Having speeded up printing presses to refill banks' empty ATMs in some parts of the country, the Reserve Bank of India released data on Wednesday showing that people were still hoarding cash as withdrawals outpaced spending.

Typically, economists say, cash withdrawn from banks takes a few months to re-enter circulation as people spend. Because of these lags, the weekly reserve money figures don't tell exactly how much people have hoarded, but the data does give a strong sense of the trend.

The incremental increase in currency in circulation, a component of the data, shows how much people are withdrawing every week and the amount of new money the RBI is supplying to banks.

During the week to April 20, they took 163.4 billion rupees ($2.44 billion) out of the banks, bringing the total for the first three weeks of the month to 595.2 billion rupees, the RBI data showed. In the previous three weeks, withdrawals totalled 164.7 billion rupees.

Currency withdrawals in the January-March quarter stood at 1.4 trillion rupees, about 27 per cent more than in the same quarter of 2016.

Overall, the currency in circulation stood at 18.9 trillion rupees as of April 20, 18.9 per cent up since the beginning of last October when withdrawals began to gather pace.

Alarm bells only rang this month when cash dispensers began running dry in several states, including Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar.

Neither the central bank nor commercial bankers appear to have a clear idea about this sudden pick up in withdrawals.

The RBI did not elaborate on Wednesday's reserve money data but in a circular last week it had said the shortage could be due to a delay in getting cash to the ATMs and that it has ramped up note printing.

But there is concern that Modi's audacious decision to take high-value banknotes out of circulation in late 2016 may be suffering a blowback, as Indians revert to old habits of keeping cash out of the banks, and out of sight of the taxman.

Rupa Rege Nitsure, a group chief economist at L&T Finance Holdings, suspected the spike in withdrawals could be a belated reaction after the government's so-called "demonetisation" move.

"Post demonetisation, there is a fear among people over the availability of cash and there could be a tendency of small businesses withdrawing money and hoarding cash given that bank credit is not easily available to them," she said.

Returning to normal

The government had wanted to push people toward making more transactions electronically, rather than rely on cash.

But the recent shortages of the new 2000 rupee bank notes has left analysts wondering if mattresses are being re-stuffed.

Analysts reckon a number of factors are behind the hoarding, including concerns over the health of Indian banks, avoidance of a new goods and services tax, preparations for campaign spending ahead of an election in the southern state Karnataka, and farmers withdrawing money during the harvest season of January to March.

Some analysts also say that, as economic growth managed to outpace the recovery in money supply after the 'demonetisation', there was always going to be a squeeze on demand for cash.

Afterall, it took until March for currency in circulation to rise above 17.98 trillion rupees level posted before the 2016 demonetisation.

"The currency supply by RBI has not kept pace with the growth in the economy and that is the reason the demand for cash has increased," said State Bank of India's chief economist Soumya Kanti Ghosh.

According to a note from SBI issued on April 18 the RBI still had to print an additional 700 billion rupees ($10.54 billion) to bridge the gap between demand and supply.

Neeraj Vyas, SBI's chief operating officer, told Reuters, that the downtime for ATMs out of money had reduced, but the situation should return to normal in "maybe another 5-7 days".

Currency withdrawals in the January-March quarter stood at 1.4 trillion rupees, about 27 percent more than in the same quarter of 2016

Having speeded up printing presses to refill banks' empty ATMs in some parts of the country, the Reserve Bank of India released data on Wednesday showing that people were still hoarding cash as withdrawals outpaced spending. Typically, economists say, cash withdrawn from banks takes a few months to re-enter circulation as people spend. Because of these lags, the weekly reserve money figures don't tell exactly how much people have hoarded, but the data does give a strong sense of the trend. The incremental increase in currency in circulation, a component of the data, shows how much people are withdrawing every week and the amount of new money the RBI is supplying to banks. During the week to April 20, they took 163.4 billion rupees ($2.44 billion) out of the banks, bringing the total for the first three weeks of the month to 595.2 billion rupees, the RBI data showed. In the previous three weeks, withdrawals totalled 164.7 billion rupees. Currency withdrawals in the January-March quarter stood at 1.4 trillion rupees, about 27 per cent more than in the same quarter of 2016. Overall, the currency in circulation stood at 18.9 trillion rupees as of April 20, 18.9 per cent up since the beginning of last October when withdrawals began to gather pace. Alarm bells only rang this month when cash dispensers began running dry in several states, including Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar. Neither the central bank nor commercial bankers appear to have a clear idea about this sudden pick up in withdrawals. The RBI did not elaborate on Wednesday's reserve money data but in a circular last week it had said the shortage could be due to a delay in getting cash to the ATMs and that it has ramped up note printing. But there is concern that Modi's audacious decision to take high-value banknotes out of circulation in late 2016 may be suffering a blowback, as Indians revert to old habits of keeping cash out of the banks, and out of sight of the taxman. Rupa Rege Nitsure, a group chief economist at L&T Finance Holdings, suspected the spike in withdrawals could be a belated reaction after the government's so-called "demonetisation" move. "Post demonetisation, there is a fear among people over the availability of cash and there could be a tendency of small businesses withdrawing money and hoarding cash given that bank credit is not easily available to them," she said. Returning to normal The government had wanted to push people toward making more transactions electronically, rather than rely on cash. But the recent shortages of the new 2000 rupee bank notes has left analysts wondering if mattresses are being re-stuffed. Analysts reckon a number of factors are behind the hoarding, including concerns over the health of Indian banks, avoidance of a new goods and services tax, preparations for campaign spending ahead of an election in the southern state Karnataka, and farmers withdrawing money during the harvest season of January to March. Some analysts also say that, as economic growth managed to outpace the recovery in money supply after the 'demonetisation', there was always going to be a squeeze on demand for cash. Afterall, it took until March for currency in circulation to rise above 17.98 trillion rupees level posted before the 2016 demonetisation. "The currency supply by RBI has not kept pace with the growth in the economy and that is the reason the demand for cash has increased," said State Bank of India's chief economist Soumya Kanti Ghosh. According to a note from SBI issued on April 18 the RBI still had to print an additional 700 billion rupees ($10.54 billion) to bridge the gap between demand and supply. Neeraj Vyas, SBI's chief operating officer, told Reuters, that the downtime for ATMs out of money had reduced, but the situation should return to normal in "maybe another 5-7 days".

RBI data suggests Indians may have gone back to hoarding cash

According to reports, former RBI Governor, Raghuram Rajan, has been listed as one of the possible contenders for a top job at the Bank of England (BoE).

According to UK-based Financial Times, UK Chancellor and Exchequer Philip Hammond has started the process of selecting the next Governor of the Bank of England. If selected, Rajan will replace the current Governor, Mark Carney, next year.

According to the report, Mr Hammond's has shown an interest in looking abroad for Carney's successor as the UK prepares for Brexit.
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Rajan currently teaches Finance at the University of Chicago, Booth School of Business. He served as the RBI Governor for three years, September 2013 to 2016.

Rajan was also the youngest Chief Economist and Director of Research at the International Monetary Fund.

Indian-origin Baroness Shriti Vadera could also be a candidate for the post.&nbsp; 
&nbsp;

Indian-origin Baroness Shriti Vadera could also be a candidate for the post

According to reports, former RBI Governor, Raghuram Rajan, has been listed as one of the possible contenders for a top job at the Bank of England (BoE). According to UK-based Financial Times, UK Chancellor and Exchequer Philip Hammond has started the process of selecting the next Governor of the Bank of England. If selected, Rajan will replace the current Governor, Mark Carney, next year. According to the report, Mr Hammond's has shown an interest in looking abroad for Carney's successor as the UK prepares for Brexit. Rajan currently teaches Finance at the University of Chicago, Booth School of Business. He served as the RBI Governor for three years, September 2013 to 2016. Rajan was also the youngest Chief Economist and Director of Research at the International Monetary Fund. Indian-origin Baroness Shriti Vadera could also be a candidate for the post.

Raghuram Rajan could be next Bank of England Governor

Asserting that the Indian economy turned in a resilient performance in 2017-18, Reserve Bank of India (RBI) Governor Urjit Patel has said the country's growth is expected to accelerate next fiscal.

Mr Patel was addressing the International Monetary Finance Committee here yesterday.

"The Indian economy turned in a resilient performance in 2017-18," Mr Patel said.

Although the real GDP growth was moderated to 6.6 per cent from 7.1 per cent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, he said.

This was supported by an acceleration in manufacturing, rising sales growth, a pick-up in capacity utilisation, strong activity in the services sector and a record agricultural harvest, the RBI governor added.

"Several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained," he said.

Global demand has been improving, which should encourage exports and boost fresh investments, Patel said, adding that on the whole, real GDP growth was expected to expand at 7.4 per cent in 2018-19, with risks evenly balanced.

In his address, Mr Patel said since November 2016, headline consumer price inflation had generally remained below the medium-term target of four per cent.

An unusual spike in vegetables prices pushed up inflation to a recent peak of 5.2 per cent in December, but it eased in subsequent months to reach 4.3 per cent in March, he said.

Mr Patel said several factors were likely to influence the inflation outlook, including a possible moderation in food prices if the monsoon turned out to be normal and was supported by an effective food supply management.

"Countervailing this, upside risks emanate from the distinct hardening bias in crude oil prices, the steady firming up of inflation excluding food and fuel mirroring pick up in domestic demand, and spillovers from financial volatility as markets re-price the path of monetary policy normalisation by systemic central banks," he said.

Noting that risks to inflation are tilted to the upside, the monetary policy rate was kept unchanged at 6.0 per cent in April 2018 with a neutral stance, Mr Patel said.

Asserting that the government is committed to fiscal prudence, the RBI governor said aided by buoyancy in tax revenues and rationalisation of subsidies, the gross fiscal deficit (GFD) of the central government has been steadily brought down since 2013-14 to 3.5 per cent of GDP in 2017-18 without compromising on public investment requirements and social sector spending.

The GFD is budgeted lower at 3.3 per cent in 2018-19, he said. The government has accepted a debt rule that will bring down the debt-to-GDP ratio to 40 per cent over a period of time by 2024-25.

Mr Patel said the goods and services tax (GST), which was implemented from July 2017 has reformed the system of indirect taxes by simplifying payments and credits, and improving the efficiency of movement of goods across the country.

Automation of tax payments and 'team-based assessment with dynamic jurisdiction' without direct interface with tax payers has improved overall efficiency and transparency of revenue administration, he said.

Mr Patel said with the pace of import growth relative to that of exports, the current account deficit (CAD) expanded from 0.7 per cent in 2016-17 to 1.9 per cent for the first nine months of 2017-18.

External financing conditions remained comfortable, boosted mainly by robust inflows of foreign direct investment (FDI), he said.

The UNCTAD's survey of multinational enterprises ranked India as the third most favoured destination for FDI for 2017-19. Reflecting these developments, India's foreign exchange reserves at $424 billion were equivalent of 11 months of imports, he added. 
"India has persevered with structural reforms over a wide area ranging from a flexible inflation targeting framework for monetary policy liberalisation of FDI flows a unique identification (Aadhaar) backed direct benefit transfers an insolvency and bankruptcy code the GST realty reforms and a swathe of measures for improvement in the ease of doing business more generally," he said.

These factors have improved India's global ranking in the World Bank's Ease of Doing Business, Mr Patel added.

'Several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained,' he said

Asserting that the Indian economy turned in a resilient performance in 2017-18, Reserve Bank of India (RBI) Governor Urjit Patel has said the country's growth is expected to accelerate next fiscal. Mr Patel was addressing the International Monetary Finance Committee here yesterday. "The Indian economy turned in a resilient performance in 2017-18," Mr Patel said. Although the real GDP growth was moderated to 6.6 per cent from 7.1 per cent a year ago, there was a strong rebound in the second half of the year on the back of a turnaround in investment demand, he said. This was supported by an acceleration in manufacturing, rising sales growth, a pick-up in capacity utilisation, strong activity in the services sector and a record agricultural harvest, the RBI governor added. "Several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained," he said. Global demand has been improving, which should encourage exports and boost fresh investments, Patel said, adding that on the whole, real GDP growth was expected to expand at 7.4 per cent in 2018-19, with risks evenly balanced. In his address, Mr Patel said since November 2016, headline consumer price inflation had generally remained below the medium-term target of four per cent. An unusual spike in vegetables prices pushed up inflation to a recent peak of 5.2 per cent in December, but it eased in subsequent months to reach 4.3 per cent in March, he said. Mr Patel said several factors were likely to influence the inflation outlook, including a possible moderation in food prices if the monsoon turned out to be normal and was supported by an effective food supply management. "Countervailing this, upside risks emanate from the distinct hardening bias in crude oil prices, the steady firming up of inflation excluding food and fuel mirroring pick up in domestic demand, and spillovers from financial volatility as markets re-price the path of monetary policy normalisation by systemic central banks," he said. Noting that risks to inflation are tilted to the upside, the monetary policy rate was kept unchanged at 6.0 per cent in April 2018 with a neutral stance, Mr Patel said. Asserting that the government is committed to fiscal prudence, the RBI governor said aided by buoyancy in tax revenues and rationalisation of subsidies, the gross fiscal deficit (GFD) of the central government has been steadily brought down since 2013-14 to 3.5 per cent of GDP in 2017-18 without compromising on public investment requirements and social sector spending. The GFD is budgeted lower at 3.3 per cent in 2018-19, he said. The government has accepted a debt rule that will bring down the debt-to-GDP ratio to 40 per cent over a period of time by 2024-25. Mr Patel said the goods and services tax (GST), which was implemented from July 2017 has reformed the system of indirect taxes by simplifying payments and credits, and improving the efficiency of movement of goods across the country. Automation of tax payments and 'team-based assessment with dynamic jurisdiction' without direct interface with tax payers has improved overall efficiency and transparency of revenue administration, he said. Mr Patel said with the pace of import growth relative to that of exports, the current account deficit (CAD) expanded from 0.7 per cent in 2016-17 to 1.9 per cent for the first nine months of 2017-18. External financing conditions remained comfortable, boosted mainly by robust inflows of foreign direct investment (FDI), he said. The UNCTAD's survey of multinational enterprises ranked India as the third most favoured destination for FDI for 2017-19. Reflecting these developments, India's foreign exchange reserves at $424 billion were equivalent of 11 months of imports, he added. "India has persevered with structural reforms over a wide area ranging from a flexible inflation targeting framework for monetary policy liberalisation of FDI flows a unique identification (Aadhaar) backed direct benefit transfers an insolvency and bankruptcy code the GST realty reforms and a swathe of measures for improvement in the ease of doing business more generally," he said. These factors have improved India's global ranking in the World Bank's Ease of Doing Business, Mr Patel added.

India's pace of growth to accelerate in 2018-19: RBI governor

A day after claiming that there was Rs 70,000-crore cash shortfall in the system, SBI Reseach termed the ongoing shortage in cash supplies as "superficial", citing a decline in cash withdrawals from ATMs in the March quarter over the previous quarter.

Though as per RBI data, the ATM withdrawals rose 12.2 per cent in the second half of FY18 over the first half, the quarter-on-quarter ATM withdrawal trend indicates that there has been a continuous increase in withdrawals--15.5 per cent in Q1), 6.9 per cent in Q2 and 8.8 per cent in Q3 of FY18. But in Q4, the withdrawal declined by 0.5 per cent over Q3, SBI Research said in a report today.

"The decline in ATM withdrawal in the fourth quarter could actually be a seasonal phenomenon apart from the usual reasons floating around like currency shortage. This strongly supports our contention that the current shortage could be superficial rather than real," the report said.

Cash withdrawals in H2 are always more than H1 due to many reasons like festival season and procurement season which always fall in H2 but in FY18 the increase is not self- explanatory.

Currency in circulation has surpassed the pre- demonetisation level of Rs 17.98 trillion to reach Rs 18.29 trillion by March 2018.

The report said the sudden surge in currency in circulation is perplexing.

The quarterly growth in Q4 of FY18 shows that from an average growth of 4.4 per cent of five years between FY12 and FY16, growth has shot up to 8 per cent.

"This is despite the fact that economy had achieved remonetization and digital modes have also gained traction in a big way," it said.

Interestingly, in a report SBI Research had said yesterday that the cash shortfall was nearly Rs 70,000 crore in the system. This comes even as government and the RBI claimed that there was no shortage of currency.

Based on the nominal GDP growth of 10.8 per cent and 9.8 per cent in FY17 and FY18 respectively, currency with the public would have been Rs 19.4 trillion by March 2018, the report had said.

However, currently, currency with public is only Rs 17.5 trillion which shows a gap of Rs 1.9 trillion. But the increase in digital payment compensates some part of the existing gap to the tune of Rs 1.2 trillion.

"Therefore, the apparent shortfall is around Rs 70,000 crore or even less," the report had said.&nbsp

A day after claiming that there was Rs 70,000-crore cash shortfall in the system, SBI Reseach termed the ongoing shortage in cash supplies as 'superficial', citing a decline in cash withdrawals from ATMs in the March quarter over the previous quarter

A day after claiming that there was Rs 70,000-crore cash shortfall in the system, SBI Reseach termed the ongoing shortage in cash supplies as "superficial", citing a decline in cash withdrawals from ATMs in the March quarter over the previous quarter. Though as per RBI data, the ATM withdrawals rose 12.2 per cent in the second half of FY18 over the first half, the quarter-on-quarter ATM withdrawal trend indicates that there has been a continuous increase in withdrawals--15.5 per cent in Q1), 6.9 per cent in Q2 and 8.8 per cent in Q3 of FY18. But in Q4, the withdrawal declined by 0.5 per cent over Q3, SBI Research said in a report today. "The decline in ATM withdrawal in the fourth quarter could actually be a seasonal phenomenon apart from the usual reasons floating around like currency shortage. This strongly supports our contention that the current shortage could be superficial rather than real," the report said. Cash withdrawals in H2 are always more than H1 due to many reasons like festival season and procurement season which always fall in H2 but in FY18 the increase is not self- explanatory. Currency in circulation has surpassed the pre- demonetisation level of Rs 17.98 trillion to reach Rs 18.29 trillion by March 2018. The report said the sudden surge in currency in circulation is perplexing. The quarterly growth in Q4 of FY18 shows that from an average growth of 4.4 per cent of five years between FY12 and FY16, growth has shot up to 8 per cent. "This is despite the fact that economy had achieved remonetization and digital modes have also gained traction in a big way," it said. Interestingly, in a report SBI Research had said yesterday that the cash shortfall was nearly Rs 70,000 crore in the system. This comes even as government and the RBI claimed that there was no shortage of currency. Based on the nominal GDP growth of 10.8 per cent and 9.8 per cent in FY17 and FY18 respectively, currency with the public would have been Rs 19.4 trillion by March 2018, the report had said. However, currently, currency with public is only Rs 17.5 trillion which shows a gap of Rs 1.9 trillion. But the increase in digital payment compensates some part of the existing gap to the tune of Rs 1.2 trillion. "Therefore, the apparent shortfall is around Rs 70,000 crore or even less," the report had said.

SBI research says cash crunch superficial citing fall in cash withdrawals

As several ATMs <a href="http://www.wionews.com/india-news/measures-to-raise-cash-printing-five-times-secy-dept-of-economic-affairs-131018">in the country ran out cash</a>, the Reserve Bank of India said today that there is no currency shortage in the country as there is sufficient cash in vaults and currency chests.

"Printing of currency has been ramped up in all note presses, there has been shortage in some pockets due to logistical issues," the RBI said.

Several ATMs across the country especially in Telangana, Uttar Pradesh, Madhya Pradesh, Uttar Pradesh and Gujarat went without cash today as people struggled to take out money.

Finance minister Arun Jaitley said that he had reviewed the currency situation in the country adding that temporary shortage was caused by "sudden and unusual increase in some areas and is being tackled quickly".

Minister of State(MoS) for finance SP Shukla said that the problem was because some states had less currency and other states had less.

Meanwhile, Gujarat deputy chief minister Nitin Patel, who is also the state finance minister, acknowledged that banks are facing cash crunch and said the government is in touch with the RBI to ensure enough cash is supplied to banks.

The demand for cash has increased since this is the harvest and marriage season in the state.

Bank officials said they are getting only one-tenth of the required cash leaving them helpless to replenish the ATMs. This has especially affected farmer, the bank officials added.

The RBI report highlighted that the currency in circulation has reached the pre-demonetisation level of about Rs 17 trillion.

SBI chairman Rajnish Kumar attributed that issue to an "imbalance" due to the crop procurement season in Punjab, MP and UP where there is heightened demand.&nbsp

&nbsp

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Finance minister Arun Jaitley said that he had reviewed the currency situation in the country

As several ATMs in the country ran out cash, the Reserve Bank of India said today that there is no currency shortage in the country as there is sufficient cash in vaults and currency chests. "Printing of currency has been ramped up in all note presses, there has been shortage in some pockets due to logistical issues," the RBI said. Several ATMs across the country especially in Telangana, Uttar Pradesh, Madhya Pradesh, Uttar Pradesh and Gujarat went without cash today as people struggled to take out money. Finance minister Arun Jaitley said that he had reviewed the currency situation in the country adding that temporary shortage was caused by "sudden and unusual increase in some areas and is being tackled quickly". Minister of State(MoS) for finance SP Shukla said that the problem was because some states had less currency and other states had less. Meanwhile, Gujarat deputy chief minister Nitin Patel, who is also the state finance minister, acknowledged that banks are facing cash crunch and said the government is in touch with the RBI to ensure enough cash is supplied to banks. The demand for cash has increased since this is the harvest and marriage season in the state. Bank officials said they are getting only one-tenth of the required cash leaving them helpless to replenish the ATMs. This has especially affected farmer, the bank officials added. The RBI report highlighted that the currency in circulation has reached the pre-demonetisation level of about Rs 17 trillion. SBI chairman Rajnish Kumar attributed that issue to an "imbalance" due to the crop procurement season in Punjab, MP and UP where there is heightened demand.

No currency shortage, sufficient cash available in vaults, assures RBI

Proper implementation of the Goods and Services Tax (GST) in India can be worked upon and is not an "unfixable problem", former RBI governor Raghuram Rajan has said, reiterating that demonetisation was "not a well-planned, well thought-out" move.

With the Modi government bringing in ambitious reforms like GST and demonetisation, Rajan said it would be good if such measures were better implemented.

"On the Goods and Services Tax, we will figure it out eventually. It will be nice if we could implement much better than we do. But it's (GST) not an unfixable problem. We can work on it. I wouldn't give up hope at this point on that," Rajan told an audience at the Harvard Kennedy School in Cambridge yesterday.

Rajan, who is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at The University of Chicago's Booth School of Business, gave the 2018 Albert H Gordon Lecture on the topic 'Leverage, Financial Crises, and Policies to Raise Economic Growth'. He was asked about the "shoddy implementation" of big-ticket reforms like GST and demonetisation in India.

On demonetisation, Rajan rejected the claim that the Reserve Bank of India had not been consulted by the government before it went on to declare 1,000 and 500-rupee currency notes as illegal tender in November 2016. He however reiterated that the move to cancel 87.5 per cent of the currency value was "not a good idea".

"I didn't ever say that I wasn't consulted (on demonetisation). In fact, I have made it quite clear that we were consulted and we didn't think it was a good idea," Rajan said.

He said demonetisation "was not a well-planned, well thought-out, useful exercise and I told the government that when the idea was first mooted," he said adding that any macro-economist would say that if 87.5 per cent of the currency is being demonetised, then it better be made sure that a similar amount of currency is printed and ready to be put back in circulation.

"India went into it without having done that. It had a negative economic impact but also the idea was that somehow people who had money stored in their basements without having paid taxes on it would overnight see religion and come to the government and say 'sorry we were hiding this stuff, let me pay taxes on it'," Rajan said, calling it a "naive view".

"Anybody who knows India, knows that very quickly we find ways around the system," he said adding that with "essentially" all the money that was demonetised coming back into the system, the exercise did not have the direct effect that was sought.

While the longer term impact of demonetisation is yet to be seen, its negative economic impact included people not having currency, not being able to pay and economic activity plummeting especially in the informal sector. 
 
"There may be some longer term impact that people think that if this sort of thing happens then the government is serious about collecting taxes. There may be greater tax payments but we still have to see strong evidence that that is true," he said.

Rajan also expressed concern that a lot of people probably lost their jobs due to demonetisation but that has not been counted well as it would be mostly in the informal sector.

"The positive impacts (of demonetisation) are out there in the future. We have no idea whether they will be important. To my mind it was not a policy that was useful at that time," he said.

To a suggestion that demonetisation could have positively impacted growth, Rajan said "you would have to find a new economic theory to explain how it helped the economy".

He said most estimates of the cost of demonetisation vary between 1.5-2 per cent of the GDP.

"It would be a really die-hard government advocate who would say that the growth benefits of demonetisation were immediate," he said.

"Most of the supporters of the move would say that the benefits of the move are coming by changing the incentive to pay taxes. I would say yes, we will have to wait and see whether that in fact is true," he said.

On the problem of non-performing assets and making a reference to the Nirav Modi-PNB scandal, Rajan said it is worrisome that some Indian banks have antiquated systems.

A part of the Punjab National Bank scam was cyber-related and there is a need to go into the details of how the fraud came to be, he said.

"It turns out that we don't need to be really clever in the Indian system to make away with a billion dollars. Some of these banks have antiquated systems also....Your worry is that the systems are not adequate to prevent rogue dealers, rogue employees colluding and making off with stuff. That is the fraud part," he said.

He added that bad loans do not necessarily come from fraud, they come from "irrational exuberance".

 
&nbsp

Proper implementation of the Goods and Services Tax (GST) in India can be worked upon and is not an 'unfixable problem', former RBI governor Raghuram Rajan has said, reiterating that demonetisation was 'not a well-planned, well thought-out' move

Proper implementation of the Goods and Services Tax (GST) in India can be worked upon and is not an "unfixable problem", former RBI governor Raghuram Rajan has said, reiterating that demonetisation was "not a well-planned, well thought-out" move. With the Modi government bringing in ambitious reforms like GST and demonetisation, Rajan said it would be good if such measures were better implemented. "On the Goods and Services Tax, we will figure it out eventually. It will be nice if we could implement much better than we do. But it's (GST) not an unfixable problem. We can work on it. I wouldn't give up hope at this point on that," Rajan told an audience at the Harvard Kennedy School in Cambridge yesterday. Rajan, who is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at The University of Chicago's Booth School of Business, gave the 2018 Albert H Gordon Lecture on the topic 'Leverage, Financial Crises, and Policies to Raise Economic Growth'. He was asked about the "shoddy implementation" of big-ticket reforms like GST and demonetisation in India. On demonetisation, Rajan rejected the claim that the Reserve Bank of India had not been consulted by the government before it went on to declare 1,000 and 500-rupee currency notes as illegal tender in November 2016. He however reiterated that the move to cancel 87.5 per cent of the currency value was "not a good idea". "I didn't ever say that I wasn't consulted (on demonetisation). In fact, I have made it quite clear that we were consulted and we didn't think it was a good idea," Rajan said. He said demonetisation "was not a well-planned, well thought-out, useful exercise and I told the government that when the idea was first mooted," he said adding that any macro-economist would say that if 87.5 per cent of the currency is being demonetised, then it better be made sure that a similar amount of currency is printed and ready to be put back in circulation. "India went into it without having done that. It had a negative economic impact but also the idea was that somehow people who had money stored in their basements without having paid taxes on it would overnight see religion and come to the government and say 'sorry we were hiding this stuff, let me pay taxes on it'," Rajan said, calling it a "naive view". "Anybody who knows India, knows that very quickly we find ways around the system," he said adding that with "essentially" all the money that was demonetised coming back into the system, the exercise did not have the direct effect that was sought. While the longer term impact of demonetisation is yet to be seen, its negative economic impact included people not having currency, not being able to pay and economic activity plummeting especially in the informal sector. "There may be some longer term impact that people think that if this sort of thing happens then the government is serious about collecting taxes. There may be greater tax payments but we still have to see strong evidence that that is true," he said. Rajan also expressed concern that a lot of people probably lost their jobs due to demonetisation but that has not been counted well as it would be mostly in the informal sector. "The positive impacts (of demonetisation) are out there in the future. We have no idea whether they will be important. To my mind it was not a policy that was useful at that time," he said. To a suggestion that demonetisation could have positively impacted growth, Rajan said "you would have to find a new economic theory to explain how it helped the economy". He said most estimates of the cost of demonetisation vary between 1.5-2 per cent of the GDP. "It would be a really die-hard government advocate who would say that the growth benefits of demonetisation were immediate," he said. "Most of the supporters of the move would say that the benefits of the move are coming by changing the incentive to pay taxes. I would say yes, we will have to wait and see whether that in fact is true," he said. On the problem of non-performing assets and making a reference to the Nirav Modi-PNB scandal, Rajan said it is worrisome that some Indian banks have antiquated systems. A part of the Punjab National Bank scam was cyber-related and there is a need to go into the details of how the fraud came to be, he said. "It turns out that we don't need to be really clever in the Indian system to make away with a billion dollars. Some of these banks have antiquated systems also....Your worry is that the systems are not adequate to prevent rogue dealers, rogue employees colluding and making off with stuff. That is the fraud part," he said. He added that bad loans do not necessarily come from fraud, they come from "irrational exuberance".

Implementation of GST not 'unfixable' problem: Ex RBI governor Raghuram Rajan

The Special Investigation Team (SIT) on black money has asked probe agencies to check and curb the use of cryptocurrencies as it reviewed their operation and circulation in the country and links to shady offshore transactions.

Officials said the SIT recently held a meeting in the national capital during which it was briefed about the overall scenario of the operations of this virtual currency in the country.

The SIT, official sources said, called cryptocurrencies like bitcoins "illegal" and asked probe agencies such as the Income Tax Department, the Enforcement Directorate (ED) and the Narcotics Control Bureau (NCB) to detect and stop their usage and check transactions being done over the Internet, including those with cross-border ramifications.

The panel, they said, would also prepare a report that would be submitted to the government in some time.

"The government is the final authority to frame rules and law to regulate these virtual currencies and the SIT would provide its report to it on the subject," a senior official said.

During the meeting, the NCB informed the SIT that about four cryptocurrency-fuelled drugs smuggling transactions have been unearthed in the country in the last over two years time while the tax department informed the panel about the searches it conducted on bitcoin exchanges across the country last year.

A report prepared by the banking regulator --the Reserve Bank of India (RBI) -- was also taken up during the meeting, they said.

Finance Minister Arun Jaitley, in his speech on February 1, had said that cryptocurrencies were not legal and affirmed to eliminate their usage.

The RBI, in the past, has come out with three specific warnings to discourage the public from investing in the virtual currencies.

A government-appointed panel constituted to study the subject and suggest measures to tackle it had submitted its report to the Union Finance Ministry early this year.

The Supreme Court-appointed SIT on black money was notified by the government in 2014 and is headed by Justice (retd) M B Shah and has multiple central probe, enforcement and regulatory agencies as its member.

The SIT called cryptocurrencies 'illegal' & asked probe agencies such as the I-T department, the ED, and the NCB to detect and stop their usage.

The Special Investigation Team (SIT) on black money has asked probe agencies to check and curb the use of cryptocurrencies as it reviewed their operation and circulation in the country and links to shady offshore transactions. Officials said the SIT recently held a meeting in the national capital during which it was briefed about the overall scenario of the operations of this virtual currency in the country. The SIT, official sources said, called cryptocurrencies like bitcoins "illegal" and asked probe agencies such as the Income Tax Department, the Enforcement Directorate (ED) and the Narcotics Control Bureau (NCB) to detect and stop their usage and check transactions being done over the Internet, including those with cross-border ramifications. The panel, they said, would also prepare a report that would be submitted to the government in some time. "The government is the final authority to frame rules and law to regulate these virtual currencies and the SIT would provide its report to it on the subject," a senior official said. During the meeting, the NCB informed the SIT that about four cryptocurrency-fuelled drugs smuggling transactions have been unearthed in the country in the last over two years time while the tax department informed the panel about the searches it conducted on bitcoin exchanges across the country last year. A report prepared by the banking regulator --the Reserve Bank of India (RBI) -- was also taken up during the meeting, they said. Finance Minister Arun Jaitley, in his speech on February 1, had said that cryptocurrencies were not legal and affirmed to eliminate their usage. The RBI, in the past, has come out with three specific warnings to discourage the public from investing in the virtual currencies. A government-appointed panel constituted to study the subject and suggest measures to tackle it had submitted its report to the Union Finance Ministry early this year. The Supreme Court-appointed SIT on black money was notified by the government in 2014 and is headed by Justice (retd) M B Shah and has multiple central probe, enforcement and regulatory agencies as its member.

After RBI's no to cryptocurrency, the SIT on black money orders clamp down on them

The Reserve Bank of India (RBI) is considering issuance of its own virtual currency (VC) while instructing financial institutions to refrain from and cut off business relations with private entities that are dealing with virtual currencies.

An interdepartmental group has been constituted to study and provide guidance on the “desirability and feasibility” to introduce a “central bank digital currency” and will submit its report by June, the central bank said.

“Several central banks are debating the possibility of introducing a fiat digital currency. As opposed to private digital tokens, these are issued by a central bank. They constitute a liability of the central bank, and they will be in circulation in addition to the paper currency that we have,” RBI deputy governor BP Kanungo told reporters during the customary post-policy address.

Explaining its rationale behind the central digital currency, RBI said technological innovations, including virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system.

 
The RBI has also directed banks and regulated entities not to deal with or provide services to individuals or businesses dealing in virtual currencies.&nbsp;

RBI directs banks and regulated entities not to deal in or provide services to individuals or businesses dealing in virtual currencies

The Reserve Bank of India (RBI) is considering issuance of its own virtual currency (VC) while instructing financial institutions to refrain from and cut off business relations with private entities that are dealing with virtual currencies. An interdepartmental group has been constituted to study and provide guidance on the “desirability and feasibility” to introduce a “central bank digital currency” and will submit its report by June, the central bank said. “Several central banks are debating the possibility of introducing a fiat digital currency. As opposed to private digital tokens, these are issued by a central bank. They constitute a liability of the central bank, and they will be in circulation in addition to the paper currency that we have,” RBI deputy governor BP Kanungo told reporters during the customary post-policy address. Explaining its rationale behind the central digital currency, RBI said technological innovations, including virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. The RBI has also directed banks and regulated entities not to deal with or provide services to individuals or businesses dealing in virtual currencies.

RBI planning on introducing digital currency

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected.

The RBI kept its policy repo rate unchanged at 6.00 per cent, its lowest since November 2010.

The reverse repo rate also remained unchanged at 5.75 per cent.

Five of six members on the monetary policy committee voted for a hold, while one wanted a hike in the repo rate.

Inflation concerns have eased substantially following a crash in vegetable prices which is expected to keep price pressures soft for the next few months.

However, oil prices remain a risk, with India importing about 80 per cent of its crude requirement.

Bonds rose after the RBI's statement, while the rupee firmed and stocks extended early gains.

The 10-year benchmark bond yield fell to 7.19 per cent from 7.28 percent before the announcement, while the rupee was trading at 64.95 to the dollar from 65.04 before. The main market index was up 1.8 per cent.

INFLATION EASING, GROWTH

The RBI projected economic growth of 7.4 per cent for the current fiscal year that began on April 1.

It also lowered its April-September inflation projection to 4.7-5.1 per cent from February's 5.1-5.6 per cent.

After hitting a 17-month high in December, retail inflation eased for the second straight month in February and by more than expected, to a four-month low of 4.44 per cent. But it was still higher than the central bank's medium term target of 4 percent.

That has prompted most market watchers to push back their forecasts for a rate hike to early 2019, from earlier estimates of the second half of this year.

While inflation fears have eased in the short-term, the RBI sounded cautious and opted to wait for more data instead of giving a clear indication of its policy path.

"The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis," the RBI said in a statement.

The RBI is also mindful of the pace of India's economic recovery, after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank.

Greater regulatory scrutiny in the wake of the scandal could make banks more wary of lending, slowing down business activity after India's economy grew 7.2 percent in the October-December, its fastest in five quarters.

The reverse repo rate was also unchanged at 5.75 per cent.

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected. The RBI kept its policy repo rate unchanged at 6.00 per cent, its lowest since November 2010. The reverse repo rate also remained unchanged at 5.75 per cent. Five of six members on the monetary policy committee voted for a hold, while one wanted a hike in the repo rate. Inflation concerns have eased substantially following a crash in vegetable prices which is expected to keep price pressures soft for the next few months. However, oil prices remain a risk, with India importing about 80 per cent of its crude requirement. Bonds rose after the RBI's statement, while the rupee firmed and stocks extended early gains. The 10-year benchmark bond yield fell to 7.19 per cent from 7.28 percent before the announcement, while the rupee was trading at 64.95 to the dollar from 65.04 before. The main market index was up 1.8 per cent. INFLATION EASING, GROWTH The RBI projected economic growth of 7.4 per cent for the current fiscal year that began on April 1. It also lowered its April-September inflation projection to 4.7-5.1 per cent from February's 5.1-5.6 per cent. After hitting a 17-month high in December, retail inflation eased for the second straight month in February and by more than expected, to a four-month low of 4.44 per cent. But it was still higher than the central bank's medium term target of 4 percent. That has prompted most market watchers to push back their forecasts for a rate hike to early 2019, from earlier estimates of the second half of this year. While inflation fears have eased in the short-term, the RBI sounded cautious and opted to wait for more data instead of giving a clear indication of its policy path. "The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis," the RBI said in a statement. The RBI is also mindful of the pace of India's economic recovery, after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank. Greater regulatory scrutiny in the wake of the scandal could make banks more wary of lending, slowing down business activity after India's economy grew 7.2 percent in the October-December, its fastest in five quarters.

RBI keeps repo rate unchanged at 6%, cuts inflation forecast

<a href="http://www.wionews.com/india-news/entertainment-jodhpur-court-convicts-salman-khan-he-gets-a-5-year-jail-term-128523">Blackbuck poaching case: Salman Khan sentenced to five years in jail, bail application tomorrow</a>

A Jodhpur court sentenced Salman Khan Thursday to five years in jail for killing two blackbucks in 1998. The actor was also fined Rs 10,000.All the others charged in the case - actors Saif, Tabu, Neelam, Sonali Bendre, and Dushyant Singh, a local - were acquitted.

<a href="http://www.wionews.com/business-&-economy/rbi-keeps-repo-rate-unchanged-at-6-per-cent-stance-stays-at-neutral-128528">RBI keeps </a><a href="http://www.wionews.com/business-&-economy/rbi-keeps-repo-rate-unchanged-at-6-per-cent-stance-stays-at-neutral-128528">repo</a><a href="http://www.wionews.com/business-&-economy/rbi-keeps-repo-rate-unchanged-at-6-per-cent-stance-stays-at-neutral-128528"> rate unchanged at 6%, cuts inflation forecast</a>

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected.The RBI kept its policy repo rate unchanged at 6.00 per cent, its lowest since November 2010.

<a href="http://www.wionews.com/sports/indian-women-hockey-team-loses-to-lower-ranked-wales-at-commonwealth-games-128554">Indian women's hockey team stunned 2-3 by Wales at Commonwealth Games</a>

The World No. 6 Indian hockey team started the campaign with disappointment at Commonwealth Games as they were stunned by 2-3 by a lower-ranked Wales in a Group A clash.

<a href="http://www.wionews.com/india-news/how-much-money-is-at-stake-as-salman-khan-goes-to-jail-128518">How much money is at stake as Salman Khan goes to jail</a>

The superstar will have to spend a few nights in the Jodhpur jail before he can appeal for bail. A lot of money is riding on the actor and the projects he is currently working on and trade pundits state that nearly Rs 500 crores are at stake.&nbsp;

<a href="http://www.wionews.com/india-news/facebook-data-leak-details-of-over-56-lakh-indian-users-may-have-been-shared-with-cambridge-analytica-128439">Facebook leak: Over 5.6 lakh Indian users' details may have been shared with Cambridge Analytica</a>

In a blog post, &nbsp;Facebook said that information about 562,455 subscribers in India — 0.6% of the complete count — may have been shared with the data firm that has worked with several Indian political parties for a long time. However, Facebook did not specify whether the company used that information for its clients.

Read the five big stories of the day here

Blackbuck poaching case: Salman Khan sentenced to five years in jail, bail application tomorrow A Jodhpur court sentenced Salman Khan Thursday to five years in jail for killing two blackbucks in 1998. The actor was also fined Rs 10,000.All the others charged in the case - actors Saif, Tabu, Neelam, Sonali Bendre, and Dushyant Singh, a local - were acquitted. RBI keeps repo rate unchanged at 6%, cuts inflation forecast The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected.The RBI kept its policy repo rate unchanged at 6.00 per cent, its lowest since November 2010. Indian women's hockey team stunned 2-3 by Wales at Commonwealth Games The World No. 6 Indian hockey team started the campaign with disappointment at Commonwealth Games as they were stunned by 2-3 by a lower-ranked Wales in a Group A clash. How much money is at stake as Salman Khan goes to jail The superstar will have to spend a few nights in the Jodhpur jail before he can appeal for bail. A lot of money is riding on the actor and the projects he is currently working on and trade pundits state that nearly Rs 500 crores are at stake. Facebook leak: Over 5.6 lakh Indian users' details may have been shared with Cambridge Analytica In a blog post, Facebook said that information about 562,455 subscribers in India — 0.6% of the complete count — may have been shared with the data firm that has worked with several Indian political parties for a long time. However, Facebook did not specify whether the company used that information for its clients.

News brief: Big stories of the day

The BSE Sensex rose over 600 points after the Reserve Bank of India kept its repo rate unchanged at 6 per cent. The reverse repo rate was also kept unchanged at 5.75 per cent.&nbsp

The Nifty meanwhile rose over 200 points.&nbsp

The bank had been expected to stick to its 'neutral' stance to support an early recovery in economic growth as inflation eases.&nbsp

The Sensex finally closed 577.73 points (1.75%) up at 33,596.80, while the Nifty closed 196.75 points (1.94%) up at 10,325.15.&nbsp

The stock market had been rising Thursday even before the central bank announced its new rates.&nbsp

The shares were tracking global equity markets that recovered after fears of a Sino-US trade war eased, with metal stocks such as Hindalco Industries Ltd and banks such as ICICI Bank Ltd among top gainers.

The United States expressed willingness to negotiate a resolution to the trade dispute with China after Beijing retaliated against proposed US tariffs on $50 billion in Chinese goods by targeting key American imports.

"All sectors which were impacted yesterday, including metals, are recovering today mainly because the fears of escalation in trade wars have receded, at least for the time-being," said Deepak Jasani, head of retail research at HDFC Securities.

(With inputs from Reuters)

The Sensex finally closed 577.73 points (1.75%) up at 33,596.80, while the Nifty closed 196.75 points (1.94%) up at 10,325.15

The BSE Sensex rose over 600 points after the Reserve Bank of India kept its repo rate unchanged at 6 per cent. The reverse repo rate was also kept unchanged at 5.75 per cent. The Nifty meanwhile rose over 200 points. The bank had been expected to stick to its 'neutral' stance to support an early recovery in economic growth as inflation eases. The Sensex finally closed 577.73 points (1.75%) up at 33,596.80, while the Nifty closed 196.75 points (1.94%) up at 10,325.15. The stock market had been rising Thursday even before the central bank announced its new rates. The shares were tracking global equity markets that recovered after fears of a Sino-US trade war eased, with metal stocks such as Hindalco Industries Ltd and banks such as ICICI Bank Ltd among top gainers. The United States expressed willingness to negotiate a resolution to the trade dispute with China after Beijing retaliated against proposed US tariffs on $50 billion in Chinese goods by targeting key American imports. "All sectors which were impacted yesterday, including metals, are recovering today mainly because the fears of escalation in trade wars have receded, at least for the time-being," said Deepak Jasani, head of retail research at HDFC Securities. (With inputs from Reuters)

Sensex rises over 600 points after RBI keeps lending rates unchanged

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected.

The RBI kept its policy repo rate unchanged at 6.00 percent, its lowest since November 2010, as unanimously expected by 61 respondents in a Reuters poll.

The reverse repo rate also remained unchanged at 5.75 percent. 
Five of six members on the monetary policy committee voted for a hold, while one wanted a hike in the repo rate.

Inflation concerns have eased substantially following a crash in vegetable prices which is expected to keep price pressures soft for the next few months.

However, oil prices remain a risk, with India importing about 80 percent of its crude requirement.

Bonds rose after the RBI`s statement, while the rupee firmed and stocks extended early gains.

The 10-year benchmark bond yield fell to 7.19 percent from 7.28 percent before the announcement, while the rupee was trading at 64.95 to the dollar from 65.04 before. The main market index was up 1.8 percent.

INFLATION EASING, GROWTH

The RBI projected economic growth of 7.4 percent for the current fiscal year that began on April 1.

It also lowered its April-September inflation projection to 4.7-5.1 percent from February`s 5.1-5.6 percent.

After hitting a 17-month high in December, retail inflation eased for the second straight month in February and by more than expected, to a four-month low of 4.44 percent. But it was still higher than the central bank's medium-term target of 4 percent.

That has prompted most market watchers to push back their forecasts for a rate hike to early 2019, from earlier estimates of the second half of this year.

While inflation fears have eased in the short-term, the RBI sounded cautious and opted to wait for more data instead of giving a clear indication of its policy path.

"The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis," the RBI said in a statement.

The RBI is also mindful of the pace of India`s economic recovery, after a loan-fraud scandal worth over $2 billion at the country`s second-largest state lender Punjab National Bank.

Greater regulatory scrutiny in the wake of the scandal could make banks more wary of lending, slowing down business activity after India`s economy grew 7.2 percent in the October-December, its fastest in five quarters.&nbsp;

RBI has kept the repo rate unchanged at 6% in the first monetary policy review of the current fiscal year, amid a gradual recovery in growth and easing inflation

The Reserve Bank of India kept its policy rates on hold for the fourth straight meeting on Thursday and retained its "neutral" stance even as inflationary pressures have eased more than expected. The RBI kept its policy repo rate unchanged at 6.00 percent, its lowest since November 2010, as unanimously expected by 61 respondents in a Reuters poll. The reverse repo rate also remained unchanged at 5.75 percent. Five of six members on the monetary policy committee voted for a hold, while one wanted a hike in the repo rate. Inflation concerns have eased substantially following a crash in vegetable prices which is expected to keep price pressures soft for the next few months. However, oil prices remain a risk, with India importing about 80 percent of its crude requirement. Bonds rose after the RBI`s statement, while the rupee firmed and stocks extended early gains. The 10-year benchmark bond yield fell to 7.19 percent from 7.28 percent before the announcement, while the rupee was trading at 64.95 to the dollar from 65.04 before. The main market index was up 1.8 percent. INFLATION EASING, GROWTH The RBI projected economic growth of 7.4 percent for the current fiscal year that began on April 1. It also lowered its April-September inflation projection to 4.7-5.1 percent from February`s 5.1-5.6 percent. After hitting a 17-month high in December, retail inflation eased for the second straight month in February and by more than expected, to a four-month low of 4.44 percent. But it was still higher than the central bank's medium-term target of 4 percent. That has prompted most market watchers to push back their forecasts for a rate hike to early 2019, from earlier estimates of the second half of this year. While inflation fears have eased in the short-term, the RBI sounded cautious and opted to wait for more data instead of giving a clear indication of its policy path. "The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis," the RBI said in a statement. The RBI is also mindful of the pace of India`s economic recovery, after a loan-fraud scandal worth over $2 billion at the country`s second-largest state lender Punjab National Bank. Greater regulatory scrutiny in the wake of the scandal could make banks more wary of lending, slowing down business activity after India`s economy grew 7.2 percent in the October-December, its fastest in five quarters.

RBI keeps repo rate unchanged at 6% in first bi-monthly monetary policy for 2018-19

The Reserve Bank of India (RBI) is likely to keep interest rates on hold on Thursday for the fourth meeting in a row but maintain a cautious tone despite a sharper-than-expected pullback in inflation in the last few months.

The Monetary Policy Committee (MPC) is likely to stick with its 'neutral' stance and flag uncertainty over the inflation outlook beyond June due to factors such as oil prices and the government's promise of increasing the minimum purchase price of foodgrains from farmers.

A Reuters poll showed all 61 respondents expected the RBI to keep the repo rate steady at 6 percent, its lowest level since November 2010. A majority of the economists polled expect the RBI to only start raising rates in early 2019.

"We expect the policy guidance and tone to be balanced and similar to that in February," said A. Prasanna, chief economist at ICICI Securities Primary Dealership, referring to the RBI's projection that inflation will moderate from October onward but with upside risks.

"Accordingly, the MPC will again vote for status quo with a preference to wait for more clarity on key risks."

Inflation unexpectedly fell after vegetable prices fell in early 2018 due to a surge in harvests. This is expected to keep price pressures soft for the next few months.

However, oil prices remain a risk, since India imports nearly 80 percent of its crude oil requirement.

It is noteworthy that February's consumer price index (CPI) inflation fell to a four-month low of 4.44 percent, and is also expected to stay behind the RBI's projection of 5.1-5.6 percent for April-September, the RBI is unlikely to lower its guard as it aims to lower inflation to 4 percent in the medium term.

The RBI will also be mindful of the pace of India's economic recovery as banks are likely to go slow on lending after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank.

That could slow down activity after India grew the fastest in five quarters at 7.2 percent.

"There can be some dent in the risk appetite among banks to give loans after the issues related to loan fraud were detected, which could add uncertainties to the pace of the near term recovery," said Siddhartha Sanyal, chief India economist at Barclays in Mumbai.

"We expect that policymakers will be careful of not stifling growth at the early stages of recovery," adding that he expected the RBI to be on hold for all of 2018.

RBI is likely to keep interest rates on hold on Thursday for the fourth meeting in a row but maintain a cautious tone despite a pullback in inflation.

The Reserve Bank of India (RBI) is likely to keep interest rates on hold on Thursday for the fourth meeting in a row but maintain a cautious tone despite a sharper-than-expected pullback in inflation in the last few months. The Monetary Policy Committee (MPC) is likely to stick with its 'neutral' stance and flag uncertainty over the inflation outlook beyond June due to factors such as oil prices and the government's promise of increasing the minimum purchase price of foodgrains from farmers. A Reuters poll showed all 61 respondents expected the RBI to keep the repo rate steady at 6 percent, its lowest level since November 2010. A majority of the economists polled expect the RBI to only start raising rates in early 2019. "We expect the policy guidance and tone to be balanced and similar to that in February," said A. Prasanna, chief economist at ICICI Securities Primary Dealership, referring to the RBI's projection that inflation will moderate from October onward but with upside risks. "Accordingly, the MPC will again vote for status quo with a preference to wait for more clarity on key risks." Inflation unexpectedly fell after vegetable prices fell in early 2018 due to a surge in harvests. This is expected to keep price pressures soft for the next few months. However, oil prices remain a risk, since India imports nearly 80 percent of its crude oil requirement. It is noteworthy that February's consumer price index (CPI) inflation fell to a four-month low of 4.44 percent, and is also expected to stay behind the RBI's projection of 5.1-5.6 percent for April-September, the RBI is unlikely to lower its guard as it aims to lower inflation to 4 percent in the medium term. The RBI will also be mindful of the pace of India's economic recovery as banks are likely to go slow on lending after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank. That could slow down activity after India grew the fastest in five quarters at 7.2 percent. "There can be some dent in the risk appetite among banks to give loans after the issues related to loan fraud were detected, which could add uncertainties to the pace of the near term recovery," said Siddhartha Sanyal, chief India economist at Barclays in Mumbai. "We expect that policymakers will be careful of not stifling growth at the early stages of recovery," adding that he expected the RBI to be on hold for all of 2018.

RBI to keep rates on hold, sounds cautious despite easing inflation

The Reserve Bank of India (RBI) is likely to keep the repo rate unchanged at its upcoming monetary policy review on April 5th. Despite downside surprises in the recent inflation readings, the Central Bank is likely to stay hawkish on account of two factors. One, there could be caution related to higher Minimum support prices (MSPs) that the government could offer to farmers in line with its budget ‘commitment’ and because of surging oil prices. Second, core inflation has become more broad-based and is markedly high for categories like services, said HDFC Bank treasury research paper today, adding that increase in components of salaries (like housing allowance) due for employees of the state governments could add to these pressures.&nbsp;

"We would also parse the commentary carefully for the RBI’s assessment of global risks such as an economically costly trade war between the US and its major trading partners, comments from the White House on dismantling or diluting trading arrangements like NAFTA, regulatory push-backs in industries like tech on the back of the recent controversy on data leaks, and finally geopolitical tensions with Russia and China (likely to flex their muscles) and the US taking a harder line on Iran and North Korea," said the paper, while adding that this may or may not directly lead to a change in monetary stance, but the central bank’s view on how prepared the domestic economy and markets are to face these risks become important. &nbsp;

The report said that change in the outlook of oil prices and emergence of new risks on the international front (trade-war etc.) could have a direct bearing on our exchange rate assumptions as well, and added, "We no longer expect the marginal degree of appreciation (Q2 vs. Q1) that we had previously pencilled in. We now expect the USD/INR pair to trade in the range of 64.5 – 65.5 in the short term." &nbsp;

Inflation Dynamics&nbsp;

In the February meeting, the RBI had revised its inflation forecast for the fourth quarter (2017-18) to 5.1% from 4.3%-4.7% earlier. Inflation print is now expected to be lower than the RBI’s estimate in Q4 (so far the average has been 4.8%). &nbsp;

Going ahead in FY19, CPI inflation could inch-up to around 5.6% in June. We expect average inflation of 5.1% in H1-FY19 with much of the rise likely to be on account of an adverse base. Thereafter, in 2H-FY19, while the base effect could be favourable and lead to some moderation in inflation, a lot would depend on how other factors pan out. Price of crude oil, potentially higher minimum support prices, the impact of housing rent allowance increase by several state governments, besides the performance of monsoon are some risks that could emerge in 2H-FY19, warranting a reasonable degree of caution by the RBI. &nbsp;

Given the recent softer inflation prints while the RBI can afford to wait longer and maintain status quo, eventually, we believe, that elevation of some of the upside risks along with the revival in rural demand could lead to a rate hike by the last quarter of 2018-19. Upside risks to inflation are detailed below:&nbsp;

1. Core inflation pressures building up&nbsp;

Rising core: Core inflation (excluding food, fuel and petrol and diesel) has been sticky in the past three months, remaining unchanged at 5.1%. Prior to this, it had gradually risen from 3.9% in June 2017 to 5.1% in December 2017.

<img alt="1111.PNG" data-entity-type="" data-entity-uuid="" height="430" src="https://images.wionews.com/iniline-images/1111.PNG" width="770" />

46% of the core items are seeing an upward pressure. (Source: CEIC, HDFC Bank)

&nbsp;

46% of the items in core are rising versus only 9% last year: Our analysis shows that between June 2017 and February 2018, 46% of the core items have seen upward pressures while 45% of the items have remained sticky. Only 9% of the items have seen a fall. This is in contrast to the trend seen between May 2016 and May 2017, when only 9% of the core items were rising while 44% of the items where seeing a downward pressure.&nbsp;

<img alt="2222.PNG" data-entity-type="" data-entity-uuid="" height="430" src="https://images.wionews.com/iniline-images/2222.PNG" width="770" />

Service inflation has been risen more than manufacturing. (Source: CEIC, HDFC Bank)

Services inflation is leading the upswing, rising to 5.7% in February from 4.4% in the beginning of the financial year (April 2017). This indicates that any downside pressures due to the introduction of GST on service prices, as was expected, has been offset by other core items or has not filtered through to retail prices.&nbsp;

2. Return of oil pressures: Crude oil prices posted their biggest weekly gain in eight months with rising geopolitical risk in the Middle East and Saudi Arabia hinting that the current OPEC output cuts could be extended into 2019.&nbsp;

MSPs risk: In the Union Budget 2018-19, the government had announced that MSPs will be set at 1.5 times the cost of production. The impact of this increase is dependent on the definition of cost used. According to our estimates, a 1.5 times increase over the A2+FL costs could lead to a 5060bps increase in headline inflation. The RBI has also highlighted the increase in MSPs as a key risk in the past and is likely to reiterate the same in the April 5 policy meeting. That said, the RBI is likely to wait and watch before the final decision on MSPs is announced in May this year, before making changes to its stance or forecasts. &nbsp;&nbsp;

Global Dynamics&nbsp;

Change in the outlook of oil prices and the emergence of new risks on the international front (trade-war etc.) could have a direct bearing on the exchange rate assumptions and thus on the overall monetary policy equation of the RBI. &nbsp;

The report summed up saying "there are global factors that the RBI needs to watch out for, and perhaps act during phases of extreme volatility. Rupee movement in 2018 is likely to be marginal in our view but it’s important to keep a tad of exchange rate risks in an environment of tightening monetary policies globally and rising concerns of a full-blown trade war. Therefore, a status-quo for the major part of the year is the most likely scenario for the RBI. The rate hike could happen in the last quarter of FY19." &nbsp;

India Inc expects the Reserve Bank of India (RBI) to maintain its hawkish stance in its first bi-monthly monetary policy review of the new fiscal.

The Reserve Bank of India (RBI) is likely to keep the repo rate unchanged at its upcoming monetary policy review on April 5th. Despite downside surprises in the recent inflation readings, the Central Bank is likely to stay hawkish on account of two factors. One, there could be caution related to higher Minimum support prices (MSPs) that the government could offer to farmers in line with its budget ‘commitment’ and because of surging oil prices. Second, core inflation has become more broad-based and is markedly high for categories like services, said HDFC Bank treasury research paper today, adding that increase in components of salaries (like housing allowance) due for employees of the state governments could add to these pressures. "We would also parse the commentary carefully for the RBI’s assessment of global risks such as an economically costly trade war between the US and its major trading partners, comments from the White House on dismantling or diluting trading arrangements like NAFTA, regulatory push-backs in industries like tech on the back of the recent controversy on data leaks, and finally geopolitical tensions with Russia and China (likely to flex their muscles) and the US taking a harder line on Iran and North Korea," said the paper, while adding that this may or may not directly lead to a change in monetary stance, but the central bank’s view on how prepared the domestic economy and markets are to face these risks become important. The report said that change in the outlook of oil prices and emergence of new risks on the international front (trade-war etc.) could have a direct bearing on our exchange rate assumptions as well, and added, "We no longer expect the marginal degree of appreciation (Q2 vs. Q1) that we had previously pencilled in. We now expect the USD/INR pair to trade in the range of 64.5 – 65.5 in the short term." Inflation Dynamics In the February meeting, the RBI had revised its inflation forecast for the fourth quarter (2017-18) to 5.1% from 4.3%-4.7% earlier. Inflation print is now expected to be lower than the RBI’s estimate in Q4 (so far the average has been 4.8%). Going ahead in FY19, CPI inflation could inch-up to around 5.6% in June. We expect average inflation of 5.1% in H1-FY19 with much of the rise likely to be on account of an adverse base. Thereafter, in 2H-FY19, while the base effect could be favourable and lead to some moderation in inflation, a lot would depend on how other factors pan out. Price of crude oil, potentially higher minimum support prices, the impact of housing rent allowance increase by several state governments, besides the performance of monsoon are some risks that could emerge in 2H-FY19, warranting a reasonable degree of caution by the RBI. Given the recent softer inflation prints while the RBI can afford to wait longer and maintain status quo, eventually, we believe, that elevation of some of the upside risks along with the revival in rural demand could lead to a rate hike by the last quarter of 2018-19. Upside risks to inflation are detailed below: 1. Core inflation pressures building up Rising core: Core inflation (excluding food, fuel and petrol and diesel) has been sticky in the past three months, remaining unchanged at 5.1%. Prior to this, it had gradually risen from 3.9% in June 2017 to 5.1% in December 2017. 46% of the core items are seeing an upward pressure. (Source: CEIC, HDFC Bank) 46% of the items in core are rising versus only 9% last year: Our analysis shows that between June 2017 and February 2018, 46% of the core items have seen upward pressures while 45% of the items have remained sticky. Only 9% of the items have seen a fall. This is in contrast to the trend seen between May 2016 and May 2017, when only 9% of the core items were rising while 44% of the items where seeing a downward pressure. Service inflation has been risen more than manufacturing. (Source: CEIC, HDFC Bank) Services inflation is leading the upswing, rising to 5.7% in February from 4.4% in the beginning of the financial year (April 2017). This indicates that any downside pressures due to the introduction of GST on service prices, as was expected, has been offset by other core items or has not filtered through to retail prices. 2. Return of oil pressures: Crude oil prices posted their biggest weekly gain in eight months with rising geopolitical risk in the Middle East and Saudi Arabia hinting that the current OPEC output cuts could be extended into 2019. MSPs risk: In the Union Budget 2018-19, the government had announced that MSPs will be set at 1.5 times the cost of production. The impact of this increase is dependent on the definition of cost used. According to our estimates, a 1.5 times increase over the A2+FL costs could lead to a 5060bps increase in headline inflation. The RBI has also highlighted the increase in MSPs as a key risk in the past and is likely to reiterate the same in the April 5 policy meeting. That said, the RBI is likely to wait and watch before the final decision on MSPs is announced in May this year, before making changes to its stance or forecasts. Global Dynamics Change in the outlook of oil prices and the emergence of new risks on the international front (trade-war etc.) could have a direct bearing on the exchange rate assumptions and thus on the overall monetary policy equation of the RBI. The report summed up saying "there are global factors that the RBI needs to watch out for, and perhaps act during phases of extreme volatility. Rupee movement in 2018 is likely to be marginal in our view but it’s important to keep a tad of exchange rate risks in an environment of tightening monetary policies globally and rising concerns of a full-blown trade war. Therefore, a status-quo for the major part of the year is the most likely scenario for the RBI. The rate hike could happen in the last quarter of FY19."

Repo rate likely to remain unchanged in monetary policy review: HDFC Bank report

The Reserve Bank of India will keep monetary policy steady at its April meeting but shift to a hawkish stance by the end of this year and raise interest rates early in 2019 as inflation pressures build, according to a Reuters poll of economists.

All 61 economists polled between March 23-28 expected the RBI to hold the repo rate at 6.00 percent and the reverse repo rate at 5.75 per cent at its April 4-5 policy meeting.

The RBI is expected to keep rates steady for the rest of this year.

After a slowdown in growth through much of last year, India is on an upswing and reclaimed top spot as the fastest growing major economy in the final quarter of 2017, outpacing China.

Inflation, on the other hand, has eased slightly, but still projected by the central bank to remain above its 4 per cent medium-term target in 2018.

"The recent strength of the economy has belatedly shifted the discussion from whether the RBI might cut policy rates again to whether it should hike," noted Shilan Shah, senior India economist at Capital Economics.

The RBI is expected to change its stance toward policy tightening by year-end, according to 60 per cent of 33 economists, including four respondents who thought the shift would come as early as its June meeting.

"With growth-inflation data likely to be higher after April, we believe there is a risk of more hawkish rhetoric at meetings in June and beyond, including a change in policy stance," wrote Sonal Varma, chief India economist at Nomura.

The latest consensus is for the RBI to hike the repo rate and the reverse repo rate by 25 basis points in the first three months of 2019 and follow it up with another one in the quarter through to end-December.

Just last month, the consensus was for the central bank to hold fire until at least the second half of 2019.

"The forecast for inflation suggests that after a temporary decline, which we have already seen, inflation will move slightly higher and this will force a hike," said Dariusz Kowalczyk, senior economist for ex-Japan Asia at Credit Agricole CIB.

After hitting a low of 1.46 per cent in June 2017, consumer price inflation steadily rose to a 17-month high in December. However, February's inflation print showed inflation at 4.4 per cent, giving the RBI a breather.

According to the central bank's own projections, inflation is likely to average 5.1-5.6 per cent for the first half of the 2018-19 fiscal year, before hovering around 4.5 per cent for the remainder of the year.

While the median consensus of economists predicts a rate hike early next year, almost a third of respondents forecast the RBI will lift rates by the end of September.

Several of them also expect another rate hike before end-2018.

Against a backdrop of government fiscal slippage, the RBI would focus on "price stability", higher bond yields and sticky inflation near the upper band of its target, according to Vishnu Varathan, head of economics and strategy at Mizuho Bank.

"The fact that evidence of underlying inflation is picking up...should tilt them towards one rate hike to calibrate policy," Mizuho's Varathan said.

"The growth story is also going to align nicely with the RBI's position because we are coming off a soft base after the demonetization and GST impact ... the policy decision becomes less of a dilemma and the clarity with which they need to act solidifies in the second half of this year."

If the RBI does raise rates when expected, it would follow other major central banks which are already tightening policy.

The US Federal Reserve raised rates in March and is expected to follow it up with three more hikes this year, according to a separate Reuters poll.

The RBI is expected to keep rates steady for the rest of this year

The Reserve Bank of India will keep monetary policy steady at its April meeting but shift to a hawkish stance by the end of this year and raise interest rates early in 2019 as inflation pressures build, according to a Reuters poll of economists. All 61 economists polled between March 23-28 expected the RBI to hold the repo rate at 6.00 percent and the reverse repo rate at 5.75 per cent at its April 4-5 policy meeting. The RBI is expected to keep rates steady for the rest of this year. After a slowdown in growth through much of last year, India is on an upswing and reclaimed top spot as the fastest growing major economy in the final quarter of 2017, outpacing China. Inflation, on the other hand, has eased slightly, but still projected by the central bank to remain above its 4 per cent medium-term target in 2018. "The recent strength of the economy has belatedly shifted the discussion from whether the RBI might cut policy rates again to whether it should hike," noted Shilan Shah, senior India economist at Capital Economics. The RBI is expected to change its stance toward policy tightening by year-end, according to 60 per cent of 33 economists, including four respondents who thought the shift would come as early as its June meeting. "With growth-inflation data likely to be higher after April, we believe there is a risk of more hawkish rhetoric at meetings in June and beyond, including a change in policy stance," wrote Sonal Varma, chief India economist at Nomura. The latest consensus is for the RBI to hike the repo rate and the reverse repo rate by 25 basis points in the first three months of 2019 and follow it up with another one in the quarter through to end-December. Just last month, the consensus was for the central bank to hold fire until at least the second half of 2019. "The forecast for inflation suggests that after a temporary decline, which we have already seen, inflation will move slightly higher and this will force a hike," said Dariusz Kowalczyk, senior economist for ex-Japan Asia at Credit Agricole CIB. After hitting a low of 1.46 per cent in June 2017, consumer price inflation steadily rose to a 17-month high in December. However, February's inflation print showed inflation at 4.4 per cent, giving the RBI a breather. According to the central bank's own projections, inflation is likely to average 5.1-5.6 per cent for the first half of the 2018-19 fiscal year, before hovering around 4.5 per cent for the remainder of the year. While the median consensus of economists predicts a rate hike early next year, almost a third of respondents forecast the RBI will lift rates by the end of September. Several of them also expect another rate hike before end-2018. Against a backdrop of government fiscal slippage, the RBI would focus on "price stability", higher bond yields and sticky inflation near the upper band of its target, according to Vishnu Varathan, head of economics and strategy at Mizuho Bank. "The fact that evidence of underlying inflation is picking up...should tilt them towards one rate hike to calibrate policy," Mizuho's Varathan said. "The growth story is also going to align nicely with the RBI's position because we are coming off a soft base after the demonetization and GST impact ... the policy decision becomes less of a dilemma and the clarity with which they need to act solidifies in the second half of this year." If the RBI does raise rates when expected, it would follow other major central banks which are already tightening policy. The US Federal Reserve raised rates in March and is expected to follow it up with three more hikes this year, according to a separate Reuters poll.

RBI to take hawkish stance by end-2018, hike rates early next year: Reports

The Reserve Bank of India has imposed a monetary penalty on ICICI Bank Ltd for flouting rules related to the sale of securities.

The regulator said that a monetary penalty of Rs 58.9 crore has been imposed on the lender.&nbsp

The penalty has been imposed due to non-compliance with rules related to the sale of securities held in the bank’s Held To Maturity (HTM) portfolio.&nbsp

The RBI did not specify what rules had been flouted.

"This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers," the RBI said.

As per the RBI’s rules, securities acquired by the banks with the intention to hold them up to maturity are classified under the HTM bucket. The RBI prescribes limits upto which banks can transfer and sell securities held under this category.

The RBI prescribes limits upto which banks can transfer and sell securities held under this category.

The Reserve Bank of India has imposed a monetary penalty on ICICI Bank Ltd for flouting rules related to the sale of securities. The regulator said that a monetary penalty of Rs 58.9 crore has been imposed on the lender. The penalty has been imposed due to non-compliance with rules related to the sale of securities held in the bank’s Held To Maturity (HTM) portfolio. The RBI did not specify what rules had been flouted. "This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers," the RBI said. As per the RBI’s rules, securities acquired by the banks with the intention to hold them up to maturity are classified under the HTM bucket. The RBI prescribes limits upto which banks can transfer and sell securities held under this category.

RBI imposes Rs 58.9 crore penalty on ICICI Bank

Demonetised Rs 500 and Rs 1,000 notes, which have been counted and processed for genuineness, are shredded and briquetted before being disposed of through a tendering process, the RBI has said.

The central bank had earlier estimated the value of old Rs 500 and Rs 1,000 notes received, as on June 30, 2017, at Rs 15.28 trillion.

While replying to Right-to-Information query, the Reserve Bank said that it is using the sophisticated Currency Verification and Processing machines to verify the numerical accuracy and genuineness of the demonetised notes. The notes are then put through the shredding and briquetting system and disposed of, but not recycled, it said.

Once compressed into bricks&#39;, the shredded notes disposed of through a tendering process, according to the reply.

On November 8, 2016, the government had announced Rs 500 and Rs 1,000 notes illegal tender in, what it had said then, was an effort to eradicate black money. However, a report released by the RBI on August 30, 2017, confirmed that demonetisation has been an economic failure, with very few benefits at a steep cost.

In the report, the RBI had said Rs 15.28 lakh crore, or more than 99% of the value of the currency that was scrapped, had returned to the banking system till June 30, 2017. The central bank said in the report, for the year ended June 30, 2017, that only Rs 16,050 crore of the Rs 15.44 lakh crore in old high denomination notes had not returned.

As on November 8, 2016, there were 1,716.5 crore pieces of Rs 500 and 685.8 crore pieces of Rs 1,000 notes in circulation, totalling Rs 15.44 lakh crore, it had said.

At least 59 sophisticated Currency Verification and Processing (CVPS) machines are in operation in various branches of RBI across the country to process demonetised notes for their arithmetical accuracy and genuineness.

The central bank had earlier estimated the value of old Rs 500 and Rs 1,000 notes received, as on June 30, 2017, at Rs 15.28 trillion

Demonetised Rs 500 and Rs 1,000 notes, which have been counted and processed for genuineness, are shredded and briquetted before being disposed of through a tendering process, the RBI has said. The central bank had earlier estimated the value of old Rs 500 and Rs 1,000 notes received, as on June 30, 2017, at Rs 15.28 trillion. While replying to Right-to-Information query, the Reserve Bank said that it is using the sophisticated Currency Verification and Processing machines to verify the numerical accuracy and genuineness of the demonetised notes. The notes are then put through the shredding and briquetting system and disposed of, but not recycled, it said. Once compressed into bricks', the shredded notes disposed of through a tendering process, according to the reply. On November 8, 2016, the government had announced Rs 500 and Rs 1,000 notes illegal tender in, what it had said then, was an effort to eradicate black money. However, a report released by the RBI on August 30, 2017, confirmed that demonetisation has been an economic failure, with very few benefits at a steep cost. In the report, the RBI had said Rs 15.28 lakh crore, or more than 99% of the value of the currency that was scrapped, had returned to the banking system till June 30, 2017. The central bank said in the report, for the year ended June 30, 2017, that only Rs 16,050 crore of the Rs 15.44 lakh crore in old high denomination notes had not returned. As on November 8, 2016, there were 1,716.5 crore pieces of Rs 500 and 685.8 crore pieces of Rs 1,000 notes in circulation, totalling Rs 15.44 lakh crore, it had said. At least 59 sophisticated Currency Verification and Processing (CVPS) machines are in operation in various branches of RBI across the country to process demonetised notes for their arithmetical accuracy and genuineness.

Demonetised notes being shredded, briquetted, disposed through tendering process

In a major decision, the RBI banned commercial banks from issuing Letters of Undertaking (LoUs) and and Letters of Comfort (LoCs) for trade finance with immediate effect.

&quot;On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/LoCs for Trade Credits for imports into India by AD Category I banks with immediate effect,&quot; the central bank said in a notification.

The RBI notification further said that Letters of Credit and Bank Guarantees for trade credits for imports into India may continue to be issued subject to compliance with the provisions.&nbsp;

LoUs were allegedly used by billionaire jeweller Nirav Modi and his uncle Mehul Choksi to trick state-owned Punjab National Bank (PNB) of nearly Rs 13,000 crore in connivance with bank officials. Also read - <a href="http://www.wionews.com/india-news/nirav-modi-got-1213-fraudulent-guarantees-in-six-years-arun-jaitley-35696">Nirav Modi got 1,213 fraudulent guarantees in six years: Arun Jaitley</a>

LoUs and LoCs are forms of trade finance often used by importers to fund their overseas purchases.

The Punjab National Bank reported the fraudulent issuance of LoUs/Foreign Letters of Credit for payment of import bills and fraudulent transactions in accounts, amounting to Rs 12,967.86 crore, to the RBI through its fraud monitoring reporting system.

A multi-agency probe, including by the Central Bureau of Investigation&nbsp;and the Enforcement Directorate has been launched into the PNB fraud.

(With inputs from PTI)

The RBI said the decision to discontinue the practice of LoUs and Letters of Comfort (LoCs) for trade finance comes into force with immediate effect

In a major decision, the RBI banned commercial banks from issuing Letters of Undertaking (LoUs) and and Letters of Comfort (LoCs) for trade finance with immediate effect. "On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/LoCs for Trade Credits for imports into India by AD Category I banks with immediate effect," the central bank said in a notification. The RBI notification further said that Letters of Credit and Bank Guarantees for trade credits for imports into India may continue to be issued subject to compliance with the provisions. LoUs were allegedly used by billionaire jeweller Nirav Modi and his uncle Mehul Choksi to trick state-owned Punjab National Bank (PNB) of nearly Rs 13,000 crore in connivance with bank officials. Also read - Nirav Modi got 1,213 fraudulent guarantees in six years: Arun Jaitley LoUs and LoCs are forms of trade finance often used by importers to fund their overseas purchases. The Punjab National Bank reported the fraudulent issuance of LoUs/Foreign Letters of Credit for payment of import bills and fraudulent transactions in accounts, amounting to Rs 12,967.86 crore, to the RBI through its fraud monitoring reporting system. A multi-agency probe, including by the Central Bureau of Investigation and the Enforcement Directorate has been launched into the PNB fraud. (With inputs from PTI)

PNB scam fallout: RBI discontinues Letters of Undertaking for trade credits with immediate effect

The All India Bank Officers&#39; Confederation (AIBOC) today alleged that most financial scams take place due to loopholes in the system.

At a public meeting here on &quot;Crisis in the Banking Sector&quot;, the confederation, along with other associations and trade unions like the Centre for Financial Accountability, the National Alliance of People&#39;s Movement and the New Trade Union Initiative, looked into recent financial scams and held talks on the &quot;legal loot of the public money&quot;.

&quot;Why the RBI, the finance ministry, the CVC and others in the government wake up only when a major scam surfaces? Why are we not analysing the failure of the system? What is the role of the government and its policies which cause system failures and scams? There have been Harshad Mehta scam, Ketan Parekh scam and the NPA scam due to misuse and loopholes in the system,&quot; D T Franco, general secretary of AIBOC said.

While discussing the topic, the panelists also dwelt on the issue of privatisation of banks, which they alleged had been advised by the chief economic adviser to the Centre.

During the meeting, some suggested that the government publish the names of bank loan defaulters and direct the banks to write to the home minister to make entry in the passports of the directors of these companies so that they cannot flee the country.

The National Alliance of People's Movement and the New Trade Union Initiative looked into recent financial scams and held talks on the 'legal loot of the public money'

The All India Bank Officers' Confederation (AIBOC) today alleged that most financial scams take place due to loopholes in the system. At a public meeting here on "Crisis in the Banking Sector", the confederation, along with other associations and trade unions like the Centre for Financial Accountability, the National Alliance of People's Movement and the New Trade Union Initiative, looked into recent financial scams and held talks on the "legal loot of the public money". "Why the RBI, the finance ministry, the CVC and others in the government wake up only when a major scam surfaces? Why are we not analysing the failure of the system? What is the role of the government and its policies which cause system failures and scams? There have been Harshad Mehta scam, Ketan Parekh scam and the NPA scam due to misuse and loopholes in the system," D T Franco, general secretary of AIBOC said. While discussing the topic, the panelists also dwelt on the issue of privatisation of banks, which they alleged had been advised by the chief economic adviser to the Centre. During the meeting, some suggested that the government publish the names of bank loan defaulters and direct the banks to write to the home minister to make entry in the passports of the directors of these companies so that they cannot flee the country.

Scams happen due to loopholes in the system: Bank officers' body

As the Nirav <a href="http://www.wionews.com/india-news/pnb-fraud-cbi-sends-3-accused-pnb-officials-to-police-custody-33516">Modi-induced Punjab National Bank(PNB) scam</a> continued to take a toll on the banking system in India, the Reserve Bank of India(RBI) said it had alerted banks thrice on potential malicious use of SWIFT infrastructure since August 2016.

Society for<a href="http://www.wionews.com/india-news/photographs-of-pm-modi-with-nirav-modi-prove-nothing-amit-shah-33510"> Worldwide Interbank Financial Telecommunications</a> also called (SWIFT) are used by banks to facilitate safe transactions. The system allows banks to transact between each other especially when foreign currency is involved. It is reportedly used by over 200 countries and is a common banking tool well known for ensuring secure transaction.

However, in the PNB scam case, the SWIFT system has come under scrutiny with officials claiming it was widely misused by bankers who allegedly manipulated it to move funds in favour of Nirav Modi.

Five bank officials, including the two at the Mumbai branch, have so far been arrested. 
&nbsp; 
The alleged fraud occurred as one PNB deputy manager, with the assistance of one or more colleagues, issued over 100 fraudulent Letters of Undertaking &ndash; essentially guarantees sent to other banks so that they would provide loans to a customer.&nbsp;

After entering the transactions on the SWIFT messaging system, the official, who worked at the same branch from 2010 to 2017 despite normal bank practices of regular rotations - did not record them on PNB`s internal system, according to the bank`s complaint.

A PNB source said on Tuesday all its branches have now been asked to reconcile SWIFT messages with entries in their core banking system going back eight or nine years.&nbsp;

India&#39;s central bank said it had set up a panel under Y H Malegam to look into reasons behind incidents of frauds in banks.

The panel will also look into reasons for high divergence in NPA classification and provisioning by banks.

&nbsp;

 
<iframe allow="autoplay; encrypted-media" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/AF6coGcVMNg" width="560"></iframe> 
&nbsp;

&nbsp;

Five bank officials, including the two at the Mumbai branch, have so far been arrested.

As the Nirav Modi-induced Punjab National Bank(PNB) scam continued to take a toll on the banking system in India, the Reserve Bank of India(RBI) said it had alerted banks thrice on potential malicious use of SWIFT infrastructure since August 2016. Society for Worldwide Interbank Financial Telecommunications also called (SWIFT) are used by banks to facilitate safe transactions. The system allows banks to transact between each other especially when foreign currency is involved. It is reportedly used by over 200 countries and is a common banking tool well known for ensuring secure transaction. However, in the PNB scam case, the SWIFT system has come under scrutiny with officials claiming it was widely misused by bankers who allegedly manipulated it to move funds in favour of Nirav Modi. Five bank officials, including the two at the Mumbai branch, have so far been arrested. The alleged fraud occurred as one PNB deputy manager, with the assistance of one or more colleagues, issued over 100 fraudulent Letters of Undertaking – essentially guarantees sent to other banks so that they would provide loans to a customer. After entering the transactions on the SWIFT messaging system, the official, who worked at the same branch from 2010 to 2017 despite normal bank practices of regular rotations - did not record them on PNB`s internal system, according to the bank`s complaint. A PNB source said on Tuesday all its branches have now been asked to reconcile SWIFT messages with entries in their core banking system going back eight or nine years. India's central bank said it had set up a panel under Y H Malegam to look into reasons behind incidents of frauds in banks. The panel will also look into reasons for high divergence in NPA classification and provisioning by banks.

Alerted banks thrice since 2016 on potential malicious use of SWIFT: RBI

Shiv Sena lashed out at the Bharatiya Janata Party on Saturday stating that the party should appoint absconding Nirav Modi as the RBI Governor &quot;to finish off the country&quot;.

Editorials in Shiv Sena&#39;s mouthpieces&nbsp;&#39;Saamana&#39; and &#39;Dopahar Ka Saamana&#39; made stinging remarks on the Punjab National Bank (PNB) fraud which came to light earlier this week.&nbsp;

The editorial pieces alleged that Nirav Modi fled the country earlier last month along with his family and was also seen with Prime Minister Narendra Modi at the Davos Summit.

The Sena clarified the fact that it wasn&#39;t alleging that the Bhartiya Janta Party or its leaders facilitated the &#39;loot&#39;, however, it did mention that Nirav Modi often batted for BJP&#39;s electoral wins.

&quot;We want to know how did he (Nirav) manage to turn up at the Davos event when a complaint against him had already been lodged by the PNB?&quot; the Sena noted in another jibe.

The editorial piece pointed out that Nirav Modi&#39;s bank accounts were not linked to Aadhaar. &quot;While a common man cannot get hospital treatment or even a funeral without an Aadhaar Card, bigshots like Nirav Modi loot crores from a bank without an Aadhaar Card,&quot; noted the editorial.&nbsp;

Nirav Modi, a diamond merchant who owns a global diamond jewellery house, is accused in the Rs 11,400 scam involving the Punjab National Bank.&nbsp;

Nirav Modi, a diamond merchant, is an accused in the Rs 11,400 scam involving the Punjab National Bank

Shiv Sena lashed out at the Bharatiya Janata Party on Saturday stating that the party should appoint absconding Nirav Modi as the RBI Governor "to finish off the country". Editorials in Shiv Sena's mouthpieces 'Saamana' and 'Dopahar Ka Saamana' made stinging remarks on the Punjab National Bank (PNB) fraud which came to light earlier this week. The editorial pieces alleged that Nirav Modi fled the country earlier last month along with his family and was also seen with Prime Minister Narendra Modi at the Davos Summit. The Sena clarified the fact that it wasn't alleging that the Bhartiya Janta Party or its leaders facilitated the 'loot', however, it did mention that Nirav Modi often batted for BJP's electoral wins. "We want to know how did he (Nirav) manage to turn up at the Davos event when a complaint against him had already been lodged by the PNB?" the Sena noted in another jibe. The editorial piece pointed out that Nirav Modi's bank accounts were not linked to Aadhaar. "While a common man cannot get hospital treatment or even a funeral without an Aadhaar Card, bigshots like Nirav Modi loot crores from a bank without an Aadhaar Card," noted the editorial. Nirav Modi, a diamond merchant who owns a global diamond jewellery house, is accused in the Rs 11,400 scam involving the Punjab National Bank.

'Make Nirav Modi RBI Governor,' Shiv Sena taunts BJP

Investors may have been shocked when one of India&#39;s biggest banks disclosed a $1.77 billion fraud by a <a href="http://www.wionews.com/india-news/who-is-nirav-modi-the-billionaire-jeweller-at-centre-of-rs-11000-crore-scam-32970" target="_blank">billionaire jeweller Nirav Modi</a>, but the central bank has recorded data that shows the problem runs far deeper and wider.

Reserve Bank of India data, which a Reuters reporter obtained through a right-to-information request, shows state-run banks have reported 8,670 &quot;loan fraud&quot; cases totalling Rs 61,260 crore ($9.58 billion) over the last five financial years up to March 31, 2017.

Also&nbsp;read:&nbsp;<a href="http://www.wionews.com/india-news/pnb-scam-this-is-how-nirav-modi-planned-his-safe-exit-from-india-33071" target="_blank">This is how Nirav Modi planned his safe exit from India</a>

In India, loan frauds typically refer to cases where the borrower intentionally tries to deceive the lending bank and does not repay the loan.

The figures expose the magnitude of the problem in a banking sector already under pressure after years of poor lending practices. Bad loans surged to a record peak of nearly $149 billion last year. 
 
Bank loan frauds have steadily increased as well, reaching Rs 17,634 crore in the latest financial year from Rs 6,357 crore in 2012-13, according to the data, which doesn&#39;t include the PNB case. 
 
Punjab National Bank, India&#39;s second-largest state lender, said on Wednesday two junior officers at a single branch had illegally steered $1.77 billion in fraudulent loans to companies, most of them controlled by billionaire jeweller Nirav Modi. It was India&#39;s biggest fraud ever.

&quot;This might be the tip of the iceberg or the middle, and that is the worry,&quot; said Pratibha Jain, a partner at law firm Nishith Desai Associates, who advises on bankruptcy cases. 
 
&quot;The fact is we don&#39;t know what else is out there.&quot;

BANK DISCLOSURES 
 
The RBI did not immediately respond to a request for comment. But in June 2017 the central bank, in its Financial Stability Report, called frauds in banks and financial institutions &quot;one of the emerging risks to the financial sector&quot;. 
 
&quot;In a number of large value frauds, serious gaps in credit underwriting standards were evident,&quot; the RBI said, adding that some of the gaps include lack of continuous monitoring of cash flows and cash profits, diversion of funds, double financing and general credit governance issues in banks. 
 
The RBI has been commended for forcing Indian banks to fully disclose its bad loans, speed up their recovery, and stop hiding fraud cases as non-performing assets.

Yet to some critics, the RBI has, at the same time, been too guarded about publicly sharing data on loan defaults or fraudulent loans. This is partly due to legal constraints on disclosing individual cases and worries investors would pummel the affected banks, making loan recovery even harder. 
 
In fact, the numbers of loan fraud cases across India could be even higher since they only include cases reported to the RBI, which involve only loans of Rs 1,00,000 or more. 
 
In its right-to-information request, Reuters sought data from 20 of India&#39;s 21 state-run lenders and obtained 15 replies. 
 
PNB topped the list with 389 cases totalling Rs 6,562 crore ($1.03 billion) over the last five financial years, in terms of the total amounts involved. 
 
Reuters was unable to obtain a detailed breakdown on the exact nature and method of the loan frauds the banks reported to RBI over the last five financial years. 
 
After PNB, Bank of Baroda had the highest amount of loan fraud reported, with Rs 4,473 crore from 389 cases and Bank of India ranked third, with loan frauds totalling Rs 4,050 crore from 231 cases over the same period, the data shows. 
 
India&#39;s biggest lender, State Bank of India reported 1,069 loan fraud cases in the last five financial years but did not disclose the amount. 
 
It was also unclear how much has been recovered by the banks over the years.

WHOLESALE REFORMS 
 
The magnitude of the bad debt in India forced the government last year to bail out the sector by pledging to inject $32 billion over this financial year and next. 
 
Yet analysts and credit rating agencies have long warned that solving the bad debt at India&#39;s banking sector needs to also involve wholesale reforms of the lending practices that led to the surge in bad loans.

Bankers have been blamed for steering funds to politically connected business tycoons, such as Vijay Mallya, without due diligence, or after being pressed by government officials to steer funds to sectors it wanted to promote, such as infrastructure. 
 
Mallya stands accused in India of fraudulently palming off losses from his now defunct Kingfisher Airlines onto banks by taking out loans he had no intention of repaying, an allegation he denies.

Nirav Modi, the jeweller accused in the PNB fraud case, posed for pictures with Indian Prime Minister Narendra Modi at the World Economic Forum in Davos, Switzerland, where he was part of India&#39;s delegation of corporate leaders.

RBI data shows state-run banks have reported 8,670 'loan fraud' cases totalling Rs 61,260 crore over the last five financial years

Investors may have been shocked when one of India's biggest banks disclosed a $1.77 billion fraud by a billionaire jeweller Nirav Modi, but the central bank has recorded data that shows the problem runs far deeper and wider. Reserve Bank of India data, which a Reuters reporter obtained through a right-to-information request, shows state-run banks have reported 8,670 "loan fraud" cases totalling Rs 61,260 crore ($9.58 billion) over the last five financial years up to March 31, 2017. Also read: This is how Nirav Modi planned his safe exit from India In India, loan frauds typically refer to cases where the borrower intentionally tries to deceive the lending bank and does not repay the loan. The figures expose the magnitude of the problem in a banking sector already under pressure after years of poor lending practices. Bad loans surged to a record peak of nearly $149 billion last year. Bank loan frauds have steadily increased as well, reaching Rs 17,634 crore in the latest financial year from Rs 6,357 crore in 2012-13, according to the data, which doesn't include the PNB case. Punjab National Bank, India's second-largest state lender, said on Wednesday two junior officers at a single branch had illegally steered $1.77 billion in fraudulent loans to companies, most of them controlled by billionaire jeweller Nirav Modi. It was India's biggest fraud ever. "This might be the tip of the iceberg or the middle, and that is the worry," said Pratibha Jain, a partner at law firm Nishith Desai Associates, who advises on bankruptcy cases. "The fact is we don't know what else is out there." BANK DISCLOSURES The RBI did not immediately respond to a request for comment. But in June 2017 the central bank, in its Financial Stability Report, called frauds in banks and financial institutions "one of the emerging risks to the financial sector". "In a number of large value frauds, serious gaps in credit underwriting standards were evident," the RBI said, adding that some of the gaps include lack of continuous monitoring of cash flows and cash profits, diversion of funds, double financing and general credit governance issues in banks. The RBI has been commended for forcing Indian banks to fully disclose its bad loans, speed up their recovery, and stop hiding fraud cases as non-performing assets. Yet to some critics, the RBI has, at the same time, been too guarded about publicly sharing data on loan defaults or fraudulent loans. This is partly due to legal constraints on disclosing individual cases and worries investors would pummel the affected banks, making loan recovery even harder. In fact, the numbers of loan fraud cases across India could be even higher since they only include cases reported to the RBI, which involve only loans of Rs 1,00,000 or more. In its right-to-information request, Reuters sought data from 20 of India's 21 state-run lenders and obtained 15 replies. PNB topped the list with 389 cases totalling Rs 6,562 crore ($1.03 billion) over the last five financial years, in terms of the total amounts involved. Reuters was unable to obtain a detailed breakdown on the exact nature and method of the loan frauds the banks reported to RBI over the last five financial years. After PNB, Bank of Baroda had the highest amount of loan fraud reported, with Rs 4,473 crore from 389 cases and Bank of India ranked third, with loan frauds totalling Rs 4,050 crore from 231 cases over the same period, the data shows. India's biggest lender, State Bank of India reported 1,069 loan fraud cases in the last five financial years but did not disclose the amount. It was also unclear how much has been recovered by the banks over the years. WHOLESALE REFORMS The magnitude of the bad debt in India forced the government last year to bail out the sector by pledging to inject $32 billion over this financial year and next. Yet analysts and credit rating agencies have long warned that solving the bad debt at India's banking sector needs to also involve wholesale reforms of the lending practices that led to the surge in bad loans. Bankers have been blamed for steering funds to politically connected business tycoons, such as Vijay Mallya, without due diligence, or after being pressed by government officials to steer funds to sectors it wanted to promote, such as infrastructure. Mallya stands accused in India of fraudulently palming off losses from his now defunct Kingfisher Airlines onto banks by taking out loans he had no intention of repaying, an allegation he denies. Nirav Modi, the jeweller accused in the PNB fraud case, posed for pictures with Indian Prime Minister Narendra Modi at the World Economic Forum in Davos, Switzerland, where he was part of India's delegation of corporate leaders.

RBI's unpublished data shows India's fraud problems extend far beyond PNB

Just when many Indian banks thought the worst of their bad debt woes were behind them, new central bank rules are stoking fears that the worst of the soured-loans buildup is yet to come.

The central bank surprised the financial sector this week by halting all of its existing loan-restructuring mechanisms with immediate effect, and rolling out new rules that will push more debt defaulters into bankruptcy courts.

To force its point home, the Reserve Bank of India (RBI) set strict timelines for lenders to take action against defaulters, threatening penalties if banks failed to act in a timely manner.

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<h5>India&#39;s bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending &mdash; the combination has choked new lending and dragged on the economy</h5>
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Soured loans, which include non-performing, restructured or rolled-over loans, reached a record high of 9.5 trillion rupees ($148 billion) in the middle of last year before dipping slightly and prompting some relief among bankers that the worst was over. State-run lenders account for the bulk of these loans.

India&#39;s bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending - the combination has choked new lending and dragged on the economy.

Analysts say the actual level of bad loans is higher than the official figures suggest, pointing to central bank audits of banks, including State Bank of India, that showed non-performing loans were higher than reported for the financial year ended March 2017. Banks have also been blamed for perpetually renewing loans on soured assets.

Most of the loan-restructuring schemes that the central bank is withdrawing have seen little success. Analysts say banks will soon have to declare the loans in those schemes as non-performing loans, which will trigger the timeline for banks to take debtors to court.

That means the banking sector will have to recognise the new status of the loans and make provisions for them, said Rajkiran Rai, chief executive at state-run Union Bank of India.

&quot;When you look at the short term, yes, we will have issues with the existing accounts,&quot; Rai said.

Longer term, the RBI&#39;s measure will benefit banks, he said.

Indeed, the new rules would bring discipline to the banking sector, although provisioning costs will shoot up as more borrowers are taken to court, said R. Subramaniakumar, chief executive at Indian Overseas Bank, a state-run lender with the second-highest bad loan ratio among all banks.

&quot;Of course it&#39;s going to put pressure on bank&#39;s balance sheets,&quot; he said, adding capital injections announced by the government will help cushion the impact.

The RBI&#39;s decision to force more struggling borrowers into bankruptcy proceedings was its latest move to try to clean up India&#39;s bad loans mess.

Last year, it ordered about 40 of the country&#39;s largest debt defaulters into bankruptcy courts, demanding creditors put aside at least 50 percent of loan amounts in provisioning.

Under the new process, the RBI requires banks to figure out plans to resolve debts of defaulters with 20 billion rupees ($311 million) or more in outstanding debt by Sept. 1, or take them to bankruptcy court.

Since 50 percent provisioning will be required for these bankruptcy cases as well, the total funds that banks will have to set aside will shoot up, pressuring profits, analysts said.

Moody&#39;s Indian affiliate ICRA estimates the criteria would net 50 defaulting companies with combined outstanding debt of 2.46 trillion rupees ($38 billion), so banks&#39; credit provisions will spike.

India Ratings and Research, the local affiliate of Fitch, said banks&#39; non-performing loans and provisions will shoot up in coming months, said analyst Udit Kariwala.

Rajeev Kumar, the top government bureaucrat overseeing the banking sector, said the new rules will impact 2-3 percent of banks&#39; loan books, while provisions could rise a &quot;little&quot;, financial news service NewsRise reported.

Bank shares slid on Wednesday, with the sector index falling 1.4 percent compared with a 0.4 percent fall in the broader market.

New RBI rules are stoking the banks' fears that the worst of the soured-loans buildup is yet to come

Just when many Indian banks thought the worst of their bad debt woes were behind them, new central bank rules are stoking fears that the worst of the soured-loans buildup is yet to come. The central bank surprised the financial sector this week by halting all of its existing loan-restructuring mechanisms with immediate effect, and rolling out new rules that will push more debt defaulters into bankruptcy courts. To force its point home, the Reserve Bank of India (RBI) set strict timelines for lenders to take action against defaulters, threatening penalties if banks failed to act in a timely manner. India's bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending — the combination has choked new lending and dragged on the economy × Soured loans, which include non-performing, restructured or rolled-over loans, reached a record high of 9.5 trillion rupees ($148 billion) in the middle of last year before dipping slightly and prompting some relief among bankers that the worst was over. State-run lenders account for the bulk of these loans. India's bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending - the combination has choked new lending and dragged on the economy. Analysts say the actual level of bad loans is higher than the official figures suggest, pointing to central bank audits of banks, including State Bank of India, that showed non-performing loans were higher than reported for the financial year ended March 2017. Banks have also been blamed for perpetually renewing loans on soured assets. Most of the loan-restructuring schemes that the central bank is withdrawing have seen little success. Analysts say banks will soon have to declare the loans in those schemes as non-performing loans, which will trigger the timeline for banks to take debtors to court. That means the banking sector will have to recognise the new status of the loans and make provisions for them, said Rajkiran Rai, chief executive at state-run Union Bank of India. "When you look at the short term, yes, we will have issues with the existing accounts," Rai said. Longer term, the RBI's measure will benefit banks, he said. Indeed, the new rules would bring discipline to the banking sector, although provisioning costs will shoot up as more borrowers are taken to court, said R. Subramaniakumar, chief executive at Indian Overseas Bank, a state-run lender with the second-highest bad loan ratio among all banks. "Of course it's going to put pressure on bank's balance sheets," he said, adding capital injections announced by the government will help cushion the impact. The RBI's decision to force more struggling borrowers into bankruptcy proceedings was its latest move to try to clean up India's bad loans mess. Last year, it ordered about 40 of the country's largest debt defaulters into bankruptcy courts, demanding creditors put aside at least 50 percent of loan amounts in provisioning. Under the new process, the RBI requires banks to figure out plans to resolve debts of defaulters with 20 billion rupees ($311 million) or more in outstanding debt by Sept. 1, or take them to bankruptcy court. Since 50 percent provisioning will be required for these bankruptcy cases as well, the total funds that banks will have to set aside will shoot up, pressuring profits, analysts said. Moody's Indian affiliate ICRA estimates the criteria would net 50 defaulting companies with combined outstanding debt of 2.46 trillion rupees ($38 billion), so banks' credit provisions will spike. India Ratings and Research, the local affiliate of Fitch, said banks' non-performing loans and provisions will shoot up in coming months, said analyst Udit Kariwala. Rajeev Kumar, the top government bureaucrat overseeing the banking sector, said the new rules will impact 2-3 percent of banks' loan books, while provisions could rise a "little", financial news service NewsRise reported. Bank shares slid on Wednesday, with the sector index falling 1.4 percent compared with a 0.4 percent fall in the broader market.

For India's banks, worst of their bad-loan troubles may be still to come

The Reserve Bank of India on Tuesday came out with a revised framework for expeditious resolution of bad loans, harmonising the existing guidelines with the norms specified in the Insolvency and Bankruptcy Code (IBC).

The new guidelines have specified framework for early identification and reporting of stressed assets.

&quot;In view of the enactment of the Insolvency and Bankruptcy Code (IBC), 2016, it has been decided to substitute the existing guidelines with a harmonised and simplified generic framework for resolution of stressed assets,&quot; the RBI said in a notification issued late in the evening.

Among other things, the RBI has decided to do away with the Joint Lenders&#39; Forum (JLF) as an institutional mechanism for resolution of stressed accounts also stands discontinued.

The notification further said all accounts, including those where any of the schemes have been invoked but not yet implemented, will be governed by the revised framework.

As per the revised guidelines, the banks will be required to identify incipient stress in loan accounts, immediately on default, by classifying stressed assets as special mention accounts (SMA) depending upon the period of default.

All lenders will be required to put in place Board- approved policies for resolution of stressed assets under this framework, including the timelines for resolution, it said, adding, &quot;As soon as there is a default in the borrower entity&#39;s account with any lender, all lenders - singly or jointly - shall initiate steps to cure the default.&quot;

The resolution plan (RP) may involve any actions/plans/ reorganisation including, but not limited to, regularisation of the account by payment of all over dues by the borrower entity, sale of the exposures to other entities / investors, change in ownership, or restructuring.

The revised framework has also laid down the timelines for resolution of stressed assets.

If a resolution plan in respect of large accounts is not implemented as per the timelines specified, lenders will be required to file insolvency application, singly or jointly, under the IBC, 2016, within 15 days from the expiry of the specified timeline.

It further said all lenders will be required to submit Central Repository of Information on Large Credits (CRILC)- Main Report to the Reserve Bank on a monthly basis effective April 1, 2018.

In addition, the lenders shall report to CRILC, all borrower entities in default (with aggregate exposure of Rs 5 crore and above), on a weekly basis, at the close of business on every Friday, or the preceding working day if Friday happens to be a holiday.

The first such weekly report shall be submitted for the week ending February 23, 2018, with a view to harmonise the guidelines with the norms specified in the IBC, said the notification while withdrawing existing mechanism for dealing with the bad debt in the banking system.

The new guidelines have specified framework for early identification and reporting of stressed assets.

The Reserve Bank of India on Tuesday came out with a revised framework for expeditious resolution of bad loans, harmonising the existing guidelines with the norms specified in the Insolvency and Bankruptcy Code (IBC)

The Reserve Bank of India on Tuesday came out with a revised framework for expeditious resolution of bad loans, harmonising the existing guidelines with the norms specified in the Insolvency and Bankruptcy Code (IBC). The new guidelines have specified framework for early identification and reporting of stressed assets. "In view of the enactment of the Insolvency and Bankruptcy Code (IBC), 2016, it has been decided to substitute the existing guidelines with a harmonised and simplified generic framework for resolution of stressed assets," the RBI said in a notification issued late in the evening. Among other things, the RBI has decided to do away with the Joint Lenders' Forum (JLF) as an institutional mechanism for resolution of stressed accounts also stands discontinued. The notification further said all accounts, including those where any of the schemes have been invoked but not yet implemented, will be governed by the revised framework. As per the revised guidelines, the banks will be required to identify incipient stress in loan accounts, immediately on default, by classifying stressed assets as special mention accounts (SMA) depending upon the period of default. All lenders will be required to put in place Board- approved policies for resolution of stressed assets under this framework, including the timelines for resolution, it said, adding, "As soon as there is a default in the borrower entity's account with any lender, all lenders - singly or jointly - shall initiate steps to cure the default." The resolution plan (RP) may involve any actions/plans/ reorganisation including, but not limited to, regularisation of the account by payment of all over dues by the borrower entity, sale of the exposures to other entities / investors, change in ownership, or restructuring. The revised framework has also laid down the timelines for resolution of stressed assets. If a resolution plan in respect of large accounts is not implemented as per the timelines specified, lenders will be required to file insolvency application, singly or jointly, under the IBC, 2016, within 15 days from the expiry of the specified timeline. It further said all lenders will be required to submit Central Repository of Information on Large Credits (CRILC)- Main Report to the Reserve Bank on a monthly basis effective April 1, 2018. In addition, the lenders shall report to CRILC, all borrower entities in default (with aggregate exposure of Rs 5 crore and above), on a weekly basis, at the close of business on every Friday, or the preceding working day if Friday happens to be a holiday. The first such weekly report shall be submitted for the week ending February 23, 2018, with a view to harmonise the guidelines with the norms specified in the IBC, said the notification while withdrawing existing mechanism for dealing with the bad debt in the banking system. The new guidelines have specified framework for early identification and reporting of stressed assets.

RBI notifies revised framework to deal with bad loans

The RBI has said that Rs 500 and Rs 1,000 notes, returned to banks when the government demonetised high-value currency 15 months ago, are still being &quot;processed for their arithmetical accuracy and genuineness&quot;.

This is being done in an &quot;expedited manner&quot;, the central bank said.

&quot;Specific bank notes are being processed for their arithmetical accuracy and genuineness and the reconciliation for the same is ongoing. This information can, therefore, be shared on completion of the process and reconciliation,&quot; the RBI said in reply to an RTI application filed by a PTI correspondent.

To a query on the number of demonetised notes, it said, &quot;...Subject to future corrections if any, arising in the course of verification process, the estimated value of specified bank notes received as on June 30, 2017 is Rs 15.28 trillion (lakh crore)&quot;.

Asked to provide the details of the deadline for finishing the counting of demonetised notes, the RBI&nbsp;said &quot;specified bank notes are being processed in an expedited manner&quot;.

As on date, 59 sophisticated Currency Verification and Processing (CVPS) machines are in operation in RBI for the purpose, it said.

The reply did not specify the location of the machines.

&quot;Besides, eight CVPS machines available with commercial banks are also being used. In addition to this, seven more CVPS machines on lease basis have been installed at RBI regional offices,&quot; the RTI reply said.

The government had on November 8, 2016 banned the use of Rs 500 and Rs 1,000 notes and allowed the holders of these currency bills to deposit them with banks or use them at certain notified utilities.

In its annual report for 2016-17 released on August 30 last year, the RBI said Rs 15.28 lakh crore, or 99 per cent of the demonetised notes, had returned to the banking system.

The central bank said in the report, for the year ended June 30, 2017, that only Rs 16,050 crore of the Rs 15.44 lakh crore in old high denomination notes had not returned.

As on November 8, 2016, there were 1,716.5 crore pieces of Rs 500 and 685.8 crore pieces of Rs 1,000 notes in circulation, totalling Rs 15.44 lakh crore, it had said.&nbsp;

The central bank has said that Rs 500 and Rs 1,000 notes, returned to banks when the government demonetised high-value currency 15 months ago, are still being 'processed for their arithmetical accuracy and genuineness'

The RBI has said that Rs 500 and Rs 1,000 notes, returned to banks when the government demonetised high-value currency 15 months ago, are still being "processed for their arithmetical accuracy and genuineness". This is being done in an "expedited manner", the central bank said. "Specific bank notes are being processed for their arithmetical accuracy and genuineness and the reconciliation for the same is ongoing. This information can, therefore, be shared on completion of the process and reconciliation," the RBI said in reply to an RTI application filed by a PTI correspondent. To a query on the number of demonetised notes, it said, "...Subject to future corrections if any, arising in the course of verification process, the estimated value of specified bank notes received as on June 30, 2017 is Rs 15.28 trillion (lakh crore)". Asked to provide the details of the deadline for finishing the counting of demonetised notes, the RBI said "specified bank notes are being processed in an expedited manner". As on date, 59 sophisticated Currency Verification and Processing (CVPS) machines are in operation in RBI for the purpose, it said. The reply did not specify the location of the machines. "Besides, eight CVPS machines available with commercial banks are also being used. In addition to this, seven more CVPS machines on lease basis have been installed at RBI regional offices," the RTI reply said. The government had on November 8, 2016 banned the use of Rs 500 and Rs 1,000 notes and allowed the holders of these currency bills to deposit them with banks or use them at certain notified utilities. In its annual report for 2016-17 released on August 30 last year, the RBI said Rs 15.28 lakh crore, or 99 per cent of the demonetised notes, had returned to the banking system. The central bank said in the report, for the year ended June 30, 2017, that only Rs 16,050 crore of the Rs 15.44 lakh crore in old high denomination notes had not returned. As on November 8, 2016, there were 1,716.5 crore pieces of Rs 500 and 685.8 crore pieces of Rs 1,000 notes in circulation, totalling Rs 15.44 lakh crore, it had said.

15 months after demonetisation, RBI says returned notes still being 'processed'

Indian shares ended lower on Wednesday in their seventh consecutive sessions of losses, after the central bank said it would closely monitor accelerating inflation and kept its main repo rate on hold while retaining its &quot;neutral&quot; stance.

The benchmark BSE Sensex closed down 0.33 percent at 34,082.71, its lowest close since January 4.&nbsp;

The broader NSE Nifty ended 0.21 percent lower at 10,476.7, its lowest close since January 3.

The benchmark BSE Sensex closed down 0.33 percent at 34,082.71, its lowest close since January 4

Indian shares ended lower on Wednesday in their seventh consecutive sessions of losses, after the central bank said it would closely monitor accelerating inflation and kept its main repo rate on hold while retaining its "neutral" stance. The benchmark BSE Sensex closed down 0.33 percent at 34,082.71, its lowest close since January 4. The broader NSE Nifty ended 0.21 percent lower at 10,476.7, its lowest close since January 3.

Sensex ends lower after RBI policy meet

The Reserve Bank of India has decided to keep the repo rate and the reverse repo rate unchanged at 6 per cent and 5.75 per cent respectively for a third straight policy meeting.&nbsp;

The RBI retained its &quot;neutral&quot; stance on the interest rates with an aim to support economic growth even as inflation accelerated to a 17-month high.

Repo rate is the rate at which the RBI lends out finances to the banking sector while the reverse repo rate is the opposite of the same.&nbsp;

According to experts, a hike in the interest rates would have translated into an increase in inflation and escalating crude oil prices.&nbsp;

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The Monetary Policy Committee (MPC) of the Reserve Bank of India had kept the interest rate unchanged in December over looming concerns of price rise.&nbsp;

RBI Governor Urjit Patel chaired the Monetary Policy Committee meeting today at 2.30pm.

&ldquo;The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth,&rdquo; RBI noted.

&quot;The policy decision is in line with our expectation along with the hawkishness that is built into the statement. While we retain status quo from RBI for FY19, a risk to our call may come from higher inflation,&quot; shared Aditi Nayar, Principal Economist, ICRA Ltd in Gurgaon.&nbsp;

&quot;Despite the upward revision in the inflation forecast and concerns highlighted regarding growing inflation risks amid the crystallization of the fiscal slippage, the tone of the policy was not as hawkish as expected, given the comment that the nascent recovery needs to be carefully nurtured,&quot; Radhika Rao, Group Economist, DBS, Singapore told Reuters.&nbsp;

Ahead of the RBI&#39;s announcement, the Indian rupee traded down 11 paise against the US dollar at 64.14.&nbsp;

RBI Governor Urjit Patel chaired the Monetary Policy Committee meeting today at 2.30pm

The Reserve Bank of India has decided to keep the repo rate and the reverse repo rate unchanged at 6 per cent and 5.75 per cent respectively for a third straight policy meeting. The RBI retained its "neutral" stance on the interest rates with an aim to support economic growth even as inflation accelerated to a 17-month high. Repo rate is the rate at which the RBI lends out finances to the banking sector while the reverse repo rate is the opposite of the same. According to experts, a hike in the interest rates would have translated into an increase in inflation and escalating crude oil prices. WATCH: RBI Governor Urjit Patel addresses the media in Mumbai https://t.co/BRq38Fyypb — ANI (@ANI) February 7, 2018 × The Monetary Policy Committee (MPC) of the Reserve Bank of India had kept the interest rate unchanged in December over looming concerns of price rise. RBI Governor Urjit Patel chaired the Monetary Policy Committee meeting today at 2.30pm. “The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth,” RBI noted. "The policy decision is in line with our expectation along with the hawkishness that is built into the statement. While we retain status quo from RBI for FY19, a risk to our call may come from higher inflation," shared Aditi Nayar, Principal Economist, ICRA Ltd in Gurgaon. "Despite the upward revision in the inflation forecast and concerns highlighted regarding growing inflation risks amid the crystallization of the fiscal slippage, the tone of the policy was not as hawkish as expected, given the comment that the nascent recovery needs to be carefully nurtured," Radhika Rao, Group Economist, DBS, Singapore told Reuters. Ahead of the RBI's announcement, the Indian rupee traded down 11 paise against the US dollar at 64.14.

RBI leaves repo rate, reverse repo rate unchanged at 6 & 5.75%

The Reserve Bank of India, meeting amid a global market storm, is widely expected to keep its key rate on hold on Wednesday, but toughen its rhetoric as inflation has accelerated sharply, making an increasing number of analysts see a hike this year. 
 
A Reuters poll showed 58 of 60 economists expect the repo rate to be kept at 6.00 per cent, the lowest since November 2010, and the reverse repo rate at 5.75 per cent. The other two predicted a 25 basis points hike. 
 
But more analysts now believe tightening looms down the road after surging oil and food prices led consumer inflation in the country to a 17-month high of 5.21 per cent in December - well above the RBI&#39;s 4 per cent target. 
 
Inflation is expected to accelerate after the government&#39;s budget last week widened its fiscal deficit target for the fiscal year starting in April to help finance a sharp increase in spending in the rural areas and on healthcare. 
 
Bond investors are already pricing in rate hikes, with benchmark 10-year bond yields rising over 80 basis points since July, the biggest move since the 2013 rupee crisis. 
 
The Reuters poll showed 14 out of 35 analysts believe the RBI will hike rates by the end of 2018, up from 7 out of 27 in December.

New inflation risks?

But questions remain about how soon the RBI can tighten, given the economy is expected to grow only 6.7 per cent in the current fiscal year - the slowest pace in about three years.

The RBI&#39;s policy stance is currently &quot;neutral&quot;.

&quot;New inflation risks are emerging post-budget, so it will have to sound hawkish - but not overly so,&quot; BNP Paribas told clients on Tuesday, adding it expects two 25-bps rate hikes in 2018&#39;s second half.

The RBI has held the repo at 6.0 per cent since a 25 bps cut in August, having taken advantage of a period of extraordinary low inflation to cut rates by 200 bps since early 2015.

For sure, a rate hike in 2018 is far from certain, as the RBI has to be careful not to slow an economy that needs rapid growth to create jobs. The RBI will also be mindful of the global economy, in case of a sharp downturn that impacts India.

Although any move to raise rates could make yields more attractive overseas, it could also undermine confidence in the economy, adding more uncertainty to monetary policy.

Inflation is expected to accelerate after the government’s budget last week widened its fiscal deficit target for the fiscal year starting in April to help finance a sharp increase in spending in the rural areas and on healthcare

The Reserve Bank of India, meeting amid a global market storm, is widely expected to keep its key rate on hold on Wednesday, but toughen its rhetoric as inflation has accelerated sharply, making an increasing number of analysts see a hike this year. A Reuters poll showed 58 of 60 economists expect the repo rate to be kept at 6.00 per cent, the lowest since November 2010, and the reverse repo rate at 5.75 per cent. The other two predicted a 25 basis points hike. But more analysts now believe tightening looms down the road after surging oil and food prices led consumer inflation in the country to a 17-month high of 5.21 per cent in December - well above the RBI's 4 per cent target. Inflation is expected to accelerate after the government's budget last week widened its fiscal deficit target for the fiscal year starting in April to help finance a sharp increase in spending in the rural areas and on healthcare. Bond investors are already pricing in rate hikes, with benchmark 10-year bond yields rising over 80 basis points since July, the biggest move since the 2013 rupee crisis. The Reuters poll showed 14 out of 35 analysts believe the RBI will hike rates by the end of 2018, up from 7 out of 27 in December. New inflation risks? But questions remain about how soon the RBI can tighten, given the economy is expected to grow only 6.7 per cent in the current fiscal year - the slowest pace in about three years. The RBI's policy stance is currently "neutral". "New inflation risks are emerging post-budget, so it will have to sound hawkish - but not overly so," BNP Paribas told clients on Tuesday, adding it expects two 25-bps rate hikes in 2018's second half. The RBI has held the repo at 6.0 per cent since a 25 bps cut in August, having taken advantage of a period of extraordinary low inflation to cut rates by 200 bps since early 2015. For sure, a rate hike in 2018 is far from certain, as the RBI has to be careful not to slow an economy that needs rapid growth to create jobs. The RBI will also be mindful of the global economy, in case of a sharp downturn that impacts India. Although any move to raise rates could make yields more attractive overseas, it could also undermine confidence in the economy, adding more uncertainty to monetary policy.

RBI expected to keep rates on hold in policy decision

An official of Reserve Bank Of India has been found stealing printed notes worth of 90 lakhs.

The accused identified as Manohar Verma,&nbsp;deputy control officer in RBI, was arrested on Thursday at Dewas district of Madhya Pradesh.

Verma was kept under CCTV after security raised doubts and he was arrested red-handed by CISF as he was attempting to steal newly printed/rejected notes.

The money was found in &nbsp;Manohar Verma&#39;s shoes, clothes and office drawers.

26 lakh of the total was recovered from Verma&#39;s office while rest of the 64 lakhs were recovered from his residence.

According to the reports, the notes Verma stole were usable in the&nbsp;market as they had minor defects.

Verma has been handed over to police and a case has been registered.&nbsp;

Reports say that more people are suspected to have stolen money from printing press of the RBI. 
&nbsp;

The accused identified as Manohar Verma who is a deputy control officer in RBI was arrested on Thursday at Dewas district of Madhya Pradesh

An official of Reserve Bank Of India has been found stealing printed notes worth of 90 lakhs. The accused identified as Manohar Verma, deputy control officer in RBI, was arrested on Thursday at Dewas district of Madhya Pradesh. Verma was kept under CCTV after security raised doubts and he was arrested red-handed by CISF as he was attempting to steal newly printed/rejected notes. The money was found in Manohar Verma's shoes, clothes and office drawers. 26 lakh of the total was recovered from Verma's office while rest of the 64 lakhs were recovered from his residence. According to the reports, the notes Verma stole were usable in the market as they had minor defects. Verma has been handed over to police and a case has been registered. Reports say that more people are suspected to have stolen money from printing press of the RBI.

RBI official steals Rs 90 lakh, caught red-handed

Mauritius was the largest source of foreign investment in India, followed by the US and the UK, according to a census by the Reserve Bank.

Singapore and Japan were the next two sources of foreign direct investment (FDI), said the Census on Foreign Liabilities and Assets of Indian Direct Investment Companies 2016-17, released by RBI today.

Of the 18,667 companies that participated in the census, 17,020 had FDI/overseas direct investment in their balance sheets in March 2017, it said.

&quot;96 per cent of the responding companies were unlisted in March 2017 and most of them had received only inward FDI; unlisted companies had higher share of FDI equity capital vis-?-vis listed companies,&quot; it said.

Further, over 80 per cent of the 15,169 companies that reported inward FDI were subsidiaries of foreign companies (single foreign investor holding over 50 per cent of the total equity).

&quot;Mauritius was the largest source of FDI in India (21.8 per cent share at market value) followed by the USA, the UK, Singapore and Japan whereas Singapore (19.7 per cent) was the major ODI destination, followed by the Netherlands, Mauritius, and the USA,&quot; the census said.

The census yields comprehensive information on the market value of foreign liabilities and assets of Indian companies arising on account of FDI, ODI and other investments.

&quot;It is important to note that changes in outstanding asset/liabilities would be different from flows recorded in the balance of payments (BoP) during a year, as the former would also include valuation changes due to price and exchange rate movements,&quot; the central bank said.

The census data further said non-financial FDI companies had a much higher share in total foreign equity participation vis-a-vis financial FDI firms.

&quot;The ratio of market values of inward to outward direct investment, increased to 4.3 in March 2017 from 3.6 a year ago; equity participation accounted for 94 per cent and 79 per cent shares in inward and outward FDI, respectively,&quot; it said.

The manufacturing sector accounted for nearly half of the total FDI at market prices; information and communication services and financial and insurance activities were the other major sectors that attracted FDI.

Total sales, including exports, of foreign subsidiaries in India increased by 18.7 per cent during 2016-17 whereas their purchases, including imports, increased by 20.1 per cent.&nbsp;

Singapore and Japan were the next two sources of foreign direct investment (FDI), said the Census on Foreign Liabilities and Assets of Indian Direct Investment Companies 2016-17, released by RBI today

Mauritius was the largest source of foreign investment in India, followed by the US and the UK, according to a census by the Reserve Bank. Singapore and Japan were the next two sources of foreign direct investment (FDI), said the Census on Foreign Liabilities and Assets of Indian Direct Investment Companies 2016-17, released by RBI today. Of the 18,667 companies that participated in the census, 17,020 had FDI/overseas direct investment in their balance sheets in March 2017, it said. "96 per cent of the responding companies were unlisted in March 2017 and most of them had received only inward FDI; unlisted companies had higher share of FDI equity capital vis-?-vis listed companies," it said. Further, over 80 per cent of the 15,169 companies that reported inward FDI were subsidiaries of foreign companies (single foreign investor holding over 50 per cent of the total equity). "Mauritius was the largest source of FDI in India (21.8 per cent share at market value) followed by the USA, the UK, Singapore and Japan whereas Singapore (19.7 per cent) was the major ODI destination, followed by the Netherlands, Mauritius, and the USA," the census said. The census yields comprehensive information on the market value of foreign liabilities and assets of Indian companies arising on account of FDI, ODI and other investments. "It is important to note that changes in outstanding asset/liabilities would be different from flows recorded in the balance of payments (BoP) during a year, as the former would also include valuation changes due to price and exchange rate movements," the central bank said. The census data further said non-financial FDI companies had a much higher share in total foreign equity participation vis-a-vis financial FDI firms. "The ratio of market values of inward to outward direct investment, increased to 4.3 in March 2017 from 3.6 a year ago; equity participation accounted for 94 per cent and 79 per cent shares in inward and outward FDI, respectively," it said. The manufacturing sector accounted for nearly half of the total FDI at market prices; information and communication services and financial and insurance activities were the other major sectors that attracted FDI. Total sales, including exports, of foreign subsidiaries in India increased by 18.7 per cent during 2016-17 whereas their purchases, including imports, increased by 20.1 per cent.

Mauritius largest source of FDI in India, says RBI

In a bid to initiate insolvency proceedings against Jaypee Associates Ltd (JAL), the Reserve Bank of India has moved the Supreme Court today.&nbsp;

Jaypee Associates, also known as Jaiprakash Associates, is the parent company of Jaypee Infratech.

The company has been reeling under debts worth Rs 29,000 crore and is now reported to sell its assets to repay the same.

The infrastructure major was dragged to court by buyers disgruntled over delays in project delivery.

The Supreme Court has asked the company to deposit Rs 2,000 crore.

The construction giant was previously asked to pay Rs 275 crore by December 31, 2017.

So far, the company has managed to deposit around Rs 425 crore; the balance amount (Rs 2,000) is yet to be deposited.

The initiation of corporate insolvency resolution process (CIRP) would discontinue all legal proceedings against JAL.&nbsp; 
&nbsp; 
The apex court will hear the case on January 10.&nbsp;

The construction giant was previously asked to pay Rs 275 crore by December 31, 2017

In a bid to initiate insolvency proceedings against Jaypee Associates Ltd (JAL), the Reserve Bank of India has moved the Supreme Court today. Jaypee Associates, also known as Jaiprakash Associates, is the parent company of Jaypee Infratech. The company has been reeling under debts worth Rs 29,000 crore and is now reported to sell its assets to repay the same. The infrastructure major was dragged to court by buyers disgruntled over delays in project delivery. The Supreme Court has asked the company to deposit Rs 2,000 crore. The construction giant was previously asked to pay Rs 275 crore by December 31, 2017. So far, the company has managed to deposit around Rs 425 crore; the balance amount (Rs 2,000) is yet to be deposited. The initiation of corporate insolvency resolution process (CIRP) would discontinue all legal proceedings against JAL. The apex court will hear the case on January 10.

RBI moves Supreme Court to initiate insolvency proceedings against Jaypee Associates

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