd (IL&amp;FS), spooked markets and led to a major sell-off in the stocks of many NBFCs.

Earlier this month, the Indian government stepped in to take control of IL&amp;FS saying it feared its collapse would cause "catastrophic" damage to the financial markets and the economy.

This week a loan default by real-estate developer Supertech, based in New Delhi, has further panicked investors, leading to further sell-offs in NBFCs with any potential exposure to real estate.

Shares in Dewan Housing Finance Corp Ltd closed down 10.75 per cent on Friday, while shares in Indiabulls Housing Finance and Edelweiss Financial Services Ltd fell 17.1 per cent and 8.7 per cent respectively.

Indian markets were shut on Thursday, but Friday`s sell-off came on top of prior declines in the stocks on Wednesday.&nbsp;

Supertech`s chairman told a local newspaper on Wednesday that Supertech had overshot its loan service deadline by 15 days to two state-run banks, but he said the firm was still servicing its debt from NBFCs regularly.

This followed an October 10 downgrade of its loan facilities by ratings agency Brickwork Ratings which slashed its 18.66 billion rupees ($253.91 million) of bank loans to junk, citing cashflow mismatches on account of a slowdown in the real estate sector.

"There is lot of fear and uncertainty among investors and any such default news which could lead to a credit loss is creating more uncertainty," said Ajay Manglunia, head of fixed income advisory at Edelweiss Financial Services.&nbsp;

"Clearly this shows that investors don`t have any more appetite for credit losses in the non-bank finance space."

The Reserve Bank of India on Friday eased lending norms related to certain non-banking finance companies (NBFCs) as liquidity concerns in the sector persist and markets continue to question the viability of some of the firms following the IL&FS debacle.

The Reserve Bank of India on Friday eased lending norms related to certain non-banking finance companies (NBFCs) as liquidity concerns in the sector persist and markets continue to question the viability of some of the firms following the IL&FS debacle. The central bank on Friday said it would allow banks to allocate up to 15 percent of their lending to NBFCs that do not finance infrastructure projects, up from an earlier limit of 10 percent. The move is effective up to Dec. 31, the Reserve Bank of India said in a statement. The relaxation in lending norms by RBI follows worries over tightening credit lines to NBFCs after a series of defaults at India`s Infrastructure Leasing & Financial Services Ltd (IL&FS), spooked markets and led to a major sell-off in the stocks of many NBFCs. Earlier this month, the Indian government stepped in to take control of IL&FS saying it feared its collapse would cause "catastrophic" damage to the financial markets and the economy. This week a loan default by real-estate developer Supertech, based in New Delhi, has further panicked investors, leading to further sell-offs in NBFCs with any potential exposure to real estate. Shares in Dewan Housing Finance Corp Ltd closed down 10.75 per cent on Friday, while shares in Indiabulls Housing Finance and Edelweiss Financial Services Ltd fell 17.1 per cent and 8.7 per cent respectively. Indian markets were shut on Thursday, but Friday`s sell-off came on top of prior declines in the stocks on Wednesday. Supertech`s chairman told a local newspaper on Wednesday that Supertech had overshot its loan service deadline by 15 days to two state-run banks, but he said the firm was still servicing its debt from NBFCs regularly. This followed an October 10 downgrade of its loan facilities by ratings agency Brickwork Ratings which slashed its 18.66 billion rupees ($253.91 million) of bank loans to junk, citing cashflow mismatches on account of a slowdown in the real estate sector. "There is lot of fear and uncertainty among investors and any such default news which could lead to a credit loss is creating more uncertainty," said Ajay Manglunia, head of fixed income advisory at Edelweiss Financial Services. "Clearly this shows that investors don`t have any more appetite for credit losses in the non-bank finance space."

RBI eases bank lending limits to some non-banking finance

With the RBI data localisation mandate becoming effective as of October 15, the debate on its legality and viability is revived. Reports indicate that whilst most entities subject to regulation by RBI have complied, the larger multinationals, who probably account for the larger quantum of transactions, are still resisting compliance.

RBI’s circular of April 2018 pertains only to banks and payment systems that it regulates. Its mandate for data localisation also was restricted to all aspects of payments data. The multitude of commercial establishments, which have and utilise financial data, will be covered only under the provisions of the proposed Personal Data Protection (PDP) Bill, 2018. The deadline for public comments is now closed and the presentation of the final draft Bill is expected soon.

Presently, the draft PDP Bill also clearly provides for localisation of critical personal (CP) data but leaves definition thereof to the Central government. Global trends that are elicited and the recommendations accompanying the draft PDP Bill clearly indicate that a wide spectrum of CP, including data of critical infrastructure, finance and health would probably form part of CP.

RBI may have jumped the gun with its circular pre-dating the draft PDP Bill and Report, but it is not off the mark in its call for localisation. Many of us were sceptical about the call for localisation keeping in mind business needs and practicalities, but there cannot be any quandary about protecting critical data from rampant dissemination.

The objections to data localisation range from economic to absurd – additional costs and teething problems that any change in processes entail, do not appear to be the real reasons for the objections though they are projected, as such. The other objections touted at most discussions across India are (a) possibility of surveillance by Indian law enforcement agencies, (b) breaches and vulnerabilities of systems and (c) purported availability of better infrastructure outside India. The other and more recent objections including from USA is for “free flow of data” to enable businesses and to “benefit users”.

Each of the above objections to data-sharing appears specious. Surveillance was and continues to be a matter of grave concern, but to claim that it is a malaise restricted to India is untenable. Indians would, in fact, benefit from localisation to the extent that there would be immediate access to remedies against violation of due process. This would not be the case if their rights are violated outside India.

System vulnerability too is not confined to India. As with the vulnerability of systems in USA or Europe, so would it be in India. Similarly, the need to create local infrastructure and systems only spells business opportunities for India. The cost is an on-time investment and the returns and benefits are likely to be sustained over long periods of time.

Finally, free flow of data is and continues to be the bedrock of the Internet, but the very jurisdiction seeking this is the one which moved away from a Net Neutrality regime. That does not justify India opting for protectionist or exclusionary processes. Again, this would be so only if the data localization sought is intended or will result in the same.

Data localisation mandated under the RBI circular and that which is envisaged under the draft PDP Bill are not completely protectionist. It is limited to financial data under the RBI circular and CP under the draft PDP Bill.

Scratch the surface and the real reason for opposition comes to the fore. The need for one of the largest caches of data, as India is, stems not just from commercial interests or profits, but from the larger issue of “Control”. USA’s attempt to flex its muscles to coerce RBI to reverse its position or to extend an extremely elongated compliance window indicates its intent.

Data sharing and control over data has become the new battleground for control. Many an instance of not just data collation or analysis, but of manipulation using data analytics demonstrates the power of data. USA’s ‘‘Clarifying Lawful Overseas Use of Data Act’’ or the ‘‘CLOUD Act’’ and its overreaching provisions for interception and procuring of data of any online user is another illustration of the vulnerabilities that Indians’ data may be subjected to with unfettered data transfers.

The Justice Srikrishna Committee Report indicates that the decision to allow free flow of data and to limit restrictions only to CP indicates a well thought out process.

Apart from the loss of control, the next large concern appears to be jurisdiction. There has been consistent resistance from multinationals to subject themselves to India’s jurisdiction. Instances abound of government authorities’ orders and in many instances, even court orders not being complied with on grounds of jurisdiction. Localization would necessarily ensure not just ease of obtaining data for investigative, tax and other government purposes, but also for victims and litigants to enforce their rights more expeditiously.

The final fear-factor appears to be the nemesis of “taxation”. The Income Tax Act, 1961 already defines the principal place of business-wide enough to encompass the place where a business, profession or vocation is situated. Localization by itself would mean implementation of local infrastructure, which may give the taxman his much-needed jurisdiction.

Data localisation is here to stay. RBI’s circular and its implementation by a substantial number of entities governed by it has already proven feasibility. National interests, the exercise of sovereignty, need for easy access to data and possibly preventing foreign surveillance and dissemination are all bound to prevail over external pressure, for the Indian government to pass the provisions for data localisation. 
&nbsp;

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-us-flexes-cyber-muscles-2676092">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

With the RBI data localisation mandate becoming effective as of October 15, the debate on its legality and viability is revived. Reports indicate that whilst most entities subject to regulation by RBI have complied, the larger multinationals, who probably account for the larger quantum of transactions, are still resisting compliance.

With the RBI data localisation mandate becoming effective as of October 15, the debate on its legality and viability is revived. Reports indicate that whilst most entities subject to regulation by RBI have complied, the larger multinationals, who probably account for the larger quantum of transactions, are still resisting compliance. RBI’s circular of April 2018 pertains only to banks and payment systems that it regulates. Its mandate for data localisation also was restricted to all aspects of payments data. The multitude of commercial establishments, which have and utilise financial data, will be covered only under the provisions of the proposed Personal Data Protection (PDP) Bill, 2018. The deadline for public comments is now closed and the presentation of the final draft Bill is expected soon. Presently, the draft PDP Bill also clearly provides for localisation of critical personal (CP) data but leaves definition thereof to the Central government. Global trends that are elicited and the recommendations accompanying the draft PDP Bill clearly indicate that a wide spectrum of CP, including data of critical infrastructure, finance and health would probably form part of CP. RBI may have jumped the gun with its circular pre-dating the draft PDP Bill and Report, but it is not off the mark in its call for localisation. Many of us were sceptical about the call for localisation keeping in mind business needs and practicalities, but there cannot be any quandary about protecting critical data from rampant dissemination. The objections to data localisation range from economic to absurd – additional costs and teething problems that any change in processes entail, do not appear to be the real reasons for the objections though they are projected, as such. The other objections touted at most discussions across India are (a) possibility of surveillance by Indian law enforcement agencies, (b) breaches and vulnerabilities of systems and (c) purported availability of better infrastructure outside India. The other and more recent objections including from USA is for “free flow of data” to enable businesses and to “benefit users”. Each of the above objections to data-sharing appears specious. Surveillance was and continues to be a matter of grave concern, but to claim that it is a malaise restricted to India is untenable. Indians would, in fact, benefit from localisation to the extent that there would be immediate access to remedies against violation of due process. This would not be the case if their rights are violated outside India. System vulnerability too is not confined to India. As with the vulnerability of systems in USA or Europe, so would it be in India. Similarly, the need to create local infrastructure and systems only spells business opportunities for India. The cost is an on-time investment and the returns and benefits are likely to be sustained over long periods of time. Finally, free flow of data is and continues to be the bedrock of the Internet, but the very jurisdiction seeking this is the one which moved away from a Net Neutrality regime. That does not justify India opting for protectionist or exclusionary processes. Again, this would be so only if the data localization sought is intended or will result in the same. Data localisation mandated under the RBI circular and that which is envisaged under the draft PDP Bill are not completely protectionist. It is limited to financial data under the RBI circular and CP under the draft PDP Bill. Scratch the surface and the real reason for opposition comes to the fore. The need for one of the largest caches of data, as India is, stems not just from commercial interests or profits, but from the larger issue of “Control”. USA’s attempt to flex its muscles to coerce RBI to reverse its position or to extend an extremely elongated compliance window indicates its intent. Data sharing and control over data has become the new battleground for control. Many an instance of not just data collation or analysis, but of manipulation using data analytics demonstrates the power of data. USA’s ‘‘Clarifying Lawful Overseas Use of Data Act’’ or the ‘‘CLOUD Act’’ and its overreaching provisions for interception and procuring of data of any online user is another illustration of the vulnerabilities that Indians’ data may be subjected to with unfettered data transfers. The Justice Srikrishna Committee Report indicates that the decision to allow free flow of data and to limit restrictions only to CP indicates a well thought out process. Apart from the loss of control, the next large concern appears to be jurisdiction. There has been consistent resistance from multinationals to subject themselves to India’s jurisdiction. Instances abound of government authorities’ orders and in many instances, even court orders not being complied with on grounds of jurisdiction. Localization would necessarily ensure not just ease of obtaining data for investigative, tax and other government purposes, but also for victims and litigants to enforce their rights more expeditiously. The final fear-factor appears to be the nemesis of “taxation”. The Income Tax Act, 1961 already defines the principal place of business-wide enough to encompass the place where a business, profession or vocation is situated. Localization by itself would mean implementation of local infrastructure, which may give the taxman his much-needed jurisdiction. Data localisation is here to stay. RBI’s circular and its implementation by a substantial number of entities governed by it has already proven feasibility. National interests, the exercise of sovereignty, need for easy access to data and possibly preventing foreign surveillance and dissemination are all bound to prevail over external pressure, for the Indian government to pass the provisions for data localisation. (This article was originally published on 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)

RBI data localisation: US flexes cyber muscles

As many as 80 per cent players in the payment industry, including Amazon, Paytm and WhatsApp, have complied with the norms for <a href="http://www.wionews.com/india-news/us-senators-writes-to-modi-to-soften-data-localisation-stance-171380">local storage of data</a>, with RBI's deadline coming to close on Monday, sources said.

However, they said some debit/credit companies are yet to comply with data storage norms and have reportedly sought more time.

The Reserve Bank is not contemplating review of its notification on data localisation norms, the sources said.

In April, the central bank had given six months to global payment companies to store transaction data of Indian customers within India.

Although 80 per cent of the players operating in India have complied with the Reserve Bank directive, some global financial technology companies have reportedly sought an extension to the October 15 timeline.

"The RBI will look at things on a case-to-case basis from tomorrow while handling the subject," one of the sources said, without mentioning if the central bank would take action or impose penalties for non-compliance.

Digital payments platform PhonePe said it has informed the Reserve Bank of India of its full compliance with the data localisation mandate to ensure payments data of Indian users is stored within the country.

The central bank's data localisation policy had elicited mixed response from the payment services industry. While some of the prominent domestic payment companies like Paytm and PhonePe have been supportive of the dictum, global players like Google (that offers Google Pay) had argued for free movement of data.

Some international players have appealed for more time for compliance and also asked that they be allowed to mirror the data.

Paytm, which had vociferously supported data localisation, said critical data must not be allowed to go out of the country, not even for processing.

"We have complied to this mandate since day one and have welcomed this initiative right from the beginning. It is important that we do not become mere internet colonies for global companies, and make every organisation accountable towards the security and privacy of data of our fellow countrymen," a Paytm spokesperson said.

US-based messaging platform WhatsApp has already said it has developed a system to store payments-related data in India.

An Amazon spokesperson said "compliance with local laws and regulation is a top priority for us in all the countries we operate in. We continue to work closely with the regulators towards this".

Google is learnt to have agreed to follow the RBI's local data storage norm for payment services but has asked for time until December to ensure compliance, a government source had indicated recently.

Critics of <a href="http://www.wionews.com/india-news/us-wants-to-prohibit-data-localisation-top-trade-official-says-amid-looming-rbi-directive-171256">data localisation</a> argue that the move would have negative effects on the ability of companies to do business in India.

Finance Minister Arun Jaitley recently held a meeting with RBI Deputy Governor BP Kanungo and others to discuss the data localisation norm for global financial technology companies.

IT industry body Nasscom said access to information can be ensured irrespective of location of the data.

"Access can be provided even if the data is stored outside India. It is not clear how this (data localisation mandate) ties in with the overall objective of ensuring enforcement," Nasscom Senior Director and Head Public Policy Ashish Aggarwal said.

Moreover, the instances of problems being faced in accessing data need to be seen in the larger perspective of total number of transactions.

Nasscom has favoured free flow of data, Aggarwal said adding that imposition of conditions that are "onerous and unnecessary" may trigger a retaliatory measures from other countries.

In its April monetary policy review, the RBI had said that in order to ensure better monitoring of payment service operators it was important to have "unfettered supervisory access to data stored with these system providers as also with their service providers/ intermediaries/third party vendors and other entities in the payment ecosystem".

"All system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India," it had said.

The RBI had further said that data should include the full end-to-end transaction details, information collected, carried, processed as part of the message, payment instruction.

As many as 80 per cent players in the payment industry, including Amazon, Paytm and WhatsApp, have complied with the norms for local storage of data, with RBI's deadline coming to close on Monday, sources said.

As many as 80 per cent players in the payment industry, including Amazon, Paytm and WhatsApp, have complied with the norms for local storage of data, with RBI's deadline coming to close on Monday, sources said. However, they said some debit/credit companies are yet to comply with data storage norms and have reportedly sought more time. The Reserve Bank is not contemplating review of its notification on data localisation norms, the sources said. In April, the central bank had given six months to global payment companies to store transaction data of Indian customers within India. Although 80 per cent of the players operating in India have complied with the Reserve Bank directive, some global financial technology companies have reportedly sought an extension to the October 15 timeline. "The RBI will look at things on a case-to-case basis from tomorrow while handling the subject," one of the sources said, without mentioning if the central bank would take action or impose penalties for non-compliance. Digital payments platform PhonePe said it has informed the Reserve Bank of India of its full compliance with the data localisation mandate to ensure payments data of Indian users is stored within the country. The central bank's data localisation policy had elicited mixed response from the payment services industry. While some of the prominent domestic payment companies like Paytm and PhonePe have been supportive of the dictum, global players like Google (that offers Google Pay) had argued for free movement of data. Some international players have appealed for more time for compliance and also asked that they be allowed to mirror the data. Paytm, which had vociferously supported data localisation, said critical data must not be allowed to go out of the country, not even for processing. "We have complied to this mandate since day one and have welcomed this initiative right from the beginning. It is important that we do not become mere internet colonies for global companies, and make every organisation accountable towards the security and privacy of data of our fellow countrymen," a Paytm spokesperson said. US-based messaging platform WhatsApp has already said it has developed a system to store payments-related data in India. An Amazon spokesperson said "compliance with local laws and regulation is a top priority for us in all the countries we operate in. We continue to work closely with the regulators towards this". Google is learnt to have agreed to follow the RBI's local data storage norm for payment services but has asked for time until December to ensure compliance, a government source had indicated recently. Critics of data localisation argue that the move would have negative effects on the ability of companies to do business in India. Finance Minister Arun Jaitley recently held a meeting with RBI Deputy Governor BP Kanungo and others to discuss the data localisation norm for global financial technology companies. IT industry body Nasscom said access to information can be ensured irrespective of location of the data. "Access can be provided even if the data is stored outside India. It is not clear how this (data localisation mandate) ties in with the overall objective of ensuring enforcement," Nasscom Senior Director and Head Public Policy Ashish Aggarwal said. Moreover, the instances of problems being faced in accessing data need to be seen in the larger perspective of total number of transactions. Nasscom has favoured free flow of data, Aggarwal said adding that imposition of conditions that are "onerous and unnecessary" may trigger a retaliatory measures from other countries. In its April monetary policy review, the RBI had said that in order to ensure better monitoring of payment service operators it was important to have "unfettered supervisory access to data stored with these system providers as also with their service providers/ intermediaries/third party vendors and other entities in the payment ecosystem". "All system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India," it had said. The RBI had further said that data should include the full end-to-end transaction details, information collected, carried, processed as part of the message, payment instruction.

Google, WhatsApp must comply with India's data localisation policy, says RBI as deadline ends

Your Story: Foreign firms asked to store Indian data locally

Two US senators have called on Prime Minister Narendra Modi to soften India's stance on data localisation, warning that measures requiring it represent "key trade barriers" between the two nations.

In a letter to Modi dated Friday, US Senators John Cornyn and Mark Warner - co-chairs of the Senate's India caucus that comprises over 30 senators - urged India to instead adopt a "light touch" regulatory framework that would allow data to flow freely across borders.

The letter comes as relations between Washington and New Delhi are strained over multiple issues, including an Indo-Russian defence contract, India's new tariffs on electronics and other items, and its moves to buy oil from Iran despite upcoming US sanctions.

Global payments companies including Mastercard, Visa and American Express have been lobbying India's finance ministry and the Reserve Bank of India to relax proposed rules that require all payment data on domestic transactions in India be stored inside the country by October 15.

The letter is most likely a last-ditch effort after the RBI told officials at top payment firms this week that the central bank would implement, in full, its data localisation directive without extending the deadline, or allowing data to be stored both offshore as well as locally - a practice known as data mirroring.

"We see this (data localisation) as a fundamental issue to the further development of digital trade and one that is crucial to our economic partnership," the U.S. senators said in the letter that has not been previously reported.

Modi's office did not immediately respond to an email seeking comment.

Localisation push

Other than the RBI proposal, India is working on an overarching data protection law that calls for storing all critical personal data in India. E-commerce and cloud computing policies are also being developed.

The letter also raised concerns on the draft data protection bill and e-commerce policy framework that called for stringent localisation measures.

These measures have unnerved some tech companies who fear it will increase their infrastructure costs, hit their global fraud detection analytic platforms and affect planned investments in India at a time when more and more Indians are going online and using digital payments.

US lobby groups, that represent companies such as Facebook Inc, Amazon.com and Alphabet Inc-owned Google, have also voiced concerns about the proposals.

Shamika Ravi, a member of Modi's economic advisory council, had earlier told Reuters that the moves were in the "long-term strategic and economic interest" of the country.

The senators added that any concerns related to "protection and security" as well as access to data for lawful purposes were possible without restrictions on physical location, according to the letter.

Government sources have previously told Reuters though, that stringent data localisation measures were essential for gaining easier access to data during investigations.

The measures in India come at a time when countries around the world are announcing stringent rules to regulate how firms store data and protect privacy, in the aftermath of Facebook's Cambridge Analytica scandal.

Two US senators have called on Prime Minister Narendra Modi to soften India's stance on data localisation, warning that measures requiring it represent "key trade barriers" between the two nations.

Two US senators have called on Prime Minister Narendra Modi to soften India's stance on data localisation, warning that measures requiring it represent "key trade barriers" between the two nations. In a letter to Modi dated Friday, US Senators John Cornyn and Mark Warner - co-chairs of the Senate's India caucus that comprises over 30 senators - urged India to instead adopt a "light touch" regulatory framework that would allow data to flow freely across borders. The letter comes as relations between Washington and New Delhi are strained over multiple issues, including an Indo-Russian defence contract, India's new tariffs on electronics and other items, and its moves to buy oil from Iran despite upcoming US sanctions. Global payments companies including Mastercard, Visa and American Express have been lobbying India's finance ministry and the Reserve Bank of India to relax proposed rules that require all payment data on domestic transactions in India be stored inside the country by October 15. The letter is most likely a last-ditch effort after the RBI told officials at top payment firms this week that the central bank would implement, in full, its data localisation directive without extending the deadline, or allowing data to be stored both offshore as well as locally - a practice known as data mirroring. "We see this (data localisation) as a fundamental issue to the further development of digital trade and one that is crucial to our economic partnership," the U.S. senators said in the letter that has not been previously reported. Modi's office did not immediately respond to an email seeking comment. Localisation push Other than the RBI proposal, India is working on an overarching data protection law that calls for storing all critical personal data in India. E-commerce and cloud computing policies are also being developed. The letter also raised concerns on the draft data protection bill and e-commerce policy framework that called for stringent localisation measures. These measures have unnerved some tech companies who fear it will increase their infrastructure costs, hit their global fraud detection analytic platforms and affect planned investments in India at a time when more and more Indians are going online and using digital payments. US lobby groups, that represent companies such as Facebook Inc, Amazon.com and Alphabet Inc-owned Google, have also voiced concerns about the proposals. Shamika Ravi, a member of Modi's economic advisory council, had earlier told Reuters that the moves were in the "long-term strategic and economic interest" of the country. The senators added that any concerns related to "protection and security" as well as access to data for lawful purposes were possible without restrictions on physical location, according to the letter. Government sources have previously told Reuters though, that stringent data localisation measures were essential for gaining easier access to data during investigations. The measures in India come at a time when countries around the world are announcing stringent rules to regulate how firms store data and protect privacy, in the aftermath of Facebook's Cambridge Analytica scandal.

US senators writes to Modi to soften data localisation stance

The US wants to prohibit data localisation to ensure that there is a free flow of information across borders, a senior Trump administration official has said, amidst reports that major American IT companies are up in arms against the latest Indian directive which kicks off next week.

Data localisation is an act of storing data on any device that is physically present within the borders of a particular country where the data was generated. 
The Reserve Bank of India (RBI), in a circular in April, said all system providers will have to ensure that the entire data relating to payment systems operated by them are stored in a system only in India. It gave time till October 15 to comply with the mandate.

"We want to have prohibitions on data localisation to ensure that there's free flow of information, free flow of data across borders, disciplines around countries requiring companies to give up their source code, permanent ban on taxation or duties on digital transmissions," Dennis Shea, Deputy US Trade Representative and US Ambassador to the WTO, told a Washington audience on Friday.

"And by the way, South Africa and India want to rethink the current moratorium on those duties," Shea said in response to a question at the Center for Strategic and International Studies (CSIS), a top American think-tank.

American financial companies are believed to have approached the administration against an RBI directive which, beginning October 15, requires them to store in India any payment-related data from transactions that take place inside the country.

India has rejected their request of mirroring.

"If implemented, this policy will put an unnecessary burden on American companies and hurt consumers, who will endure higher costs and increased cybersecurity risks," Republican Strategist Andy Surabian, who is also a political adviser to Donald Trump Jr, wrote in BreitBart News this week.

"And they are planning to do all of this in spite of the unprecedented level of economic support the US has provided India over the course of decades. The Trump administration should stand up to these reckless actions, just like they have done in other situations when Americans were getting bullied and pushed around," Surabian demanded.

During his CSIS appearance, Shea did not specifically pointed out India on the data localisation issue, but made his views pretty clear where the Trump administration stands on this issue.

Shea said the US is very engaged at the multilateral issue and has a very high-ambition approach to that.

The general view is that the negotiation part of this process may begin early next year, or perhaps a ministerial statement around Davos.

Other members of the WTO, he said, have lower ambitions so "how this works out still remains to be seen," he added.

Mobile messaging platform WhatsApp has said it has built a system that stores payments-related data in India, in line with RBI's data localisation policy.&nbsp; 
&nbsp;

The US wants to prohibit data localisation to ensure that there is a free flow of information across borders, a senior Trump administration official has said, amidst reports that major American IT companies are up in arms against the latest Indian directive which kicks off next week.

The US wants to prohibit data localisation to ensure that there is a free flow of information across borders, a senior Trump administration official has said, amidst reports that major American IT companies are up in arms against the latest Indian directive which kicks off next week. Data localisation is an act of storing data on any device that is physically present within the borders of a particular country where the data was generated. The Reserve Bank of India (RBI), in a circular in April, said all system providers will have to ensure that the entire data relating to payment systems operated by them are stored in a system only in India. It gave time till October 15 to comply with the mandate. "We want to have prohibitions on data localisation to ensure that there's free flow of information, free flow of data across borders, disciplines around countries requiring companies to give up their source code, permanent ban on taxation or duties on digital transmissions," Dennis Shea, Deputy US Trade Representative and US Ambassador to the WTO, told a Washington audience on Friday. "And by the way, South Africa and India want to rethink the current moratorium on those duties," Shea said in response to a question at the Center for Strategic and International Studies (CSIS), a top American think-tank. American financial companies are believed to have approached the administration against an RBI directive which, beginning October 15, requires them to store in India any payment-related data from transactions that take place inside the country. India has rejected their request of mirroring. "If implemented, this policy will put an unnecessary burden on American companies and hurt consumers, who will endure higher costs and increased cybersecurity risks," Republican Strategist Andy Surabian, who is also a political adviser to Donald Trump Jr, wrote in BreitBart News this week. "And they are planning to do all of this in spite of the unprecedented level of economic support the US has provided India over the course of decades. The Trump administration should stand up to these reckless actions, just like they have done in other situations when Americans were getting bullied and pushed around," Surabian demanded. During his CSIS appearance, Shea did not specifically pointed out India on the data localisation issue, but made his views pretty clear where the Trump administration stands on this issue. Shea said the US is very engaged at the multilateral issue and has a very high-ambition approach to that. The general view is that the negotiation part of this process may begin early next year, or perhaps a ministerial statement around Davos. Other members of the WTO, he said, have lower ambitions so "how this works out still remains to be seen," he added. Mobile messaging platform WhatsApp has said it has built a system that stores payments-related data in India, in line with RBI's data localisation policy.

US wants to prohibit data localisation, top trade official says amid looming RBI directive

The Reserve Bank of India (RBI) will implement in full its directive that forces global payment companies to store data locally from this month, four sources told Reuters, a blow to the firms who had lobbied to dilute the measure.

The RBI in April said all payments data should within six months be stored only in the country for "unfettered supervisory access". The deadline for the companies to adhere is October 15.

The directive is part of a wider push by India to ask companies to store more of their data locally at a time when governments globally are enforcing more stringent rules to protect user data. &nbsp;

However, the global payments companies fear the new rules would increase their infrastructure costs, hit their global fraud detection analytic platforms and affect planned investments in the country at a time when more and more Indians are using digital modes of payments.&nbsp;

Firms such as Mastercard, Visa and American Express have in recent months met with Indian policymakers, including Finance Minister Arun Jaitley, to push for an extension of the RBI`s deadline.

They also repeatedly sought dilution of the RBI directive, requesting that they be allowed to store data both locally and at their offshore offices, a practice widely known as 'data mirroring'.

But in a meeting between RBI officials and US&nbsp;payment companies in Mumbai on Wednesday, central bank officials said the industry will need to store all their data only within the country, as per its April directive, and said data mirroring will not be allowed, four sources aware of the discussions said.

"They specifically said no mirroring, the meeting was bad (for the industry), it`s pretty clear," said one of the industry sources.

The RBI also conveyed in the meeting it was not willing to extend the deadline for compliance to the directive, the sources said.

The RBI did not immediately respond to a request for comment. Mastercard, Visa and American Express also did not respond.

Government sources have previously told Reuters that stringent data localisation measures were essential for gaining easier access to data during investigations.&nbsp;

Whatsapp has built a system to store its payment data locally, the company said on Tuesday. The Facebook-owned messenger had begun testing its payments service in India and is keen to deepen its reach.

It was easier for companies such as Whatsapp, which have a relatively smaller-scale payments platform in India, to comply with the central bank directive, but the bigger payment firms will need more time, one of the sources said.

"The bigger companies will have to change a lot of things such as setting up servers and replicating payment processing tools," the source said. 
Another source, who works at a multinational payment company, said moving and storing its data only in India would take at least 12-18 months.

The Reserve Bank of India (RBI) will implement in full its directive that forces global payment companies to store data locally from this month, four sources told Reuters, a blow to the firms who had lobbied to dilute the measure.

The Reserve Bank of India (RBI) will implement in full its directive that forces global payment companies to store data locally from this month, four sources told Reuters, a blow to the firms who had lobbied to dilute the measure. The RBI in April said all payments data should within six months be stored only in the country for "unfettered supervisory access". The deadline for the companies to adhere is October 15. The directive is part of a wider push by India to ask companies to store more of their data locally at a time when governments globally are enforcing more stringent rules to protect user data. However, the global payments companies fear the new rules would increase their infrastructure costs, hit their global fraud detection analytic platforms and affect planned investments in the country at a time when more and more Indians are using digital modes of payments. Firms such as Mastercard, Visa and American Express have in recent months met with Indian policymakers, including Finance Minister Arun Jaitley, to push for an extension of the RBI`s deadline. They also repeatedly sought dilution of the RBI directive, requesting that they be allowed to store data both locally and at their offshore offices, a practice widely known as 'data mirroring'. But in a meeting between RBI officials and US payment companies in Mumbai on Wednesday, central bank officials said the industry will need to store all their data only within the country, as per its April directive, and said data mirroring will not be allowed, four sources aware of the discussions said. "They specifically said no mirroring, the meeting was bad (for the industry), it`s pretty clear," said one of the industry sources. The RBI also conveyed in the meeting it was not willing to extend the deadline for compliance to the directive, the sources said. The RBI did not immediately respond to a request for comment. Mastercard, Visa and American Express also did not respond. Government sources have previously told Reuters that stringent data localisation measures were essential for gaining easier access to data during investigations. Whatsapp has built a system to store its payment data locally, the company said on Tuesday. The Facebook-owned messenger had begun testing its payments service in India and is keen to deepen its reach. It was easier for companies such as Whatsapp, which have a relatively smaller-scale payments platform in India, to comply with the central bank directive, but the bigger payment firms will need more time, one of the sources said. "The bigger companies will have to change a lot of things such as setting up servers and replicating payment processing tools," the source said. Another source, who works at a multinational payment company, said moving and storing its data only in India would take at least 12-18 months.

RBI sticking with plan to force payments firms to store data locally: Report

India's retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the Reserve Bank of India, a Reuters poll found.

The Indian central bank last week held interest rates unchanged, surprising many market watchers who anticipated a third consecutive hike, but shifted its stance from "neutral" to "calibrated tightening" in a nod to pricing pressures.

The median of 45 economists in the poll taken Oct. 3-9 showed inflation was expected to have accelerated to the central bank's medium-term target of 4.00 per cent last month from a year ago, higher than August's 10-month low of 3.69 per cent.

Forecasts ranged from 3.60 per cent to 4.70 per cent, with over 40 per cent of economists expecting inflation to rise above the RBI's target, almost one-third forecast it to fall below target and the remaining 11 said it would be bang on 4.00 per cent.

"Consumer price inflation is likely to have risen in September, in large part because the recent sharp fall in food inflation appears to have reversed," said Shilan Shah, a senior India economist at Capital Economics.

"Core inflation is likely to have remained elevated. Despite the RBI keeping rates on hold last week, the tightening cycle still has a little bit further to run."

Although food inflation has quickened it was subdued enough to offset some of the pain coming from the double whammy of a weak currency and rising oil prices.

The rupee tumbled to a new low of 74.395 against the US&nbsp;dollar on Tuesday and Brent crude, India's costliest import item, hit a four-year high this month.

According to a separate Reuters poll, the struggling rupee, which has lost over 16 per cent against the greenback this year so far, was not expected to reverse its losses anytime soon.

"India's macro concern at the moment is not the rupee, but liquidity. If the RBI takes care of liquidity, then other concerns should gradually subside," said Shashank Mendiratta, economist at ANZ Bank.

"The RBI to that extent has taken steps to infuse liquidity by announcing OMOs (open market operations) and the similar measure will be taken up through this fiscal year."

Wholesale price inflation probably rose to 4.90 per cent in September from 4.53 per cent in August.

The poll forecast industrial output expanded 4.0 per cent in August from a year ago compared with 6.6 per cent in July.

That prediction was probably based on slower output growth from eight core industries - accounting for nearly 40 per cent of total industrial production - with annual production cooling to 4.2 per cent in August, from 7.3 per cent a month earlier.

India's retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the Reserve Bank of India, a Reuters poll found.

India's retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the Reserve Bank of India, a Reuters poll found. The Indian central bank last week held interest rates unchanged, surprising many market watchers who anticipated a third consecutive hike, but shifted its stance from "neutral" to "calibrated tightening" in a nod to pricing pressures. The median of 45 economists in the poll taken Oct. 3-9 showed inflation was expected to have accelerated to the central bank's medium-term target of 4.00 per cent last month from a year ago, higher than August's 10-month low of 3.69 per cent. Forecasts ranged from 3.60 per cent to 4.70 per cent, with over 40 per cent of economists expecting inflation to rise above the RBI's target, almost one-third forecast it to fall below target and the remaining 11 said it would be bang on 4.00 per cent. "Consumer price inflation is likely to have risen in September, in large part because the recent sharp fall in food inflation appears to have reversed," said Shilan Shah, a senior India economist at Capital Economics. "Core inflation is likely to have remained elevated. Despite the RBI keeping rates on hold last week, the tightening cycle still has a little bit further to run." Although food inflation has quickened it was subdued enough to offset some of the pain coming from the double whammy of a weak currency and rising oil prices. The rupee tumbled to a new low of 74.395 against the US dollar on Tuesday and Brent crude, India's costliest import item, hit a four-year high this month. According to a separate Reuters poll, the struggling rupee, which has lost over 16 per cent against the greenback this year so far, was not expected to reverse its losses anytime soon. "India's macro concern at the moment is not the rupee, but liquidity. If the RBI takes care of liquidity, then other concerns should gradually subside," said Shashank Mendiratta, economist at ANZ Bank. "The RBI to that extent has taken steps to infuse liquidity by announcing OMOs (open market operations) and the similar measure will be taken up through this fiscal year." Wholesale price inflation probably rose to 4.90 per cent in September from 4.53 per cent in August. The poll forecast industrial output expanded 4.0 per cent in August from a year ago compared with 6.6 per cent in July. That prediction was probably based on slower output growth from eight core industries - accounting for nearly 40 per cent of total industrial production - with annual production cooling to 4.2 per cent in August, from 7.3 per cent a month earlier.

India inflation likely rose to RBI's four percent target in September: Poll

Every monetary policy meeting gives rise to a debate over whether the RBI should increase interest rates. This time, too, it is not different as the external environment, equity markets, credit markets and the general sentiment are down. The rupee is falling, oil price is rising and stock markets are searching for a bottom.

Over the past few weeks, the whole financial system in India has been going through a turmoil. The upheaval was triggered by defaults at Infrastructure Leasing and Financial Services Ltd (IL&amp;FS), and other Non-Banking Financial Company (NBFC) and Housing Finance Companies (HFC). The Central government took prompt action by superseding the IL&amp;FS board and is trying hard to bring in a Satyam-like resolution to the problem. For the time being, the fear and rumours have been nipped in the bud.

IL&amp;FS was one of the largest Infrastructure lenders in the country and a default by it has disturbed the well-oiled Commercial Paper (CP) market. CP is a short-term financial instrument used by corporates to raise money from a few days to a year. Banks and mutual funds are main investors in CPs. The total outstanding CP issuance by all corporates as on September 15, 2018, is Rs 6,40,000 crore, out of which, more than 60 per cent is raised by NBFC and HFC. CP is a preferred mode of raising short-term money for companies as it offers lower interest rates when compared to banks interest rate for loans.

 
Post the IL&amp;FS default on their repayment of CP, large investors have withdrawn from the CP market. They are scared of further defaults and losing their investment. This has led to liquidity drying up for NBFC and HFCs. Now, why is it important that the CP markets remain well oiled? After 11 PSU banks were put under Prompt Corrective Action (PCA) by the RBI, there were further restrictions on these banks on new lending. This opened up the opportunity for NBFC and HFC to capture this market and bridge the need by corporates. After all the raw material for NBFC and HFC is ‘money’ and when the flow of money dries up so does the finished goods and, in this case, lending slows down by NBFC and HFC. Hence, even if the IL&amp;FS issue is sorted, it may take nearly a quarter for the investors to start lending again at the same pace as they were doing before the problem started. This will obviously slow down NBFCs growth and also credit flow into the economy.

Meanwhile, the Consumer Price Inflation (CPI) was at 3.69 per cent, which is well under the RBI’s targeted inflation rate of 4 per cent. It is remarkable that even after the increase in MSP and oil prices, the Consumer Price Inflation for March 2019 is expected to be around 4.70 per cent and for the full year average of 4.40 per cent to 4.50 per cent. This is within the stated range of inflation targeted by RBI. The CPI is expected to be low mainly due to low food inflation and MSP benefit being passed on to the farmer directly, thus as per the stated policy of keeping interest rates 2 per cent over the average CPI inflation has already been achieved.

While inflation is under control, the speed with which the Indian Rupee (INR) is falling against the dollar is a cause of concern. Countries like Turkey, Argentina and Indonesia have tried to address currency depreciation by hiking the interest rate and have failed miserably. Addressing the currency depreciation with interest rate hike is a very blunt tool. India’s currency woes need to be solved by taking more concrete steps toward containing the Current Account Deficit (CAD). But factors like crude prices are beyond the control of the India government. Though the steps taken by the government to reduce petrol and diesel prices by Rs 2.50 per litre are welcome, maybe it’s time to adopt new measures to curtail the overall fuel consumption through innovative means.

RBI has raised REPO rates twice this year from 6 per cent to 6.25 per cent in June and 6.50 per cent in August. By doing this RBI has moved along with the interest rate curve. The government securities market is extremely nervous and is already trading substantially higher to the long-term average spreads of 100 bps over Repo rate. The 10-year government security bond is being traded at 8.20 per cent which is a spread of 170 bps higher. This is an unusually high interest rate for a government to borrow from the market. The borrowing cost of the government is growing rapidly and high-interest rates can dent the future growth of the country. Even from real interest rate perspective, RBI is targeting a positive interest rate of 1.50 per cent to 2 per cent, whereas we are already in positive interest rate territory at 3.36 per cent as per the current bond rates pricing in the market.

In such a scenario it is time for the RBI to be bold and brave. The first steps taken by RBI towards resolving this situation was announcing Rs 36,000 crore of open market operations (ie, buying government bonds from open market). This basically helps in infusing much-needed liquidity into the debt markets. The money markets need assurances to soothe and calm the nerves of its investors so that liquidity can come back to these markets.

Government steps toward resolving IL&amp;FS and RBI’s Open Market Operation announcement is in the correct direction. Raising interest rates after two consecutive rate hikes may not be an effective way to stop the rupee from depreciating further. Especially when the inflation is not showing any signs of running away. However, by keeping the interest rates steady and a neutral liquidity position with a bias towards easy liquidity when the markets require it, may help the markets to calm down its nerves, along with removing some of the PCA restrictions on PSU banks could keep the financial engine chugging. 
 
 
(The author is the promoter-director of Sunidhi Securities &amp; Finance Ltd)

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-markets-need-rbi-s-assurance-2671660">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

 
&nbsp;

Every monetary policy meeting gives rise to a debate over whether the RBI should increase interest rates. This time, too, it is not different as the external environment, equity markets, credit markets and the general sentiment are down.

Every monetary policy meeting gives rise to a debate over whether the RBI should increase interest rates. This time, too, it is not different as the external environment, equity markets, credit markets and the general sentiment are down. The rupee is falling, oil price is rising and stock markets are searching for a bottom. Over the past few weeks, the whole financial system in India has been going through a turmoil. The upheaval was triggered by defaults at Infrastructure Leasing and Financial Services Ltd (IL&FS), and other Non-Banking Financial Company (NBFC) and Housing Finance Companies (HFC). The Central government took prompt action by superseding the IL&FS board and is trying hard to bring in a Satyam-like resolution to the problem. For the time being, the fear and rumours have been nipped in the bud. IL&FS was one of the largest Infrastructure lenders in the country and a default by it has disturbed the well-oiled Commercial Paper (CP) market. CP is a short-term financial instrument used by corporates to raise money from a few days to a year. Banks and mutual funds are main investors in CPs. The total outstanding CP issuance by all corporates as on September 15, 2018, is Rs 6,40,000 crore, out of which, more than 60 per cent is raised by NBFC and HFC. CP is a preferred mode of raising short-term money for companies as it offers lower interest rates when compared to banks interest rate for loans. Post the IL&FS default on their repayment of CP, large investors have withdrawn from the CP market. They are scared of further defaults and losing their investment. This has led to liquidity drying up for NBFC and HFCs. Now, why is it important that the CP markets remain well oiled? After 11 PSU banks were put under Prompt Corrective Action (PCA) by the RBI, there were further restrictions on these banks on new lending. This opened up the opportunity for NBFC and HFC to capture this market and bridge the need by corporates. After all the raw material for NBFC and HFC is ‘money’ and when the flow of money dries up so does the finished goods and, in this case, lending slows down by NBFC and HFC. Hence, even if the IL&FS issue is sorted, it may take nearly a quarter for the investors to start lending again at the same pace as they were doing before the problem started. This will obviously slow down NBFCs growth and also credit flow into the economy. Meanwhile, the Consumer Price Inflation (CPI) was at 3.69 per cent, which is well under the RBI’s targeted inflation rate of 4 per cent. It is remarkable that even after the increase in MSP and oil prices, the Consumer Price Inflation for March 2019 is expected to be around 4.70 per cent and for the full year average of 4.40 per cent to 4.50 per cent. This is within the stated range of inflation targeted by RBI. The CPI is expected to be low mainly due to low food inflation and MSP benefit being passed on to the farmer directly, thus as per the stated policy of keeping interest rates 2 per cent over the average CPI inflation has already been achieved. While inflation is under control, the speed with which the Indian Rupee (INR) is falling against the dollar is a cause of concern. Countries like Turkey, Argentina and Indonesia have tried to address currency depreciation by hiking the interest rate and have failed miserably. Addressing the currency depreciation with interest rate hike is a very blunt tool. India’s currency woes need to be solved by taking more concrete steps toward containing the Current Account Deficit (CAD). But factors like crude prices are beyond the control of the India government. Though the steps taken by the government to reduce petrol and diesel prices by Rs 2.50 per litre are welcome, maybe it’s time to adopt new measures to curtail the overall fuel consumption through innovative means. RBI has raised REPO rates twice this year from 6 per cent to 6.25 per cent in June and 6.50 per cent in August. By doing this RBI has moved along with the interest rate curve. The government securities market is extremely nervous and is already trading substantially higher to the long-term average spreads of 100 bps over Repo rate. The 10-year government security bond is being traded at 8.20 per cent which is a spread of 170 bps higher. This is an unusually high interest rate for a government to borrow from the market. The borrowing cost of the government is growing rapidly and high-interest rates can dent the future growth of the country. Even from real interest rate perspective, RBI is targeting a positive interest rate of 1.50 per cent to 2 per cent, whereas we are already in positive interest rate territory at 3.36 per cent as per the current bond rates pricing in the market. In such a scenario it is time for the RBI to be bold and brave. The first steps taken by RBI towards resolving this situation was announcing Rs 36,000 crore of open market operations (ie, buying government bonds from open market). This basically helps in infusing much-needed liquidity into the debt markets. The money markets need assurances to soothe and calm the nerves of its investors so that liquidity can come back to these markets. Government steps toward resolving IL&FS and RBI’s Open Market Operation announcement is in the correct direction. Raising interest rates after two consecutive rate hikes may not be an effective way to stop the rupee from depreciating further. Especially when the inflation is not showing any signs of running away. However, by keeping the interest rates steady and a neutral liquidity position with a bias towards easy liquidity when the markets require it, may help the markets to calm down its nerves, along with removing some of the PCA restrictions on PSU banks could keep the financial engine chugging. (The author is the promoter-director of Sunidhi Securities & Finance Ltd) (This article was originally published on 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)

Markets need RBI’s assurance

The continuing downfall of Rupee has led to the Indian currency breaching the 74-mark against US dollar for the first time. The Reserve Bank of India (RBI), in a surprise move, kept the key rates unchanged which many analysts feel is the reason for Rupee's further fall.

The rupee has tanked 14 per cent against the dollar this year as investors withdraw from emerging markets.

The RBI raised rates in June and August in part to help shore up the currency, which started 2018 at 63.67 to the dollar.

The partially convertible rupee had hit a <a href="http://www.wionews.com/business-economy/rupee-crashes-to-all-time-low-of-7381-on-capital-outflows-surging-oil-prices-169479">life-time low</a> of 73.81 per dollar on Thursday before recovering to 73.62 later in the day.

Confidence has ebbed in India's markets in recent weeks. The rupee has set all-time lows, bonds are at their weakest since November 2014, and share markets have suffered a sharp correction after hitting record highs in August.

A liquidity scare erupted last month after a series of debt defaults by <a href="http://www.wionews.com/business-economy/new-board-to-consider-all-options-to-revive-ilfs-169502">Infrastructure Leasing &amp; Financial Services</a> (IL&amp;FS) sparked redemption pressure at other shadow banking companies.

And dollar selling by the RBI to support the rupee has put a further squeeze on rupee liquidity.

Rising global oil prices, they climbed two per cent on Wednesday to hit a four year-high, are bad news for importing nations like India.

The current account has faced additional pressure as India, like many emerging market economies, has also suffered due to rising US interest rates drawing investors away.

(With inputs from Reuters)

The continuing downfall of Rupee has led to the Indian currency breaching the 74-mark against US dollar for the first time. The Reserve Bank of India (RBI), in a surprise move, kept the key rates unchanged which many analysts feel is the reason for Rupee's further fall.

The continuing downfall of Rupee has led to the Indian currency breaching the 74-mark against US dollar for the first time. The Reserve Bank of India (RBI), in a surprise move, kept the key rates unchanged which many analysts feel is the reason for Rupee's further fall. The rupee has tanked 14 per cent against the dollar this year as investors withdraw from emerging markets. The RBI raised rates in June and August in part to help shore up the currency, which started 2018 at 63.67 to the dollar. The partially convertible rupee had hit a life-time low of 73.81 per dollar on Thursday before recovering to 73.62 later in the day. Confidence has ebbed in India's markets in recent weeks. The rupee has set all-time lows, bonds are at their weakest since November 2014, and share markets have suffered a sharp correction after hitting record highs in August. A liquidity scare erupted last month after a series of debt defaults by Infrastructure Leasing & Financial Services (IL&FS) sparked redemption pressure at other shadow banking companies. And dollar selling by the RBI to support the rupee has put a further squeeze on rupee liquidity. Rising global oil prices, they climbed two per cent on Wednesday to hit a four year-high, are bad news for importing nations like India. The current account has faced additional pressure as India, like many emerging market economies, has also suffered due to rising US interest rates drawing investors away. (With inputs from Reuters)

Rupee breaches 74-mark for first time as RBI keeps key rates unchanged

The Reserve Bank of India (RBI) held interest rates unchanged at a policy meeting on Friday, sending the rupee tumbling to a record low and stunning analysts who had expected a rate increase to combat inflationary pressures arising from high oil prices.

The RBI's monetary policy committee (MPC) left the repo rate at 6.50 per cent, though 35 out of 64 analysts surveyed by Reuters last week had forecast a rate hike.

The panel however, shifted its policy stance to 'calibrated tightening" from 'neutral'. Five of the six panel members voted to leave the rate unchanged.

"Global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook," the RBI said in its policy statement, adding that it was vital "to further strengthen domestic macroeconomic fundamentals."

The MPC also held the reverse repo rate at 6.25 percent.

While the RBI kept its rates unchanged, analysts expect the central bank to raise rates by at least 50 basis points more going ahead, as inflationary pressures become more pronounced.

The Indian rupee weakened from 73.65 to hit an all-time low of 74.15 post the RBI policy, before stabilising around the 74 level.

The rupee has slumped in recent months amid a global rise in oil prices and a sell-off in emerging markets. It has fallen more than 13 percent since January, making it the worst performing major Asian emerging market currency.

The 10-year benchmark bond yield fell to 8.03 per cent from 8.13 per cent before the policy was announced, as traders expecting a rate hike were wrongfooted.

The Reserve Bank of India (RBI) held interest rates unchanged at a policy meeting on Friday, sending the rupee tumbling to a record low and stunning analysts who had expected a rate increase to combat inflationary pressures arising from high oil prices.

The Reserve Bank of India (RBI) held interest rates unchanged at a policy meeting on Friday, sending the rupee tumbling to a record low and stunning analysts who had expected a rate increase to combat inflationary pressures arising from high oil prices. The RBI's monetary policy committee (MPC) left the repo rate at 6.50 per cent, though 35 out of 64 analysts surveyed by Reuters last week had forecast a rate hike. The panel however, shifted its policy stance to 'calibrated tightening" from 'neutral'. Five of the six panel members voted to leave the rate unchanged. "Global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook," the RBI said in its policy statement, adding that it was vital "to further strengthen domestic macroeconomic fundamentals." The MPC also held the reverse repo rate at 6.25 percent. While the RBI kept its rates unchanged, analysts expect the central bank to raise rates by at least 50 basis points more going ahead, as inflationary pressures become more pronounced. The Indian rupee weakened from 73.65 to hit an all-time low of 74.15 post the RBI policy, before stabilising around the 74 level. The rupee has slumped in recent months amid a global rise in oil prices and a sell-off in emerging markets. It has fallen more than 13 percent since January, making it the worst performing major Asian emerging market currency. The 10-year benchmark bond yield fell to 8.03 per cent from 8.13 per cent before the policy was announced, as traders expecting a rate hike were wrongfooted.

RBI keeps policy rate unchanged in surprise move

The Reserve Bank of India on Wednesday said it will relax external commercial borrowings (ECB) policy to allow state-run oil marketing companies to raise external debt for working capital purposes.

The RBI will permit oil marketing firms to raise overseas funds with minimum average maturity period of 3 or 5 years under the automatic route, it said in a statement. It lifted the individual borrowing limit set at $750 million under the ECB framework.

The move comes in light of the rupee's drop to a record low on Wednesday triggered by a sharp rise in global crude oil prices, prompting the central bank to quickly intervene to slow its fall.

The Reserve Bank of India on Wednesday said it will relax external commercial borrowings (ECB) policy to allow state-run oil marketing companies to raise external debt for working capital purposes.

The Reserve Bank of India on Wednesday said it will relax external commercial borrowings (ECB) policy to allow state-run oil marketing companies to raise external debt for working capital purposes. The RBI will permit oil marketing firms to raise overseas funds with minimum average maturity period of 3 or 5 years under the automatic route, it said in a statement. It lifted the individual borrowing limit set at $750 million under the ECB framework. The move comes in light of the rupee's drop to a record low on Wednesday triggered by a sharp rise in global crude oil prices, prompting the central bank to quickly intervene to slow its fall.

RBI eases overseas borrowing norms for state-run oil companies

The six-member Monetary Policy Committee (MPC), headed by RBI governor Urjit Patel, began three-day deliberations Wednesday to decide on the key policy rates amid expectations that it would go for a 25 basis points hike to counter the impact of rising oil prices on inflation.

If the RBI raises the interest rate on Friday, it would be third in a row. It hiked key policy rate in this fiscal's second bi-monthly policy in June after a hiatus of four-and-a-half years. Subsequently, the RBI raised the repo rate or short-term lending rate by another 25 basis points in August policy meeting.

After two successive hikes, the repo rate currently stands at 6.50 per cent.

According to experts, rising crude oil prices, depreciating rupee and widening current account deficit are some of the factors the policy-making body would keep in mind while deciding on interest rates.

The rupee Wednesday weakened further to 73.25 against the US dollar while brent crude was trading near USD 85 per barrel.

"With petrol and diesel prices moving up, there is a strong expectation that inflation will also move up. So, they (RBI) may take a pre-emptive action. I feel there will be an increase of 25 basis points in the repo rate," Union Bank of India managing director and chief executive Rajkiran Rai G said.

Despite the rise in oil prices, the headline inflation number came down to 3.69 per cent for August as against 4.17 per cent for July.

The government has mandated the Reserve Bank to keep inflation within a band of 2-6 per cent.

Given the macroeconomic situation, the RBI is expected to raise the rate by 25 basis points in its upcoming policy review, another public sector bank head said.

Experts say the weaker trend in the rupee may also prompt the central bank to raise repo rate.

"Given where currency level is at this point of time, I think they will increase the interest rate by a quarter basis points," HDFC vice chairman and chief executive Keki Mistry said.

Tracking global developments, the rupee has become weak and is hovering around 73 against the dollar.

The SBI, in its research report Ecowrap, said the RBI should raise the policy repo rate by at least 25 basis points to arrest the rupee's fall.

"We rule out a hike of 50 basis points, as it may spook the market. However, there is a probability of change in neutral stance too, as three successive rate hikes with a neutral stance could contradict RBI message," the research report said.

The six-member Monetary Policy Committee (MPC), headed by RBI governor Urjit Patel, began three-day deliberations Wednesday to decide on the key policy rates amid expectations that it would go for a 25 basis points hike to counter the impact of rising oil prices on inflation.

The six-member Monetary Policy Committee (MPC), headed by RBI governor Urjit Patel, began three-day deliberations Wednesday to decide on the key policy rates amid expectations that it would go for a 25 basis points hike to counter the impact of rising oil prices on inflation. If the RBI raises the interest rate on Friday, it would be third in a row. It hiked key policy rate in this fiscal's second bi-monthly policy in June after a hiatus of four-and-a-half years. Subsequently, the RBI raised the repo rate or short-term lending rate by another 25 basis points in August policy meeting. After two successive hikes, the repo rate currently stands at 6.50 per cent. According to experts, rising crude oil prices, depreciating rupee and widening current account deficit are some of the factors the policy-making body would keep in mind while deciding on interest rates. The rupee Wednesday weakened further to 73.25 against the US dollar while brent crude was trading near USD 85 per barrel. "With petrol and diesel prices moving up, there is a strong expectation that inflation will also move up. So, they (RBI) may take a pre-emptive action. I feel there will be an increase of 25 basis points in the repo rate," Union Bank of India managing director and chief executive Rajkiran Rai G said. Despite the rise in oil prices, the headline inflation number came down to 3.69 per cent for August as against 4.17 per cent for July. The government has mandated the Reserve Bank to keep inflation within a band of 2-6 per cent. Given the macroeconomic situation, the RBI is expected to raise the rate by 25 basis points in its upcoming policy review, another public sector bank head said. Experts say the weaker trend in the rupee may also prompt the central bank to raise repo rate. "Given where currency level is at this point of time, I think they will increase the interest rate by a quarter basis points," HDFC vice chairman and chief executive Keki Mistry said. Tracking global developments, the rupee has become weak and is hovering around 73 against the dollar. The SBI, in its research report Ecowrap, said the RBI should raise the policy repo rate by at least 25 basis points to arrest the rupee's fall. "We rule out a hike of 50 basis points, as it may spook the market. However, there is a probability of change in neutral stance too, as three successive rate hikes with a neutral stance could contradict RBI message," the research report said.

RBI rate-setting panel begins three-day meet, may hike repo rate on Friday

Rupee depreciation does not benefit exporters, instead, a stable currency is needed for long-term sustainable growth of India's international trade, industry body CII said Monday.

In the present globalised environment, a majority of costs like raw material, shipping charges, warehousing and other related services are denominated in foreign currency or at import parity price, the chamber said in a statement.

Besides, most of the exporters do long-term hedging at the time of booking of orders, while importers press for a reduction in prices citing depreciation of the rupee, it said.

"Hence, it is more of a perception than reality that depreciation of the rupee helps exporters. What is required is a stable range-bound currency which will give stability and certainty for quoting prices and accepting orders in today's competitive global environment," Chairman of CII National Committee on Exports and Imports Sanjay Budhia said.

The rupee weakened by 36 paise to 72.84 against the US dollar Monday even as the RBI announced plans to purchase government bonds worth Rs 36,000 crore to boost liquidity.

The domestic unit rupee had gained 11 paise to close at a one-week high of 72.48 against the US dollar on Friday.

In recent weeks, the rupee has taken a beating amid volatility in global markets and strengthening of the greenback. The central bank has been taking various measures to shore up the rupee.

Rupee depreciation does not benefit exporters, instead, a stable currency is needed for long-term sustainable growth of India's international trade, industry body CII said Monday.

Rupee depreciation does not benefit exporters, instead, a stable currency is needed for long-term sustainable growth of India's international trade, industry body CII said Monday. In the present globalised environment, a majority of costs like raw material, shipping charges, warehousing and other related services are denominated in foreign currency or at import parity price, the chamber said in a statement. Besides, most of the exporters do long-term hedging at the time of booking of orders, while importers press for a reduction in prices citing depreciation of the rupee, it said. "Hence, it is more of a perception than reality that depreciation of the rupee helps exporters. What is required is a stable range-bound currency which will give stability and certainty for quoting prices and accepting orders in today's competitive global environment," Chairman of CII National Committee on Exports and Imports Sanjay Budhia said. The rupee weakened by 36 paise to 72.84 against the US dollar Monday even as the RBI announced plans to purchase government bonds worth Rs 36,000 crore to boost liquidity. The domestic unit rupee had gained 11 paise to close at a one-week high of 72.48 against the US dollar on Friday. In recent weeks, the rupee has taken a beating amid volatility in global markets and strengthening of the greenback. The central bank has been taking various measures to shore up the rupee.

Stable currency needed to boost India's international trade: CII

RBI’s policy meeting, macroeconomic data announcements, and the trend in rupee and crude oil prices would set the tone for the stock markets in a holiday-shortened week ahead, say experts. Bourses will remain closed Tuesday for Mahatma Gandhi Jayanti.

“Investors are yet to gain confidence to start bottom fishing due to lack of liquidity, margin funding and short selling in the market. The weak sentiment is likely to extend till the financial market stabilises and confidence reverts with accommodative valuation. RBI policy meet this week is the key event,” said Vinod Nair, Head of Research, Geojit Financial Services.

RBI’s interest rate decision will be announced Friday. At its previous monetary policy meeting in August, the Reserve Bank raised the benchmark interest rate by 25 basis points to 6.50 per cent on inflationary concerns. “RBI’s interest rate decision will be crucially watched,” said Mustafa Nadeem, CEO, Epic Research. PMI data for the manufacturing and services sectors will also influence trading sentiment, experts said. Investors would continue to track the NBFC space which has been hit by liquidity concerns.

Factors such as the movement of rupee and crude oil prices would also play a key role, they added. “Next month, hopefully, will be rosier than the previous month as all the weak hands are out and the worst has already been priced in which is known to all. “Things might only get better going ahead given the Q2 FY19 results will start pouring in. RBI’s 4th bi-monthly meet could create a knee-jerk reaction if they decide to increase interest rates by 0.25 per cent,” said Jimeet Modi, Founder and CEO, SAMCO Securities and StockNote.

Over the last week, the Sensex lost 614.46 points, or 1.67 per cent, to end at 36,227.14. The Sensex has lost a whopping 2,417.93 points, or 6.26 per cent, in September — its worst monthly show since February 2016.

RBI’s policy meeting, macroeconomic data announcements, and the trend in rupee and crude oil prices would set the tone for the stock markets in a holiday-shortened week ahead, say experts.

RBI’s policy meeting, macroeconomic data announcements, and the trend in rupee and crude oil prices would set the tone for the stock markets in a holiday-shortened week ahead, say experts. Bourses will remain closed Tuesday for Mahatma Gandhi Jayanti. “Investors are yet to gain confidence to start bottom fishing due to lack of liquidity, margin funding and short selling in the market. The weak sentiment is likely to extend till the financial market stabilises and confidence reverts with accommodative valuation. RBI policy meet this week is the key event,” said Vinod Nair, Head of Research, Geojit Financial Services. RBI’s interest rate decision will be announced Friday. At its previous monetary policy meeting in August, the Reserve Bank raised the benchmark interest rate by 25 basis points to 6.50 per cent on inflationary concerns. “RBI’s interest rate decision will be crucially watched,” said Mustafa Nadeem, CEO, Epic Research. PMI data for the manufacturing and services sectors will also influence trading sentiment, experts said. Investors would continue to track the NBFC space which has been hit by liquidity concerns. Factors such as the movement of rupee and crude oil prices would also play a key role, they added. “Next month, hopefully, will be rosier than the previous month as all the weak hands are out and the worst has already been priced in which is known to all. “Things might only get better going ahead given the Q2 FY19 results will start pouring in. RBI’s 4th bi-monthly meet could create a knee-jerk reaction if they decide to increase interest rates by 0.25 per cent,” said Jimeet Modi, Founder and CEO, SAMCO Securities and StockNote. Over the last week, the Sensex lost 614.46 points, or 1.67 per cent, to end at 36,227.14. The Sensex has lost a whopping 2,417.93 points, or 6.26 per cent, in September — its worst monthly show since February 2016.

RBI policy, macro data key for stock markets in holiday-shortened week

The Reserve Bank of India (RBI) eased a mandatory liquidity rule on Thursday, by tweaking its liquidity coverage ratio requirements for banks.

In a circular the RBI said it would allow banks to account for up to two percentage points more of government securities, held in their statutory liquidity ratio reserves, to help them meet liquidity coverage ratio norms.

The move will ease tight cash conditions to some extent as it will reduce pressure on banks to buy more government securities to maintain high-quality liquid assets, as mandated under global Basel III norms.

The Reserve Bank of India (RBI) eased a mandatory liquidity rule on Thursday, by tweaking its liquidity coverage ratio requirements for banks. In a circular the RBI said it would allow banks to account for up to two percentage points more of government securities, held in their statutory liquidity ratio reserves, to help them meet liquidity coverage ratio norms.

The Reserve Bank of India (RBI) eased a mandatory liquidity rule on Thursday, by tweaking its liquidity coverage ratio requirements for banks. In a circular the RBI said it would allow banks to account for up to two percentage points more of government securities, held in their statutory liquidity ratio reserves, to help them meet liquidity coverage ratio norms. The move will ease tight cash conditions to some extent as it will reduce pressure on banks to buy more government securities to maintain high-quality liquid assets, as mandated under global Basel III norms.

RBI eases some cash requirement rules for banks

The Reserve Bank of India today fixed the reference rate of the rupee at 67.3353 against the US dollar and 79.5230 for the euro.

The corresponding rates were 67.5228 and 79.5824, as on June 08, 2018.

According to an RBI statement, the exchange rates for the pound and the yen against the rupee were 90.3707 and 61.24 per 100 yens, respectively, based on reference rates for the dollar and cross-currency quotes at noon.

The SDR-rupee figure will be based on this rate, the statement added.

The SDR-rupee figure will be based on this rate, the statement added

The Reserve Bank of India today fixed the reference rate of the rupee at 67.3353 against the US dollar and 79.5230 for the euro. The corresponding rates were 67.5228 and 79.5824, as on June 08, 2018. According to an RBI statement, the exchange rates for the pound and the yen against the rupee were 90.3707 and 61.24 per 100 yens, respectively, based on reference rates for the dollar and cross-currency quotes at noon. The SDR-rupee figure will be based on this rate, the statement added.

RBI sets rupee reference rate at 67.3353 against dollar

The BSE Sensex surged almost 276 points to end above the key 35,000-mark on Wednesday even as the RBI hiked the policy rate by 0.25 per cent on inflation concerns.

However, the RBI retained the GDP growth forecast for 2018-19 at 7.4 per cent on hopes of further boost to investments and higher consumption.

The central bank hiked the benchmark lending rate for the first time in four-and-half-years on inflation concerns arising from a surge in international oil prices.&nbsp

The repo rate now stands at 6.25 per cent.&nbsp

The BSE Sensex, which opened strong at 34,932.49, fell after RBI's policy announcement but soon recovered to touch the day's high of 35,230.54.&nbsp

It finally ended at 35,178.88, up 275.67 points, or 0.79 per cent.&nbsp

The gauge had lost 419.17 points in the previous three sessions.

On similar lines, the NSE Nifty, after shuttling between 10,698.35 and 10,587.50, finished the session 91.50 points, or 0.86 per cent higher at 10,684.65.&nbsp

Meanwhile, domestic institutional investors (DIIs) bought shares worth a net Rs 474.33 crore, while foreign portfolio investors (FPIs) sold shares worth Rs 157.51 crore yesterday, as per provisional data.&nbsp

The central bank hiked the benchmark lending rate for the first time in four-and-half-years on inflation concerns arising from a surge in international oil prices.

The BSE Sensex surged almost 276 points to end above the key 35,000-mark on Wednesday even as the RBI hiked the policy rate by 0.25 per cent on inflation concerns. However, the RBI retained the GDP growth forecast for 2018-19 at 7.4 per cent on hopes of further boost to investments and higher consumption. The central bank hiked the benchmark lending rate for the first time in four-and-half-years on inflation concerns arising from a surge in international oil prices. The repo rate now stands at 6.25 per cent. The BSE Sensex, which opened strong at 34,932.49, fell after RBI's policy announcement but soon recovered to touch the day's high of 35,230.54. It finally ended at 35,178.88, up 275.67 points, or 0.79 per cent. The gauge had lost 419.17 points in the previous three sessions. On similar lines, the NSE Nifty, after shuttling between 10,698.35 and 10,587.50, finished the session 91.50 points, or 0.86 per cent higher at 10,684.65. Meanwhile, domestic institutional investors (DIIs) bought shares worth a net Rs 474.33 crore, while foreign portfolio investors (FPIs) sold shares worth Rs 157.51 crore yesterday, as per provisional data.

Sensex soars 276 pts even as RBI hikes rate

The Reserve Bank of India has hiked its repo rate by 25 basis points to 6.25%.&nbsp;

This is the first hike in over four years.&nbsp;

The reverse repo rate has been hiked to 6.5%.&nbsp;

The repo rate is the rate of interest at which the RBI loans money to other banks. The repo rate then determines the rate of interest at which the banks loan money to their customers.&nbsp;

A hike in the repo rate will mean an increase in the EMIs of people who have borrowed money at fluctuating rates.&nbsp;

The reverse repo rate is the rate at which the RBI borrows money from the market.&nbsp;

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Reserve Bank of India (RBI) projects inflation for 2018-19 at 4.8- 4.9% in first half and 4.7% in the second half of the year, projection for GDP is 7.5-7.6 in first half and 7.3-7.4 in the second half.
— ANI (@ANI) <a href="https://twitter.com/ANI/status/1004288695942254595?ref_src=twsrc%5Etfw">June 6, 2018</a></blockquote>
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The RBI meanwhile projected inflation for 2018-19 at 4.8- 4.9% in the first half and 4.7% in the second half of the year.&nbsp;

Its GDP projection was 7.5-7.6% for the first half and 7.3-7.4% in the second half.

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Gross domestic product (GDP) growth for 2017-18 has been revised & estimated at 6.7% backed by an all time high production of food grains and horticulture, strengthening of industrial growth and resilient services sector activity: RBI Guv Urjit Patel <a href="https://t.co/3Eam0qniRf">pic.twitter.com/3Eam0qniRf</a>
— ANI (@ANI) <a href="https://twitter.com/ANI/status/1004298584139841536?ref_src=twsrc%5Etfw">June 6, 2018</a></blockquote>
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&nbsp;

This was the first hike in over 4 years. The reverse repo rate is now 6.5%

The Reserve Bank of India has hiked its repo rate by 25 basis points to 6.25%. This is the first hike in over four years. The reverse repo rate has been hiked to 6.5%. The repo rate is the rate of interest at which the RBI loans money to other banks. The repo rate then determines the rate of interest at which the banks loan money to their customers. A hike in the repo rate will mean an increase in the EMIs of people who have borrowed money at fluctuating rates. The reverse repo rate is the rate at which the RBI borrows money from the market. Reserve Bank of India (RBI) projects inflation for 2018-19 at 4.8- 4.9% in first half and 4.7% in the second half of the year, projection for GDP is 7.5-7.6 in first half and 7.3-7.4 in the second half. — ANI (@ANI) June 6, 2018 × The RBI meanwhile projected inflation for 2018-19 at 4.8- 4.9% in the first half and 4.7% in the second half of the year. Its GDP projection was 7.5-7.6% for the first half and 7.3-7.4% in the second half. Gross domestic product (GDP) growth for 2017-18 has been revised & estimated at 6.7% backed by an all time high production of food grains and horticulture, strengthening of industrial growth and resilient services sector activity: RBI Guv Urjit Patel pic.twitter.com/3Eam0qniRf — ANI (@ANI) June 6, 2018 ×

RBI hikes repo rate to 6.25%, EMIs to get costlier

The BSE benchmark Sensex slipped below the key 35,000-mark in early trade today following losses in banking, power, realty and capital goods stocks.

Investors are cautious ahead of RBI's policy decision due&nbsp;tomorrow, brokers said.

The RBI's Monetary Policy Committee began its three-day meeting yesterday amid speculation that it may hike the key interest rate for the first time in over four years on account of firming inflation.

The 30-share index, which had lost 310.49 points in the previous two sessions, fell further by 101.70 points, or 0.29 per cent, to 34,910.19.

Sectoral indices led by power, banking, realty, capital goods and PSU declined up to 1.20 per cent.

The NSE Nifty also shed 33.55 points, or 0.32 per cent, to 10,594.95.

Shares of Powr Grid, Yes Bank, Bharti Airtel, Dr Reddy's, Infosys, Hero MotoCorp, L&T, HUL, Axis Bank, Bajaj Auto, HDFC Ltd and NTPC were trading in the negative zone with losses of up to 2.41 per cent.

Meanwhile, domestic institutional investors (DIIs) sold shares worth a net Rs 712.41 crore, while foreign portfolio investors (FPIs) bought shares worth Rs 2,354.03 crore yesterday, as per provisional data released by the stock exchanges.

Among other Asian markets, Hong Kong's Hang Seng fell 0.05 per cent, while Japan's Nikkei was up 0.12 per cent in early trade. Shanghai Composite Index also rose 0.02 per cent.

The US Dow Jones Industrial Average ended 0.72 per cent higher in yesterday's trade.

The RBI's Monetary Policy Committee began its three-day meeting yesterday amid speculation that it may hike the key interest rate for the first time in over four years on account of firming inflation

The BSE benchmark Sensex slipped below the key 35,000-mark in early trade today following losses in banking, power, realty and capital goods stocks. Investors are cautious ahead of RBI's policy decision due tomorrow, brokers said. The RBI's Monetary Policy Committee began its three-day meeting yesterday amid speculation that it may hike the key interest rate for the first time in over four years on account of firming inflation. The 30-share index, which had lost 310.49 points in the previous two sessions, fell further by 101.70 points, or 0.29 per cent, to 34,910.19. Sectoral indices led by power, banking, realty, capital goods and PSU declined up to 1.20 per cent. The NSE Nifty also shed 33.55 points, or 0.32 per cent, to 10,594.95. Shares of Powr Grid, Yes Bank, Bharti Airtel, Dr Reddy's, Infosys, Hero MotoCorp, L&T, HUL, Axis Bank, Bajaj Auto, HDFC Ltd and NTPC were trading in the negative zone with losses of up to 2.41 per cent. Meanwhile, domestic institutional investors (DIIs) sold shares worth a net Rs 712.41 crore, while foreign portfolio investors (FPIs) bought shares worth Rs 2,354.03 crore yesterday, as per provisional data released by the stock exchanges. Among other Asian markets, Hong Kong's Hang Seng fell 0.05 per cent, while Japan's Nikkei was up 0.12 per cent in early trade. Shanghai Composite Index also rose 0.02 per cent. The US Dow Jones Industrial Average ended 0.72 per cent higher in yesterday's trade.

Sensex down 102 points in cautious trade

Benchmark Sensex tanked over 215 points to close at 35,011.89 on Monday as cautious investors trimmed their portfolios amid the RBI's monetary policy meeting getting underway.

The RBI's Monetary Policy Committee began its three-day meeting today amid speculation that it may hike the key interest rate on June 6 for the first time in about four-and-half years on account of firming inflation.

The 30-share Sensex opened on a strong footing on across-the-board gains amid positive global leads and hit a high of 35,555.59.

&nbspHowever, it soon slipped into the negative zone on massive selling in several heavyweights. It finally ended at 35,011.89, down 215.37 points or 0.61 per cent.&nbsp

The broader NSE Nifty too ended lower by 67.70 points, or 0.63 per cent, at 10,628.50, after hovering between 10,770.30 and 10,618.35.

Meanwhile, foreign portfolio investors (FPIs) offloaded shares worth a net Rs 202.80 crore, while domestic institutional investors (DIIs) bought equities to the tune of Rs 337.97 crore on Friday, as per provisional data.&nbsp

Benchmark Sensex tanked over 215 points to close at 35,011.89 on Monday as cautious investors trimmed their portfolios amid the RBI's monetary policy meeting getting underway

Benchmark Sensex tanked over 215 points to close at 35,011.89 on Monday as cautious investors trimmed their portfolios amid the RBI's monetary policy meeting getting underway. The RBI's Monetary Policy Committee began its three-day meeting today amid speculation that it may hike the key interest rate on June 6 for the first time in about four-and-half years on account of firming inflation. The 30-share Sensex opened on a strong footing on across-the-board gains amid positive global leads and hit a high of 35,555.59. &nbspHowever, it soon slipped into the negative zone on massive selling in several heavyweights. It finally ended at 35,011.89, down 215.37 points or 0.61 per cent. The broader NSE Nifty too ended lower by 67.70 points, or 0.63 per cent, at 10,628.50, after hovering between 10,770.30 and 10,618.35. Meanwhile, foreign portfolio investors (FPIs) offloaded shares worth a net Rs 202.80 crore, while domestic institutional investors (DIIs) bought equities to the tune of Rs 337.97 crore on Friday, as per provisional data.

Sensex slumps 215 points; RBI policy meet gets underway

The CEO and Managing Director of IDBI Bank Mahesh Kumar Jain has now been appointed as the Deputy Governor of Reserve Bank of India (RBI) for a term of three years.&nbsp

Jain was appointed as IDBI's MD and CEO of IDBI bank in April 2017 before which he was Managing Director & Chief Executive Officer of Indian Bank.&nbsp

Jain joined Indian Bank as an executive director in September 2013 where he handled several key portfolios. Prior to joining Indian Bank, Jain served as general manager with Syndicate Bank. He began his banking career with Punjab National Bank.&nbsp

He was previously a member of the steering committee on Risk Management of IBA and a member of the IBA working group on risk management and implementation of Basel II and III.&nbsp

Jain was appointed as IDBI's MD and CEO of IDBI bank in April 2017 before which he was Managing Director & Chief Executive Officer of Indian Bank

The CEO and Managing Director of IDBI Bank Mahesh Kumar Jain has now been appointed as the Deputy Governor of Reserve Bank of India (RBI) for a term of three years. Jain was appointed as IDBI's MD and CEO of IDBI bank in April 2017 before which he was Managing Director & Chief Executive Officer of Indian Bank. Jain joined Indian Bank as an executive director in September 2013 where he handled several key portfolios. Prior to joining Indian Bank, Jain served as general manager with Syndicate Bank. He began his banking career with Punjab National Bank. He was previously a member of the steering committee on Risk Management of IBA and a member of the IBA working group on risk management and implementation of Basel II and III.

Mahesh Kumar Jain appointed as Deputy Governor of RBI for three years

Around one million bank employees <a href="http://www.wionews.com/business-&-economy/bank-strike-may-hit-transactions-worth-rs-20k-crore-assocham-140991">went on strike</a> across India on Wednesday, a union representative said, demanding better pay and a government crackdown on companies who wilfully default on loan payments.

Some 5,000 workers chanted slogans and waved banners at a protest in the financial capital Mumbai, head of the bank union Devidas Tuljapurkar said, as they claimed they were paying the price for India's mountain of bad debts.

The Asian giant's troubled lenders have some of the highest levels of debt in emerging markets, weighed down by billions of dollars of non-performing assets (NPAs) also known as <a href="www.wionews.com/india-news/rbi-discovers-rs-47000-crore-bad-loan-at-five-biggest-state-run-banks-140756">bad loans</a>.

The two-day strike, which ends on Thursday, led to tens of thousands of branches of public sector and commercial banks downing their shutters, paralysing operations in some parts of the country.

The strikers are unhappy with a proposed two per cent wage rise which they have been offered, noting that it is well below India's inflation rate of around 4.5 per cent.

"Bankers justification in offering the meagre wage rise is losses to the banks," Tuljapurkar, convenor of India's United Forum of Bank Unions, said in a statement.

"(However)... It is big corporates who are attributable for losses to the banks. But for no fault on their part ordinary employees and officers are being denied their due share in profits," he added.

India's bad loan problem received national attention in March 2016 when beer and airline tycoon Vijay Mallya fled to the UK to avoid paying nearly $1 billion in loans that he owed banks.

Earlier this year the government said banks' bad loans were worth more than $120 billion.

High debts mean banks are stretched too thin to lend funds for fresh investments, holding back economic growth.

The government is trying to help state-owned banks clean up their books and in October approved a $32 billion recapitalisation plan for struggling lenders.

It has also given India's central bank greater powers to intervene in cases of bad loans, and to order lenders to deal with their debts under new bankruptcy laws.

"We have been consistently demanding that the government should come down heavily against those big corporates (who default on payments). Without which Indian banking cannot be revived," Tuljapurkar said.

The union chief also said that bank employees' workloads had increased since Prime Minister Narendra Modi was elected four years ago and implemented a number of economic initiatives.

A sudden move in late 2016 to devalue 86 per cent of India's currency sparked long lines at ATMs and chaotic scenes at banks.

Many poorer Indians, reliant on cash, were left scrambling to buy basic necessities as their meagre savings evaporated in an instant.

Earlier this year the government said banks' bad loans were worth more than $120 billion.

Around one million bank employees went on strike across India on Wednesday, a union representative said, demanding better pay and a government crackdown on companies who wilfully default on loan payments. Some 5,000 workers chanted slogans and waved banners at a protest in the financial capital Mumbai, head of the bank union Devidas Tuljapurkar said, as they claimed they were paying the price for India's mountain of bad debts. The Asian giant's troubled lenders have some of the highest levels of debt in emerging markets, weighed down by billions of dollars of non-performing assets (NPAs) also known as bad loans. The two-day strike, which ends on Thursday, led to tens of thousands of branches of public sector and commercial banks downing their shutters, paralysing operations in some parts of the country. The strikers are unhappy with a proposed two per cent wage rise which they have been offered, noting that it is well below India's inflation rate of around 4.5 per cent. "Bankers justification in offering the meagre wage rise is losses to the banks," Tuljapurkar, convenor of India's United Forum of Bank Unions, said in a statement. "(However)... It is big corporates who are attributable for losses to the banks. But for no fault on their part ordinary employees and officers are being denied their due share in profits," he added. India's bad loan problem received national attention in March 2016 when beer and airline tycoon Vijay Mallya fled to the UK to avoid paying nearly $1 billion in loans that he owed banks. Earlier this year the government said banks' bad loans were worth more than $120 billion. High debts mean banks are stretched too thin to lend funds for fresh investments, holding back economic growth. The government is trying to help state-owned banks clean up their books and in October approved a $32 billion recapitalisation plan for struggling lenders. It has also given India's central bank greater powers to intervene in cases of bad loans, and to order lenders to deal with their debts under new bankruptcy laws. "We have been consistently demanding that the government should come down heavily against those big corporates (who default on payments). Without which Indian banking cannot be revived," Tuljapurkar said. The union chief also said that bank employees' workloads had increased since Prime Minister Narendra Modi was elected four years ago and implemented a number of economic initiatives. A sudden move in late 2016 to devalue 86 per cent of India's currency sparked long lines at ATMs and chaotic scenes at banks. Many poorer Indians, reliant on cash, were left scrambling to buy basic necessities as their meagre savings evaporated in an instant.

How strike by 1 million bank workers affected India on Day 1

India's five biggest state-run banks are experiencing a bad loan of Rs 47,000 crore.

The audits revealed by the Reserve Bank of India for the year ended March 31, 2017 showed that the banks were experienced large losses.

Half of the countries 22 state-run banks are under the Reserve Bank of India's strict Prompt Corrective Action (PCA), therefore the hidden bad debt will have a catastrophic&nbsp;effect on the sector.

RBI's former deputy governor has said that a few of the banks undergoing PCA may find it hard to survive.

This increases reliance on loan recoveries from India's new bankruptcy process.

An analyst at a financial service said that Bank of India would now need a “favourable outcome” -- loan recoveries of about 50 per cent -- from the bankruptcy process.

The audits revealed by the Reserve Bank of India for the year ended March 31, 2017 showed that the banks were experienced large losses

India's five biggest state-run banks are experiencing a bad loan of Rs 47,000 crore. The audits revealed by the Reserve Bank of India for the year ended March 31, 2017 showed that the banks were experienced large losses. Half of the countries 22 state-run banks are under the Reserve Bank of India's strict Prompt Corrective Action (PCA), therefore the hidden bad debt will have a catastrophic effect on the sector. RBI's former deputy governor has said that a few of the banks undergoing PCA may find it hard to survive. This increases reliance on loan recoveries from India's new bankruptcy process. An analyst at a financial service said that Bank of India would now need a “favourable outcome” -- loan recoveries of about 50 per cent -- from the bankruptcy process.

RBI discovers Rs 47,000 crore bad loan at five biggest state-run banks

When the government announced a surprise $32 billion bailout plan for the nation's state-controlled banks last October, credit rating firms and the nation's central bank saw it as a huge step to getting the industry back to robust health – and lending more to&nbsp;businesses and consumers.

But their optimism may have been majorly misplaced judging by the latest numbers coming out of the banks. And that may, in turn, crimp economic growth in Asia's third-largest economy.

Thirteen state banks have reported combined losses of $8.6 billion for the year to March - including $6.5 billion in the last quarter - and their non-performing loans have surged nearly a fifth from end-December levels. Two state banks have reported modest profits and six are still to report.

While many of the banks, including top lender State Bank of India, have said the worst is probably over, they still see one or two more quarters of pain. That means more bad loans getting disclosed and loss provisions shooting up as a central bank order will cause more debt defaulters to be dragged into bankruptcy.

"The government capital is only going to just plug the hole, there is definitely no growth capital," said Udit Kariwala, an analyst at Fitch Ratings' India Ratings & Research. He said smaller state lenders with limited ability to raise capital from the market will have to curtail their lending.

The 21 state lenders hold two-thirds of India's banking assets and accounted for the bulk of the record $150 billion of soured loans in the banking sector last year.

The banks, which have been blamed for indiscriminate lending to sectors such as metals and power that turned sour, can still be held responsible for much of the balance sheet carnage.

A more than $2 billion fraud at India's second-biggest state lender, Punjab National Bank, disclosed less than four months ago, not only left a hole but also underlined how weak the banks' grip on risk is.

Exacerbating the problems is a move in February by the Reserve Bank of India, the nation's central bank, to withdraw half a dozen loan restructuring schemes that banking experts said were helping banks to avoid disclosing dud loans. It also tightened other rules governing bad loan accounting.

In addition, the RBI this month banned Dena Bank, a loss-making smaller state-run lender, from making any new loans. Days later, Allahabad Bank, another smaller state-run lender, said it had been asked by the regulator not to increase the number of risky loans and costly deposits on its books due to its capital and leverage position

Bank analysts say more state banks could come under similar restrictions aimed at conserving limited capital. The RBI already has 11 state lenders under its "prompt corrective action" framework that restricts them from expanding.

That is not all. Capital needs will also be exposed by global banking rules fully kicking in by March 2019. They mandate banks to have a minimum core capital ratio of 8 percent, and at least six banks, including PNB, are short of that number.

Under New Delhi's recapitalisation plan - aimed mainly at driving credit growth in an economy where bank loans are the main source of funding for everything from buying a car to building a port - the government has already injected about 880 billion rupees ($13 billion) into 20 banks as of end-March.

It has 650 billion rupees to inject in the current fiscal year, and the banks themselves were supposed to raise 580 billion rupees through share and asset sales.

Some, including SBI and PNB, last year raised funds from share sales, but several others have postponed such plans.

Kariwala at India Ratings estimates the banks now need 800 billion to 1 trillion rupees to fund soured-asset provisions and maintain minimum capital ratios alone, which means there will be little left from the bailout for lending growth.

Some bank analysts say the government may have to increase the size of the bailout.

Certainly, bank lending - and its impact on growth - will be on Prime Minister Narendra Modi's agenda ahead of a general election that has to be held within a year.

"Given how the stocks are doing, the nearly 0.6 trillion rupees banks need to raise looks difficult. So, the government may have to slightly increase the amount they are planning to inject," said Srikanth Vadlamani, vice president of the Financial Institutions Group at Moody's Investors Service.

Moody's said this week that PNB alone would need 120-130 billion rupees of new capital in the year to March to achieve an 8 percent core capital ratio. At the end of the last quarter, it was at just 5.95 percent.

Businesses, especially the smaller ones, are already complaining about not getting the loans they want.

In February to March, lending to small&nbsp;businesses dropped 0.2 percent, though overall lending grew 5.9 percent.

For importers, a major channel of funding - overseas credit through letters of undertakings from Indian banks - has been shut after the PNB fraud, forcing those&nbsp;businesses to depend more on domestic rupee loans.

The Indian government will ensure that all state banks including the weaker ones meet the minimum regulatory capital ratio, said Rajeev Kumar, the top bureaucrat overseeing the banking sector at the finance ministry.

He also said with the planned recapitalisation some of the banks will have room to grow, while bad loan recoveries in the bankruptcy process will further aid banks' bottom lines, He said he expects the banks' woes to subside in a quarter or two.

"Whenever you do the cleaning part, a bit of dust, a bit of pain, upfront is okay," said Kumar. "It's only one quarter that you have to just wait."

Thirteen state banks have reported combined losses of $8.6 billion for the year to March - including $6.5 billion in the last quarter

When the government announced a surprise $32 billion bailout plan for the nation's state-controlled banks last October, credit rating firms and the nation's central bank saw it as a huge step to getting the industry back to robust health – and lending more to businesses and consumers. But their optimism may have been majorly misplaced judging by the latest numbers coming out of the banks. And that may, in turn, crimp economic growth in Asia's third-largest economy. Thirteen state banks have reported combined losses of $8.6 billion for the year to March - including $6.5 billion in the last quarter - and their non-performing loans have surged nearly a fifth from end-December levels. Two state banks have reported modest profits and six are still to report. While many of the banks, including top lender State Bank of India, have said the worst is probably over, they still see one or two more quarters of pain. That means more bad loans getting disclosed and loss provisions shooting up as a central bank order will cause more debt defaulters to be dragged into bankruptcy. "The government capital is only going to just plug the hole, there is definitely no growth capital," said Udit Kariwala, an analyst at Fitch Ratings' India Ratings & Research. He said smaller state lenders with limited ability to raise capital from the market will have to curtail their lending. The 21 state lenders hold two-thirds of India's banking assets and accounted for the bulk of the record $150 billion of soured loans in the banking sector last year. The banks, which have been blamed for indiscriminate lending to sectors such as metals and power that turned sour, can still be held responsible for much of the balance sheet carnage. A more than $2 billion fraud at India's second-biggest state lender, Punjab National Bank, disclosed less than four months ago, not only left a hole but also underlined how weak the banks' grip on risk is. Exacerbating the problems is a move in February by the Reserve Bank of India, the nation's central bank, to withdraw half a dozen loan restructuring schemes that banking experts said were helping banks to avoid disclosing dud loans. It also tightened other rules governing bad loan accounting. In addition, the RBI this month banned Dena Bank, a loss-making smaller state-run lender, from making any new loans. Days later, Allahabad Bank, another smaller state-run lender, said it had been asked by the regulator not to increase the number of risky loans and costly deposits on its books due to its capital and leverage position Bank analysts say more state banks could come under similar restrictions aimed at conserving limited capital. The RBI already has 11 state lenders under its "prompt corrective action" framework that restricts them from expanding. That is not all. Capital needs will also be exposed by global banking rules fully kicking in by March 2019. They mandate banks to have a minimum core capital ratio of 8 percent, and at least six banks, including PNB, are short of that number. Under New Delhi's recapitalisation plan - aimed mainly at driving credit growth in an economy where bank loans are the main source of funding for everything from buying a car to building a port - the government has already injected about 880 billion rupees ($13 billion) into 20 banks as of end-March. It has 650 billion rupees to inject in the current fiscal year, and the banks themselves were supposed to raise 580 billion rupees through share and asset sales. Some, including SBI and PNB, last year raised funds from share sales, but several others have postponed such plans. Kariwala at India Ratings estimates the banks now need 800 billion to 1 trillion rupees to fund soured-asset provisions and maintain minimum capital ratios alone, which means there will be little left from the bailout for lending growth. Some bank analysts say the government may have to increase the size of the bailout. Certainly, bank lending - and its impact on growth - will be on Prime Minister Narendra Modi's agenda ahead of a general election that has to be held within a year. "Given how the stocks are doing, the nearly 0.6 trillion rupees banks need to raise looks difficult. So, the government may have to slightly increase the amount they are planning to inject," said Srikanth Vadlamani, vice president of the Financial Institutions Group at Moody's Investors Service. Moody's said this week that PNB alone would need 120-130 billion rupees of new capital in the year to March to achieve an 8 percent core capital ratio. At the end of the last quarter, it was at just 5.95 percent. Businesses, especially the smaller ones, are already complaining about not getting the loans they want. In February to March, lending to small businesses dropped 0.2 percent, though overall lending grew 5.9 percent. For importers, a major channel of funding - overseas credit through letters of undertakings from Indian banks - has been shut after the PNB fraud, forcing those businesses to depend more on domestic rupee loans. The Indian government will ensure that all state banks including the weaker ones meet the minimum regulatory capital ratio, said Rajeev Kumar, the top bureaucrat overseeing the banking sector at the finance ministry. He also said with the planned recapitalisation some of the banks will have room to grow, while bad loan recoveries in the bankruptcy process will further aid banks' bottom lines, He said he expects the banks' woes to subside in a quarter or two. "Whenever you do the cleaning part, a bit of dust, a bit of pain, upfront is okay," said Kumar. "It's only one quarter that you have to just wait."

India state banks' bailout stumbles as losses mount

Former MD and CEO of the Punjab National Bank Usha Ananthasubramanian and some other senior bank officials were aware of the "fraudulent" dealings with diamond merchant Nirav Modi but kept "misleading" the RBI, the CBI has alleged in its charge sheet.

A special CBI court here took cognisance of the chargesheet today and permitted the investigating agency to issue fresh non-bailable warrants against Nirav Modi, his brother Nishal and an executive of the Nirav Modi Group Subhash Parab.

In its charge sheet into the nearly 13,000 crore scam, the CBI said the RBI had since October 2016 sent several questionnaires to the PNB, seeking to know what procedures or measures the bank follows before issuing Letters of Understandings and Letters of Credit.

Also read:&nbsp;<a href="http://www.wionews.com/india-news/pnb-scam-how-punjab-national-bank-fell-victim-to-countrys-biggest-bank-fraud-33009">How Punjab National Bank fell victim to country's biggest bank fraud</a>

"This was duly dealt by accused Ananthasubramanian and the bank's Executive Directors - K V Brahmaji Rao, Sanjiv Sharan and Nehal Ahad and instead of replying to the queries in true spirit and facts, Ahad and the general manager of the International Banking Division of the bank's headquarters prepared a misleading reply and sent it to the RBI after getting the same approved from Sharan," the CBI said.

The 12,000-page chargesheet further claimed that a similar fraud was detected in 2016 following which the RBI took up the issue and issued circulars to all banks.

"The accused PNB officials, including Ananthasubramanian and others, were aware of this fraud involving PNB Dubai and the Indian Overseas Bank Chandigarh and yet they did not take any corrective action and remained silent spectators. This facilitated continuance of the fraud resulting in wrongful loss to the PNB," it said.

From August 2015 to May 2017, when Ananthasubramanian was the MD and CEO of the PNB, relevant circulars, caution notices and urgent questionnaires issued by the RBI were brought to her notice and she dealt with the same, the CBI said.

"Inspite of her knowledge about the modus operandi in these frauds, she (Ananthasubramanian) did not take any meaningful corrective measures in her capacity as the executive head of the bank and had unauthorisedly delegated the RBI guidelines work to her subordinates without any follow up action," the chargesheet said.

The CBI has further claimed that senior officers from the Nirav Modi Group including accused Vipul Ambani were constantly meeting Ananthasubramanian in order to continue 
with the credit facilities to the group.

"This indicated clearly that she (Ananthasubramanian) was aware of the facilities extended to the various group entities of Modi," it said.

The CBI has made the allegation in its charge sheet. It added that other than the MD and CEO Usha Ananthasubramanian, other senior officials of the bank were also in the know

Former MD and CEO of the Punjab National Bank Usha Ananthasubramanian and some other senior bank officials were aware of the "fraudulent" dealings with diamond merchant Nirav Modi but kept "misleading" the RBI, the CBI has alleged in its charge sheet. A special CBI court here took cognisance of the chargesheet today and permitted the investigating agency to issue fresh non-bailable warrants against Nirav Modi, his brother Nishal and an executive of the Nirav Modi Group Subhash Parab. In its charge sheet into the nearly 13,000 crore scam, the CBI said the RBI had since October 2016 sent several questionnaires to the PNB, seeking to know what procedures or measures the bank follows before issuing Letters of Understandings and Letters of Credit. Also read: How Punjab National Bank fell victim to country's biggest bank fraud "This was duly dealt by accused Ananthasubramanian and the bank's Executive Directors - K V Brahmaji Rao, Sanjiv Sharan and Nehal Ahad and instead of replying to the queries in true spirit and facts, Ahad and the general manager of the International Banking Division of the bank's headquarters prepared a misleading reply and sent it to the RBI after getting the same approved from Sharan," the CBI said. The 12,000-page chargesheet further claimed that a similar fraud was detected in 2016 following which the RBI took up the issue and issued circulars to all banks. "The accused PNB officials, including Ananthasubramanian and others, were aware of this fraud involving PNB Dubai and the Indian Overseas Bank Chandigarh and yet they did not take any corrective action and remained silent spectators. This facilitated continuance of the fraud resulting in wrongful loss to the PNB," it said. From August 2015 to May 2017, when Ananthasubramanian was the MD and CEO of the PNB, relevant circulars, caution notices and urgent questionnaires issued by the RBI were brought to her notice and she dealt with the same, the CBI said. "Inspite of her knowledge about the modus operandi in these frauds, she (Ananthasubramanian) did not take any meaningful corrective measures in her capacity as the executive head of the bank and had unauthorisedly delegated the RBI guidelines work to her subordinates without any follow up action," the chargesheet said. The CBI has further claimed that senior officers from the Nirav Modi Group including accused Vipul Ambani were constantly meeting Ananthasubramanian in order to continue with the credit facilities to the group. "This indicated clearly that she (Ananthasubramanian) was aware of the facilities extended to the various group entities of Modi," it said.

Former PNB MD knew of Nirav Modi scam but 'kept misleading' RBI, says CBI

Annual retail inflation accelerated in April to 4.58 per cent, after easing for three straight months, government data showed on Monday, mainly driven by faster increases in fuel prices.

Analysts polled by Reuters had forecast April's CPI inflation at 4.42 per cent, up from March's 4.28 per cent.

April was the sixth straight month in which inflation was higher than the Reserve Bank of India's medium-term target of 4 per cent.&nbsp;

The Reserve Bank of India's medium-term target is 4 per cent.&nbsp;

Earlier on Monday, the government said that the wholesale price inflation (WPI) in April increased to 3.18 per cent, compared with the poll's forecast of 2.86 per cent and March`s level of 2.47 per cent.&nbsp;

The Reserve Bank of India's medium-term target is 4 per cent

Annual retail inflation accelerated in April to 4.58 per cent, after easing for three straight months, government data showed on Monday, mainly driven by faster increases in fuel prices. Analysts polled by Reuters had forecast April's CPI inflation at 4.42 per cent, up from March's 4.28 per cent. April was the sixth straight month in which inflation was higher than the Reserve Bank of India's medium-term target of 4 per cent. The Reserve Bank of India's medium-term target is 4 per cent. Earlier on Monday, the government said that the wholesale price inflation (WPI) in April increased to 3.18 per cent, compared with the poll's forecast of 2.86 per cent and March`s level of 2.47 per cent.

Retail inflation inches up for first time in four months

A business survey showed on Wednesday that Indian factory growth accelerated in April on strong domestic demand and output, while price pressures were subdued in a comforting sign for the central bank, the Reserve Bank of India, as it seeks 
to temper inflation without hurting the economy.

The Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by IHS Markit, rose to 51.6 last month from March's 51.0, as predicted by a Reuters poll and above the 50-point mark that separates growth from contraction for a ninth straight month.

"The Indian manufacturing economy started the quarter on a slightly stronger footing as growth picked-up from March's five-month low, buoyed by stronger demand conditions," Aashna Dodhia, an economist at IHS Markit, said in a press 
release.

"Encouragingly, PMI data highlighted inflationary pressures moderated for the second month in a row, with input cost and output charge inflation at the weakest since September 2017 and July 2017 respectively."

Inflation is forecast to average 4.7 per cent in the fiscal year ending next March, and 4.9 per cent the following year, a separate Reuters poll showed.

While retail inflation has eased this year and hit a five-month low of 4.28 per cent in March it remained above the Reserve Bank of India's (RBI) medium-term target of 4 per cent.

The RBI has kept interest rates steady after a 25 basis-point cut to the repo rate in August last year. It is forecast to keep the rates unchanged until the second half of next year.

In the latest survey the new orders sub-index, a proxy for domestic demand, rose to 52.0 in April, encouraging firms to increase output and resume hiring.

Optimism about future output in April was the strongest since July 2017. That suggests Asia's third largest economy is in good heart as disruptions from a shock ban on high-value currency notes in November 2016 and the chaotic launch of a goods and services tax (GST) in July fade.

As per a Reuters poll, India will claim top spot as the world's fastest-growing major economy this year, but rising trade tensions between the United States and China may restrain growth.

Export orders slipped to a 5-month low in April, the PMI survey showed.

(With inputs from Reuters)

The Nikkei Manufacturing Purchasing Managers' Index rose to 51.6 last month from March's 51.0 and above the 50-point mark that separates growth from contraction for a ninth straight month

A business survey showed on Wednesday that Indian factory growth accelerated in April on strong domestic demand and output, while price pressures were subdued in a comforting sign for the central bank, the Reserve Bank of India, as it seeks to temper inflation without hurting the economy. The Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by IHS Markit, rose to 51.6 last month from March's 51.0, as predicted by a Reuters poll and above the 50-point mark that separates growth from contraction for a ninth straight month. "The Indian manufacturing economy started the quarter on a slightly stronger footing as growth picked-up from March's five-month low, buoyed by stronger demand conditions," Aashna Dodhia, an economist at IHS Markit, said in a press release. "Encouragingly, PMI data highlighted inflationary pressures moderated for the second month in a row, with input cost and output charge inflation at the weakest since September 2017 and July 2017 respectively." Inflation is forecast to average 4.7 per cent in the fiscal year ending next March, and 4.9 per cent the following year, a separate Reuters poll showed. While retail inflation has eased this year and hit a five-month low of 4.28 per cent in March it remained above the Reserve Bank of India's (RBI) medium-term target of 4 per cent. The RBI has kept interest rates steady after a 25 basis-point cut to the repo rate in August last year. It is forecast to keep the rates unchanged until the second half of next year. In the latest survey the new orders sub-index, a proxy for domestic demand, rose to 52.0 in April, encouraging firms to increase output and resume hiring. Optimism about future output in April was the strongest since July 2017. That suggests Asia's third largest economy is in good heart as disruptions from a shock ban on high-value currency notes in November 2016 and the chaotic launch of a goods and services tax (GST) in July fade. As per a Reuters poll, India will claim top spot as the world's fastest-growing major economy this year, but rising trade tensions between the United States and China may restrain growth. Export orders slipped to a 5-month low in April, the PMI survey showed. (With inputs from Reuters)

India's factory growth accelerates in April on strong domestic demand

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