The Reserve Bank of India (RBI) on Sunday announced it would be printing new Rs 20 and Rs 50 notes in the Mahatma Gandhi 2005 series.&nbsp;

Both notes will have numerals in ascending size in the number panels and without intaglio printing. They will bear the signature of RBI Governor Urijit Patel

India&#39;s central bank has also announced that Rs 20 and Rs 50 notes issued in the past will continue to be legal.

The RBI took the decision following the shortfall in currency which has gripped the nation and left people inconvenienced following the Narendra Modi-led BJP government&#39;s decision to demonetise Rs 500 and Rs 1000 notes on November 8.

The new Rs 20 notes will have the inset letter &#39;L&#39; in both number panels, while the Rs 50 currency will be without the letter. The year &#39;2016&#39; will be printed on the reverse of the banknotes.

&quot;The Reserve Bank of India will shortly issue Rs 20 denomination banknotes in the Mahatma Gandhi Series-2005, with inset letter L in both the number panels, bearing signature of Dr Urjit R Patel, Governor, Reserve Bank of India, and the year of printing &#39;2016&#39; printed on the reverse of the banknote,&quot; RBI said in a statement.&quot; RBI said about the Rs 20 notes in a press release.

&quot;The Reserve Bank will shortly issue Rs 50 denomination banknotes in the Mahatma Gandhi Series-2005, without inset letter in both the number panels, bearing signature of Dr Urjit R Patel, Governor, Reserve Bank of India, and the year of printing &#39;2016&#39; printed on the reverse of the banknote,&quot;&nbsp;the central bank about the design of the Rs 50 currency.

(WION)&nbsp;

 
&nbsp;

The RBI has taken the decision following the shortfall in currency after the demonetisation of Rs 500 and Rs 1000 notes last month

The Reserve Bank of India (RBI) on Sunday announced it would be printing new Rs 20 and Rs 50 notes in the Mahatma Gandhi 2005 series. Both notes will have numerals in ascending size in the number panels and without intaglio printing. They will bear the signature of RBI Governor Urijit Patel India's central bank has also announced that Rs 20 and Rs 50 notes issued in the past will continue to be legal. The RBI took the decision following the shortfall in currency which has gripped the nation and left people inconvenienced following the Narendra Modi-led BJP government's decision to demonetise Rs 500 and Rs 1000 notes on November 8. The new Rs 20 notes will have the inset letter 'L' in both number panels, while the Rs 50 currency will be without the letter. The year '2016' will be printed on the reverse of the banknotes. "The Reserve Bank of India will shortly issue Rs 20 denomination banknotes in the Mahatma Gandhi Series-2005, with inset letter L in both the number panels, bearing signature of Dr Urjit R Patel, Governor, Reserve Bank of India, and the year of printing '2016' printed on the reverse of the banknote," RBI said in a statement." RBI said about the Rs 20 notes in a press release. "The Reserve Bank will shortly issue Rs 50 denomination banknotes in the Mahatma Gandhi Series-2005, without inset letter in both the number panels, bearing signature of Dr Urjit R Patel, Governor, Reserve Bank of India, and the year of printing '2016' printed on the reverse of the banknote," the central bank about the design of the Rs 50 currency. (WION)

Demonetisation: India's central bank to print new Rs 20, Rs 50 notes

The Reserve Bank of India (RBI) on Monday late night said that the general public has withdrawn Rs 2.16 lakh crore from their accounts since beginning of demonetisation on November 9, 2016.

RBI further said that deposits in bank accounts during this period, amounted to Rs 8.11 lakh crore. Interestingly, Government had told the Supreme Court earlier this month that it expects around Rs 10-11 lakh crore to be deposited in banks till December 30, 2016 &ndash; the last day of depositing the now illegal tender of Rs 500 and Rs 1000 notes.

However, the long queues and frequent running out of cash has ensured that nearly 50% of this total currency (Rs 14 lakh crore) has already been deposited in banks in two weeks.

Moreover, there has been a sudden surge in deposits with Jan Dhan Accounts.

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<h5>As on November 9, the Government claimed that the 25.5 crore accounts opened under Jan-Dhan Yojana (PMJDY) garnered Rs 45,636.61 crore. The number of accounts now stand at 25.68 crore while deposits have risen to Rs 72,834.72 crore.</h5>
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PM Modi and Finance Minister Arun Jaitley have been pushing citizens towards a more &#39;less-cash&#39; economy. The Government, on Monday, removed excise duty on &#39;point of sale&#39; machines in order to expedite use of digital currency than hard cash.&nbsp;

However, with over Rs 2 lakh crore withdrawn in two weeks from the Rs 8.11 lakh deposited, it is amply clear that Indians are still not ready to go completely cash-less.&nbsp;

On the evening of November 8, Prime Minister Narendra Modi in a televised address said that nearly 86% of Rs 16 lakh crore that oiled the Indian economy by way of Rs 500 and Rs 1000 notes were illegal tender from midnight.

He said that citizens have&nbsp;50 days to deposit this old currency in banks, exchange it with new or withdraw through ATMs, etc.

The RBI on Monday released data that showed nearly 50% of all demonetised currency in Rs 500 and Rs 1000 notes has been deposited with banks

The Reserve Bank of India (RBI) on Monday late night said that the general public has withdrawn Rs 2.16 lakh crore from their accounts since beginning of demonetisation on November 9, 2016. RBI further said that deposits in bank accounts during this period, amounted to Rs 8.11 lakh crore. Interestingly, Government had told the Supreme Court earlier this month that it expects around Rs 10-11 lakh crore to be deposited in banks till December 30, 2016 – the last day of depositing the now illegal tender of Rs 500 and Rs 1000 notes. However, the long queues and frequent running out of cash has ensured that nearly 50% of this total currency (Rs 14 lakh crore) has already been deposited in banks in two weeks. Moreover, there has been a sudden surge in deposits with Jan Dhan Accounts. As on November 9, the Government claimed that the 25.5 crore accounts opened under Jan-Dhan Yojana (PMJDY) garnered Rs 45,636.61 crore. The number of accounts now stand at 25.68 crore while deposits have risen to Rs 72,834.72 crore. × PM Modi and Finance Minister Arun Jaitley have been pushing citizens towards a more 'less-cash' economy. The Government, on Monday, removed excise duty on 'point of sale' machines in order to expedite use of digital currency than hard cash. However, with over Rs 2 lakh crore withdrawn in two weeks from the Rs 8.11 lakh deposited, it is amply clear that Indians are still not ready to go completely cash-less. On the evening of November 8, Prime Minister Narendra Modi in a televised address said that nearly 86% of Rs 16 lakh crore that oiled the Indian economy by way of Rs 500 and Rs 1000 notes were illegal tender from midnight. He said that citizens have 50 days to deposit this old currency in banks, exchange it with new or withdraw through ATMs, etc.

Demonetisation: Indians withdrew over 2 lakh crore since November 9

The government is considering increasing the amount of bonds issued under the so-called market stabilisation scheme (MSS) to drain out excess cash from the banking system, economic affairs secretary Shaktikanta Das said on Monday.

The government will study a current central bank proposal to increase the limit of MSS bonds issued this year and will take a decision accordingly, Das told reporters in New Delhi.

India has budgeted the issuance of 200 billion rupees ($2.91 billion) of MSS bonds in the year ending in March.&nbsp;

Banks have been flush with deposits after the government abolished 500 and 1,000 rupee notes earlier this month, forcing the RBI on Saturday to temporarily increase the amount of funds banks must deposit under the cash reserve ratio.&nbsp;

RBI Governor Urjit Patel on Sunday said the measure to raise CRR would be reviewed once the government issues more MSS bonds, Press Trust of India reported in a story carried by several local media.&nbsp; 
 
(Reuters)

The government will study an RBI proposal to increase limit of MSS bonds issued this year, economic affairs secretary Shaktikanta Das said

The government is considering increasing the amount of bonds issued under the so-called market stabilisation scheme (MSS) to drain out excess cash from the banking system, economic affairs secretary Shaktikanta Das said on Monday. The government will study a current central bank proposal to increase the limit of MSS bonds issued this year and will take a decision accordingly, Das told reporters in New Delhi. India has budgeted the issuance of 200 billion rupees ($2.91 billion) of MSS bonds in the year ending in March. Banks have been flush with deposits after the government abolished 500 and 1,000 rupee notes earlier this month, forcing the RBI on Saturday to temporarily increase the amount of funds banks must deposit under the cash reserve ratio. RBI Governor Urjit Patel on Sunday said the measure to raise CRR would be reviewed once the government issues more MSS bonds, Press Trust of India reported in a story carried by several local media. (Reuters)

Demonetisation: Government considers issuing bonds under market stabilisation scheme

The Indian rupee has clocked its record low&nbsp;of 68.86 against the US dollar. Just yesterday, we saw a sharp nine-month low set in. This has seen a decline in the equity markets as well in the intra-day trading session.&nbsp;

What has really triggered this depreciation of rupee against the dollar?

The rupee has plunged close to 3 per cent since US President-elect Donald Trump&#39;s victory. The foreign institutional investors have pulled out of bonds despite the bond rally on the back of 4 per cent fall in the yield differencial between the American and Indian government securities. The FII holdings in government and corporate bonds have dropped by 1.4 millions dollars in November and 1.7 dollars have been pulled out of Indian equities by FII&#39;s in the same period. The dollar index rally is almost close to a 14-year high.&nbsp;

The expectation of an interest rate hike by the US Federal Reserve is another reason why the rupee has come under pressure. The interest rate hike has strengthened the dollar.&nbsp;

The US bond yields have seen a sharp increase which leads global investors to pull out of India and redirect these funds into US bonds which fetch them a higher rate of return on their investment.&nbsp;

Now this is just a global factor. There are multiple domestic factors that are responsible for such volatility on this counter.

Most brokerage reports have reduced their earnings estimate for the next quarter and even H2FY17. FII&#39;s have reduced their exposure in equities and debt market. The value of portfolios for most investors and especially FII&#39;s stands to be in jeopardy as FII&#39;s now get lower return in dollar terms against the rupee. This also means that the demand curve of dollar rises, further weakening the rupee.&nbsp;

Rupee essentially in the past one to two months according to brokerage reports has outperformed other currencies of emerging markets. Hence, experts feel this could have well been overvalued to begin with.&nbsp;

It has been observed that the Reserve Bank of India is historically known to intervene to curb volatility. If the weakness on the currency&nbsp;is in line with the momentum with other weakening currencies, the RBI may not interfere much.&nbsp;

The weakening rupee can also be a deterrent&nbsp;for the RBI to cut the repo rate.&nbsp; 
&nbsp;

(WION)

The Indian rupee has clocked its record low?of 68.86 against the US dollar

The Indian rupee has clocked its record low of 68.86 against the US dollar. Just yesterday, we saw a sharp nine-month low set in. This has seen a decline in the equity markets as well in the intra-day trading session. What has really triggered this depreciation of rupee against the dollar? The rupee has plunged close to 3 per cent since US President-elect Donald Trump's victory. The foreign institutional investors have pulled out of bonds despite the bond rally on the back of 4 per cent fall in the yield differencial between the American and Indian government securities. The FII holdings in government and corporate bonds have dropped by 1.4 millions dollars in November and 1.7 dollars have been pulled out of Indian equities by FII's in the same period. The dollar index rally is almost close to a 14-year high. The expectation of an interest rate hike by the US Federal Reserve is another reason why the rupee has come under pressure. The interest rate hike has strengthened the dollar. The US bond yields have seen a sharp increase which leads global investors to pull out of India and redirect these funds into US bonds which fetch them a higher rate of return on their investment. Now this is just a global factor. There are multiple domestic factors that are responsible for such volatility on this counter. Most brokerage reports have reduced their earnings estimate for the next quarter and even H2FY17. FII's have reduced their exposure in equities and debt market. The value of portfolios for most investors and especially FII's stands to be in jeopardy as FII's now get lower return in dollar terms against the rupee. This also means that the demand curve of dollar rises, further weakening the rupee. Rupee essentially in the past one to two months according to brokerage reports has outperformed other currencies of emerging markets. Hence, experts feel this could have well been overvalued to begin with. It has been observed that the Reserve Bank of India is historically known to intervene to curb volatility. If the weakness on the currency is in line with the momentum with other weakening currencies, the RBI may not interfere much. The weakening rupee can also be a deterrent for the RBI to cut the repo rate. (WION)

What has really triggered this depreciation of rupee against the dollar?

Further relaxing cash withdrawal norms, the Reserve Bank of India has said that overdraft and cash credit account holders can now withdraw up to Rs 50,000 in a week.

Earlier, current account holders were allowed to withdraw up to Rs 50,000 in cash, in a week.&nbsp;

&quot;On a review, it has been decided to extend this facility to overdraft and cash credit accounts also,&quot; the central bank said.&nbsp;

Accordingly, holders of current/overdraft/cash credit accounts, which are operational for the last three months or more, may now withdraw up to Rs 50,000 in cash, in a week.&nbsp;

However, this enhanced limit for weekly withdrawal is not applicable for personal overdraft accounts.&nbsp;

The Reserve Bank further said the Rs 50,000 withdrawals may be disbursed predominantly in Rs 2,000 denomination bank notes.

Government has taken several decisions to ease withdrawal restrictions for farmers, small traders, Group &#39;C&#39; employees of Central Government including equivalent levels in the defence and paramilitary forces, railways and CPSEs in the aftermath of the cancellation of the legal tender character of the old Rs 500 and Rs 1,000 notes.

(PTI)

Earlier, current account holders were allowed to withdraw up to Rs 50,000 in cash, in a week

Further relaxing cash withdrawal norms, the Reserve Bank of India has said that overdraft and cash credit account holders can now withdraw up to Rs 50,000 in a week. Earlier, current account holders were allowed to withdraw up to Rs 50,000 in cash, in a week. "On a review, it has been decided to extend this facility to overdraft and cash credit accounts also," the central bank said. Accordingly, holders of current/overdraft/cash credit accounts, which are operational for the last three months or more, may now withdraw up to Rs 50,000 in cash, in a week. However, this enhanced limit for weekly withdrawal is not applicable for personal overdraft accounts. The Reserve Bank further said the Rs 50,000 withdrawals may be disbursed predominantly in Rs 2,000 denomination bank notes. Government has taken several decisions to ease withdrawal restrictions for farmers, small traders, Group 'C' employees of Central Government including equivalent levels in the defence and paramilitary forces, railways and CPSEs in the aftermath of the cancellation of the legal tender character of the old Rs 500 and Rs 1,000 notes. (PTI)

Reserve Bank of India allows Rs 50,000 a week withdrawal from overdraft accounts

The Reserve Bank of India (RBI) has proposed opening of &quot;Islamic window&quot; in conventional banks for &quot;gradual&quot; introduction of Sharia-compliant or interest-free banking in the country.

Both the Centre and RBI are exploring the possibility of introduction of Islamic banking for long to ensure financial inclusion of those sections of the society that remain excluded due to religious reasons.

&quot;In our considered opinion, given the complexities of Islamic finance and various regulatory and supervisory challenges involved in the matter and also due to the fact that Indian banks have no experience in this field, Islamic banking may be introduced in India in a gradual manner.

&quot;Initially, a few simple products which are similar to conventional banking products may be considered for introduction through Islamic window of the conventional banks after necessary notification by the government.

&quot;Introduction of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on the basis of experience gained in course of time,&quot; the RBI has told Finance Ministry in a letter, a copy of which was received in response to an RTI query filed by PTI.

Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam.

&quot;It is also our understanding that interest-free banking for financial inclusion will require a proper process of the product being certified as Sharia compliant will be required both on the asset and liability side and the funds received under the interest-free banking could not be mingled with other funds and therefore, this banking will have to be conducted under a separate window,&quot; it said.

The central bank&#39;s proposal is based on examination of legal, technical and regulatory issues regarding feasibility of introducing Islamic banking in India on the basis of recommendation of the Inter Departmental Group (IDG).

RBI has also prepared a technical analysis report which has been sent to the Finance Ministry.

&quot;In case it is decided to introduce Islamic banking product in India as suggested, RBI would require to undertake further work to put in place the operational and regulatory framework to facilitate introduction of such products by banks in India,&quot; the letter said.

(PTI)

Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam

The Reserve Bank of India (RBI) has proposed opening of "Islamic window" in conventional banks for "gradual" introduction of Sharia-compliant or interest-free banking in the country. Both the Centre and RBI are exploring the possibility of introduction of Islamic banking for long to ensure financial inclusion of those sections of the society that remain excluded due to religious reasons. "In our considered opinion, given the complexities of Islamic finance and various regulatory and supervisory challenges involved in the matter and also due to the fact that Indian banks have no experience in this field, Islamic banking may be introduced in India in a gradual manner. "Initially, a few simple products which are similar to conventional banking products may be considered for introduction through Islamic window of the conventional banks after necessary notification by the government. "Introduction of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on the basis of experience gained in course of time," the RBI has told Finance Ministry in a letter, a copy of which was received in response to an RTI query filed by PTI. Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam. "It is also our understanding that interest-free banking for financial inclusion will require a proper process of the product being certified as Sharia compliant will be required both on the asset and liability side and the funds received under the interest-free banking could not be mingled with other funds and therefore, this banking will have to be conducted under a separate window," it said. The central bank's proposal is based on examination of legal, technical and regulatory issues regarding feasibility of introducing Islamic banking in India on the basis of recommendation of the Inter Departmental Group (IDG). RBI has also prepared a technical analysis report which has been sent to the Finance Ministry. "In case it is decided to introduce Islamic banking product in India as suggested, RBI would require to undertake further work to put in place the operational and regulatory framework to facilitate introduction of such products by banks in India," the letter said. (PTI)

Sharia banking: Reserve Bank of India proposes 'Islamic window' in banks

The Reserve Bank of India on Monday relaxed rules for classifying bad loans for small borrowers saying they may need more time to repay their loan dues after the government withdrew higher-value banknotes of Rs 500 and Rs 1000.

Banks and other financiers will get an additional 60 days for recognising certain loans of up to 10 million rupees ($146,800) as substandard, the RBI said in a notification.

The above relaxation is available to entities running working capital accounts with any bank with the sanctioned limit of Rs 1 crore or less, PTI reported.

Term loans, whether business or personal, secured or otherwise, the original sanctioned amount of Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI) would also get benefit of this relaxation.&nbsp;

This will also include housing loans and agriculture loans, it said.

The relaxation will apply to dues payable between November 1 and December 31, said a Reuters report.

The demonetisation of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 (USD 352) per week, limiting their options to repay their dues.&nbsp; 
 
(WION with inputs from agencies)

Banks and other financiers will get the extension for car, housing, farm and other loans of up to Rs 10 million (USD 146,800)

The Reserve Bank of India on Monday relaxed rules for classifying bad loans for small borrowers saying they may need more time to repay their loan dues after the government withdrew higher-value banknotes of Rs 500 and Rs 1000. Banks and other financiers will get an additional 60 days for recognising certain loans of up to 10 million rupees ($146,800) as substandard, the RBI said in a notification. The above relaxation is available to entities running working capital accounts with any bank with the sanctioned limit of Rs 1 crore or less, PTI reported. Term loans, whether business or personal, secured or otherwise, the original sanctioned amount of Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI) would also get benefit of this relaxation. This will also include housing loans and agriculture loans, it said. The relaxation will apply to dues payable between November 1 and December 31, said a Reuters report. The demonetisation of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 (USD 352) per week, limiting their options to repay their dues. (WION with inputs from agencies)

Demonetisation: Reserve Bank of India grants 60-day repayment relief to small loan borrowers

Last week, when India&#39;s central bank ordered banks to issue more 100 rupee notes, no one had a clue that it was a precursor to one of Prime Minister Narendra Modi&#39;s boldest economic announcements - the sudden withdrawal of 500 and 1,000 rupee notes ($7.50, $15) from circulation.

It now emerges that the assault against black money was carefully planned over six months by a coterie of PM Modi&#39;s advisors sworn to secrecy, AFP reports. Only a handful of India&#39;s 1.25 billion people - finance minister Arun Jaitley, Reserve Bank of India governor and a few close officials --- were in the loop until the very last minute, AFP quotes Indian media as saying.

Behind-the-scenes: How the operation played out

The Times of India reported that many of Modi&#39;s ministers were only briefed on the plan at a cabinet meeting in New Delhi just before he addressed the nation. They were then not allowed to leave until he had finished his speech to prevent any unwanted leak.

Meanwhile, in India&#39;s commercial capital of Mumbai, RBI&#39;s bank heads had been called to the central bank in the morning to receive a locked currency chest which they were told contained notes of the new 2,000 rupee denomination.&nbsp;The chests were standard procedure for the issuing of new notes, a spokesperson for the RBI told AFP.

The RBI heads were under strict instructions not to open the chest or speak about it until later that night, a report in Mint newspaper says. It was only when they opened it, as Modi was speaking, that they learnt about the new 500 note.

With the glare of the world on the US election, Modi chose to deliver his bombshell announcement in a rare address to the nation barely three hours before the order to close banks and ATMs came into force. People scrambled to withdraw Rs 100 &nbsp;notes to meet the midnight deadline set by the RBI.

Once the queues had trudged away from the millions of ATMs around the country with now precious 100 rupee bills, the task began of refilling the machines with the new currency. Trucks laden with cash started delivering the notes across the country.

&quot;If secrecy had failed people would have invested most of their cash in Hawala rackets, gold or real estate before the announcement, worsening the black money issue,&quot; Paras Savla of Mumbai-based investment management firm KPB &amp; Associates told AFP.

RBI chief Urjit Patel has said production of the new notes had been &quot;ramped up&quot; to meet requirements but Pradip Shah, who helped set up India&#39;s HDFC bank, said it would be a &quot;nightmare&quot; getting money to some rural areas.&nbsp;&quot;A lot of people are going to be inconvenienced,&quot; he told AFP.

The move is part of Modi&#39;s crackdown on so-called black money financial transactions in which cash is used to avoid tax. After closing for a day banks started reissuing new 500 notes and a new denomination of 2,000 rupees on Thursday.

The AFP reports that by spring, the prime minister was convinced that he needed a headline-grabbing reform to show his determination to counter rampant tax evasion and settled on scrapping the two highest denomination bills.

Almost 90 percent of transactions in India are done with cash while 500 and 1,000 notes currently account for more than 85 per cent of the value of cash in circulation, according to research firm Capital Economics.

(WION with inputs from AFP) 
&nbsp;

Only a select few were aware of the Indian prime minister's audacious plan to issue new notes beforehand

Last week, when India's central bank ordered banks to issue more 100 rupee notes, no one had a clue that it was a precursor to one of Prime Minister Narendra Modi's boldest economic announcements - the sudden withdrawal of 500 and 1,000 rupee notes ($7.50, $15) from circulation. It now emerges that the assault against black money was carefully planned over six months by a coterie of PM Modi's advisors sworn to secrecy, AFP reports. Only a handful of India's 1.25 billion people - finance minister Arun Jaitley, Reserve Bank of India governor and a few close officials --- were in the loop until the very last minute, AFP quotes Indian media as saying. Behind-the-scenes: How the operation played out The Times of India reported that many of Modi's ministers were only briefed on the plan at a cabinet meeting in New Delhi just before he addressed the nation. They were then not allowed to leave until he had finished his speech to prevent any unwanted leak. Meanwhile, in India's commercial capital of Mumbai, RBI's bank heads had been called to the central bank in the morning to receive a locked currency chest which they were told contained notes of the new 2,000 rupee denomination. The chests were standard procedure for the issuing of new notes, a spokesperson for the RBI told AFP. The RBI heads were under strict instructions not to open the chest or speak about it until later that night, a report in Mint newspaper says. It was only when they opened it, as Modi was speaking, that they learnt about the new 500 note. With the glare of the world on the US election, Modi chose to deliver his bombshell announcement in a rare address to the nation barely three hours before the order to close banks and ATMs came into force. People scrambled to withdraw Rs 100 notes to meet the midnight deadline set by the RBI. Once the queues had trudged away from the millions of ATMs around the country with now precious 100 rupee bills, the task began of refilling the machines with the new currency. Trucks laden with cash started delivering the notes across the country. "If secrecy had failed people would have invested most of their cash in Hawala rackets, gold or real estate before the announcement, worsening the black money issue," Paras Savla of Mumbai-based investment management firm KPB & Associates told AFP. RBI chief Urjit Patel has said production of the new notes had been "ramped up" to meet requirements but Pradip Shah, who helped set up India's HDFC bank, said it would be a "nightmare" getting money to some rural areas. "A lot of people are going to be inconvenienced," he told AFP. The move is part of Modi's crackdown on so-called black money financial transactions in which cash is used to avoid tax. After closing for a day banks started reissuing new 500 notes and a new denomination of 2,000 rupees on Thursday. The AFP reports that by spring, the prime minister was convinced that he needed a headline-grabbing reform to show his determination to counter rampant tax evasion and settled on scrapping the two highest denomination bills. Almost 90 percent of transactions in India are done with cash while 500 and 1,000 notes currently account for more than 85 per cent of the value of cash in circulation, according to research firm Capital Economics. (WION with inputs from AFP)

India's rupee shake-up: A behind-the-scenes report

Amid a&nbsp;sense of panic among Indian customers after 3.2 million debit cards were declared to be at risk from fraudsters who had stolen crucial data allowing them to siphon off funds, the Indian government today assured the nation that there is no need to panic as an enquiry is underway and the computer trail leading to the guilty will be discovered soon.

&nbsp;

Speaking to the media here, Indian&nbsp;economic affairs secretary Shaktikanta Das stated that some elements outside India have carried out the hacking and have misused the debit cards.

&nbsp;

&quot;So in that regard, we have sought detailed reports from the banks and the RBI will also launch an investigation into the matter and so will the Finance ministry. From the government&#39;s stand I would like to say that Cyber Security is an issue of paramount importance as it is linked with financial security,&quot; he said.

&nbsp;

Asserting that there is absolutely no cause for alarm among customers, Das added that firm action will be taken once they receive the report from the banks.

&nbsp;

The finance ministry has asked for a detailed report from the Reserve Bank of India and National Payments Corporation of India (NPCI) about the debit card information breach.

&nbsp;

Earlier, according to a statement issued by the NPCI, 641 customer complaints from 19 banks have been received and the amount involved is Rupees 1.3 crore.

&nbsp;

&quot;All affected banks have been alerted by all card networks that a total card base of about 3.2 million could have been possibly compromised. It was established through the analysis after such frauds were reported that there was a possible compromise at one of the payment switch provider&#39;s system. Based on the analysis, NPCI and other schemes identified the period of compromise and the possible card numbers which could have been compromised during that period,&quot; the statement said.

&nbsp;

(ANI)

The finance ministry has asked for a detailed report from RBI and National Payments Corporation of India regarding the information breach

Amid a sense of panic among Indian customers after 3.2 million debit cards were declared to be at risk from fraudsters who had stolen crucial data allowing them to siphon off funds, the Indian government today assured the nation that there is no need to panic as an enquiry is underway and the computer trail leading to the guilty will be discovered soon. Speaking to the media here, Indian economic affairs secretary Shaktikanta Das stated that some elements outside India have carried out the hacking and have misused the debit cards. "So in that regard, we have sought detailed reports from the banks and the RBI will also launch an investigation into the matter and so will the Finance ministry. From the government's stand I would like to say that Cyber Security is an issue of paramount importance as it is linked with financial security," he said. Asserting that there is absolutely no cause for alarm among customers, Das added that firm action will be taken once they receive the report from the banks. The finance ministry has asked for a detailed report from the Reserve Bank of India and National Payments Corporation of India (NPCI) about the debit card information breach. Earlier, according to a statement issued by the NPCI, 641 customer complaints from 19 banks have been received and the amount involved is Rupees 1.3 crore. "All affected banks have been alerted by all card networks that a total card base of about 3.2 million could have been possibly compromised. It was established through the analysis after such frauds were reported that there was a possible compromise at one of the payment switch provider's system. Based on the analysis, NPCI and other schemes identified the period of compromise and the possible card numbers which could have been compromised during that period," the statement said. (ANI)

Debit card scare: Indian government asks consumers not to panic

Reserve Bank of India&#39;s (RBI) &nbsp;new management today cut the repo rate by 25 basis points as it released the&nbsp;monetary policy for this quarter.&nbsp;

&nbsp;

In a first, the policy has been decided by recently constituted monetary policy committee (MPC), &nbsp;a committee of six members that included three independent experts, apart from&nbsp;RBI Governor Urjit Patel and two senior officials from the central bank&#39;s monetary policy department.

&nbsp;

The central banking institution&#39;s committee has&nbsp;decided to reduce the repo rate by 25 basis points from 6.50 per cent to 6.25 per cent. It&#39;s pertinent to mention that the repo rate, a&nbsp; monetary policy tool to control inflation,&nbsp;is the rate at which the commercial banks borrow from the central bank.&nbsp;

&nbsp;

A fall in the repo rate should ideally reduce the lending rate and improve investments in India. However, a look at the past figures reveals that a fall in repo rates has hardly ever translated into &nbsp;a subsequent fall in lending rates.&nbsp;

&nbsp;

Lately, RBI has been sluggish &nbsp;in changing the interest rates as it shifted its focus from multiple indicator targetting &nbsp;to inflation targetting, a change suggested by the Urjit Patel Committee itself. Patel took charge as the governor of the central banking institution last month.&nbsp;

&nbsp;

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<h5>The repo rate, a&nbsp; monetary policy tool to control inflation,&nbsp;is the rate at which the commercial banks borrow from the central bank.&nbsp;</h5>
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Revealing the details, RBI&#39;s official statement read: &lsquo;The decision of the MPC is consistent with an accommodative stance of&nbsp;monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 &nbsp;(quarter 4) of 2016-17.&rsquo;

&nbsp;

The official statement also stresses that the International factors have also played an important role in influencing the current monetary policy. Some of these factors are:

&nbsp;

<ul>
	<li>A weak global demand is likely to&nbsp;drag down the global growth and reduce trade volumes to a great extent&nbsp;</li>
</ul>

&nbsp;

<ul>
	<li>At the International Monetary Fund (IMF) meeting this week, scheduled for October 7-9, &nbsp;a further reduction in&nbsp;the global growth rate is expected&nbsp;</li>
</ul>

&nbsp;

<ul>
	<li>The systemic central banks in the world continue to pose problems to the emerging markets as&nbsp;there is mixed macroeconomic data from the US and the European Union (EU). Even the US presidential election has caused an uncertainty in the global markets&nbsp;</li>
</ul>

&nbsp;

<ul>
	<li>Other global factors such as Britain&#39;s exit from EU, bank&nbsp;stress in Europe, rebalancing of debt-fuelled growth in China, oil glut&nbsp;have a bearing on the domestic policies of India as well&nbsp;</li>
</ul>

 
(WION)&nbsp;

A fall in the repo rate should ideally reduce the lending rate and improve investments in India

Reserve Bank of India's (RBI) new management today cut the repo rate by 25 basis points as it released the monetary policy for this quarter. In a first, the policy has been decided by recently constituted monetary policy committee (MPC), a committee of six members that included three independent experts, apart from RBI Governor Urjit Patel and two senior officials from the central bank's monetary policy department. The central banking institution's committee has decided to reduce the repo rate by 25 basis points from 6.50 per cent to 6.25 per cent. It's pertinent to mention that the repo rate, a monetary policy tool to control inflation, is the rate at which the commercial banks borrow from the central bank. A fall in the repo rate should ideally reduce the lending rate and improve investments in India. However, a look at the past figures reveals that a fall in repo rates has hardly ever translated into a subsequent fall in lending rates. Lately, RBI has been sluggish in changing the interest rates as it shifted its focus from multiple indicator targetting to inflation targetting, a change suggested by the Urjit Patel Committee itself. Patel took charge as the governor of the central banking institution last month. The repo rate, a monetary policy tool to control inflation, is the rate at which the commercial banks borrow from the central bank. × Revealing the details, RBI's official statement read: ‘The decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 (quarter 4) of 2016-17.’ The official statement also stresses that the International factors have also played an important role in influencing the current monetary policy. Some of these factors are: A weak global demand is likely to drag down the global growth and reduce trade volumes to a great extent At the International Monetary Fund (IMF) meeting this week, scheduled for October 7-9, a further reduction in the global growth rate is expected The systemic central banks in the world continue to pose problems to the emerging markets as there is mixed macroeconomic data from the US and the European Union (EU). Even the US presidential election has caused an uncertainty in the global markets Other global factors such as Britain's exit from EU, bank stress in Europe, rebalancing of debt-fuelled growth in China, oil glut have a bearing on the domestic policies of India as well (WION)

Reserve Bank of India's new management cuts repo rate by 25 basis points

The Reserve Bank of India (RBI) will announce its monetary policy review today. It will be announced in the afternoon at 2.30 pm IST against the existing practice of 11 am.

This will be Urjit Patel&#39;s maiden policy announcement as RBI Governor. Unlike his predecessor Raghuram Rajan who had the final say on interest rate cut decisions, Patel will have to go by the advice of a newly set up six-member monetary policy committee (MPC).

This is the first time that decision&nbsp;making on interest rates will shift to the six-member panel which has equal representation from the RBI and the government.

Since January last year, the RBI has cut the repo rate - the rate at which RBI lends to banks - five times.

India&#39;s retail inflation has touched a five-month low of 5.05 per cent in August, triggering hopes of a rate cut. The RBI and the government have set a retail inflation target of four percent for the next five years with an upper tolerance level of six percent and lower limit of two per cent.

Most analysts expect a status quo on rates. Mounting bad loans will remain another focus area of Patel&#39;s debut policy review.

Rajan has set a deadline of March 2017 for banks to clean up their balance sheets.

Patel has to ensure that there is no let-up on this cut-off date.

(ANI)

For the first time, decision making on interest rates will shift to a newly set up six-member monetary policy committee (MPC)

The Reserve Bank of India (RBI) will announce its monetary policy review today. It will be announced in the afternoon at 2.30 pm IST against the existing practice of 11 am. This will be Urjit Patel's maiden policy announcement as RBI Governor. Unlike his predecessor Raghuram Rajan who had the final say on interest rate cut decisions, Patel will have to go by the advice of a newly set up six-member monetary policy committee (MPC). This is the first time that decision making on interest rates will shift to the six-member panel which has equal representation from the RBI and the government. Since January last year, the RBI has cut the repo rate - the rate at which RBI lends to banks - five times. India's retail inflation has touched a five-month low of 5.05 per cent in August, triggering hopes of a rate cut. The RBI and the government have set a retail inflation target of four percent for the next five years with an upper tolerance level of six percent and lower limit of two per cent. Most analysts expect a status quo on rates. Mounting bad loans will remain another focus area of Patel's debut policy review. Rajan has set a deadline of March 2017 for banks to clean up their balance sheets. Patel has to ensure that there is no let-up on this cut-off date. (ANI)

Reserve Bank of India to roll out monetary policy review today

India has appointed three independent experts to Reserve Bank of India&rsquo;s (RBI) Monetary Policy Committee (MPC) to set interest rates as the central banking institution gears up for a switch in terms of deciding its new policy.&nbsp; 
 
The three experts -- Chetan Ghate, professor at Indian Statistical Institute, Pami Dua, director at Delhi School of Economics, and Ravindra Dholakia, professor at Indian Institute of Management, Ahmedabad -- will join RBI Governor Urjit Patel and two senior officials from the bank&#39;s monetary policy department. 
 
Deputy governor R Gandhi and executive director Michael Patra are the two other senior officials from RBI.&nbsp; 
 
The commitee will be responsible for setting the key interest rates in the monetary policy review, thereby diluting the power of the RBI governor. It will meet four times in a year to decide on the monetary policy of India by a majority vote. In case of a tie, the RBI governor has the deciding vote.&nbsp; 
 
The three independent experts were recommended by a search committee.&nbsp; 
 
It&#39;s pertinent to mention that the Indian government amended the RBI Act on June 27, 2016 to shift the job of monetary policy-making in India to a newly constituted Monetary Policy Committee (MPC). 
 
Until recently, a technical advisory committee was constituted by the RBI, which consisted of governor, deputy governor and external advisors to give their opinion and suggestions for deciding RBI&#39;s monetary policy.&nbsp; 
 
However, the governor&#39;s word was final on the rates and the recommendations of the technical advisors were not binding on the RBI. 
&nbsp; 
In 2014, it was the Urjit Patel Committee that recommended the setting up of an MPC for determining interest rates and also, move from multiple indicator approach to inflation targeting. Having both Government and RBI members on the MPC was suggested for accountability.&nbsp; 
 
The Indian government would have to keep its deficit under check and RBI would owe an explanation for runaway inflation. 
&nbsp; 
Monetary policy decisions by central banks have far-reaching implications for the economy, investors, savers and borrowers. Hence, with only governor having the decision-making authority raises questions the accountability of the entire process. 
 
Across the world, several countries, including New Zealand, England, Canada, South Africa, Sweden, have tried to make the process transparent by appointing a committee and adopting inflation targeting as a monetary policy objective.&nbsp; 
 
(WION)

Newly-constituted Monetary Policy Committee will make the process for setting key interest rates more transparent

India has appointed three independent experts to Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) to set interest rates as the central banking institution gears up for a switch in terms of deciding its new policy. The three experts -- Chetan Ghate, professor at Indian Statistical Institute, Pami Dua, director at Delhi School of Economics, and Ravindra Dholakia, professor at Indian Institute of Management, Ahmedabad -- will join RBI Governor Urjit Patel and two senior officials from the bank's monetary policy department. Deputy governor R Gandhi and executive director Michael Patra are the two other senior officials from RBI. The commitee will be responsible for setting the key interest rates in the monetary policy review, thereby diluting the power of the RBI governor. It will meet four times in a year to decide on the monetary policy of India by a majority vote. In case of a tie, the RBI governor has the deciding vote. The three independent experts were recommended by a search committee. It's pertinent to mention that the Indian government amended the RBI Act on June 27, 2016 to shift the job of monetary policy-making in India to a newly constituted Monetary Policy Committee (MPC). Until recently, a technical advisory committee was constituted by the RBI, which consisted of governor, deputy governor and external advisors to give their opinion and suggestions for deciding RBI's monetary policy. However, the governor's word was final on the rates and the recommendations of the technical advisors were not binding on the RBI. In 2014, it was the Urjit Patel Committee that recommended the setting up of an MPC for determining interest rates and also, move from multiple indicator approach to inflation targeting. Having both Government and RBI members on the MPC was suggested for accountability. The Indian government would have to keep its deficit under check and RBI would owe an explanation for runaway inflation. Monetary policy decisions by central banks have far-reaching implications for the economy, investors, savers and borrowers. Hence, with only governor having the decision-making authority raises questions the accountability of the entire process. Across the world, several countries, including New Zealand, England, Canada, South Africa, Sweden, have tried to make the process transparent by appointing a committee and adopting inflation targeting as a monetary policy objective. (WION)

India appoints three experts for RBI's Monetary Policy Committee

No decision has yet been reached to appoint India&#39;s next central bank governor, finance minister Arun Jaitley said today, 18 days before the incumbent is due to stand down. 
 
A senior aide to Indian Prime Minister Narendra Modi said he was &quot;expected to make up his mind very soon&quot; on replacing Raghuram Rajan, the former International Monetary Fund chief economist who dropped a bombshell in June by announcing he would not seek a second term. 
 
&quot;We will let you know when we decide,&quot; Jaitley told reporters as he returned to the finance ministry from a meeting with Modi. &quot;You will come to know the conclusion, not the process.&quot; 
 
Rajan ends his three-year term as governor of the Reserve Bank of India on September 4. 
 
In that short time, he transformed the RBI into an inflation-targeting central bank, with a central goal for consumer price growth of four per cent. The government is also in the process of selecting a new, six-member Monetary Policy Committee that will decide on interest rates. 
 
Officials have suggested that Rajan&#39;s replacement would be named soon to give enough time for an orderly leadership handover at the Mumbai-based central bank. 
 
A shortlist of possible successors was floated in the immediate aftermath of Rajan&#39;s June 18 announcement that, in the ensuing weeks, has seen hopefuls drift in and out of contention. 
 
Former RBI deputy governor Subir Gokarn, now India&#39;s executive director at the IMF, has featured throughout. Also in consideration is current deputy governor Urjit Patel, according to officials with direct knowledge of the matter. 
 
World Bank Chief Economist Kaushik Basu, who is soon to retire, has edged into contention. Other names also mentioned have been State Bank of India chair-managing director Arundhati Bhattacharya; the government&#39;s chief economic adviser Arvind Subramanian; and Ashok Lahiri, who held the same role under an earlier government. 
 
One finance ministry official said a decision was likely to be announced by the Prime Minister&#39;s Office, adding it was difficult to say at this stage whether Modi would accept Jaitley&#39;s recommendation at all. He declined to comment on what was discussed at the meeting between Modi and Jaitley. 
 
(Reuters)

Officials have suggested that Rajan's replacement would be named in time enough for an orderly leadership handover

No decision has yet been reached to appoint India's next central bank governor, finance minister Arun Jaitley said today, 18 days before the incumbent is due to stand down. A senior aide to Indian Prime Minister Narendra Modi said he was "expected to make up his mind very soon" on replacing Raghuram Rajan, the former International Monetary Fund chief economist who dropped a bombshell in June by announcing he would not seek a second term. "We will let you know when we decide," Jaitley told reporters as he returned to the finance ministry from a meeting with Modi. "You will come to know the conclusion, not the process." Rajan ends his three-year term as governor of the Reserve Bank of India on September 4. In that short time, he transformed the RBI into an inflation-targeting central bank, with a central goal for consumer price growth of four per cent. The government is also in the process of selecting a new, six-member Monetary Policy Committee that will decide on interest rates. Officials have suggested that Rajan's replacement would be named soon to give enough time for an orderly leadership handover at the Mumbai-based central bank. A shortlist of possible successors was floated in the immediate aftermath of Rajan's June 18 announcement that, in the ensuing weeks, has seen hopefuls drift in and out of contention. Former RBI deputy governor Subir Gokarn, now India's executive director at the IMF, has featured throughout. Also in consideration is current deputy governor Urjit Patel, according to officials with direct knowledge of the matter. World Bank Chief Economist Kaushik Basu, who is soon to retire, has edged into contention. Other names also mentioned have been State Bank of India chair-managing director Arundhati Bhattacharya; the government's chief economic adviser Arvind Subramanian; and Ashok Lahiri, who held the same role under an earlier government. One finance ministry official said a decision was likely to be announced by the Prime Minister's Office, adding it was difficult to say at this stage whether Modi would accept Jaitley's recommendation at all. He declined to comment on what was discussed at the meeting between Modi and Jaitley. (Reuters)

India finance minister: We'll let you know on RBI governor

Senior leader of India&#39;s ruling national party, Subramanian Swamy, once again attacked Raghuram Rajan today on the monetary policy, over a month after Prime Minister Narendra Modi had disapproved of his criticism of the Reserve Bank of India (RBI) chief. 
 
The&nbsp;Bharatiya Janata Party (BJP)&nbsp;leader also criticised the media of painting Rajan as &quot;some angel&quot; and him as a &quot;devil&quot;. 
 
&quot;In the Raghuram Rajan case, the whole media was motivated by forces outside this country to support him. They said the stock markets will collapse if he goes. The stock markets are not collapsing, it&#39;s gone up in fact.&nbsp; 
 
&quot;He was harming the India economy by raising interest rates and making it impossible for small and medium industries to take loans from the banks,&quot; Swamy alleged. 
 
&quot;...So, it was as if I was some devil, and this man was some angel, who has come from abroad to save us,&quot; he said. 
 
PM had disapproved of Swamy&#39;s attacks 
 
The member of parliament in the upper house (Rajya Sabha) was speaking at a function organised here by Virat Hindustan Sangam, to recall his political life during the &#39;Emergency era&#39; imposed during the tenure of former Indian prime minister Indira Gandhi. 
 
Prime Minister Modi on June 27 had disapproved of Swamy&#39;s attacks on the RBI governor and some top finance ministry officials, saying they were &quot;inappropriate&quot;. 
 
Swamy has been accusing Rajan over financial policy attracting widespread media attention. 
 
Meanwhile, Rajan has already said that he will not seek a second term as the RBI Governor. 
 
Modi-government, however, recently announced its decision to stick to 4 per cent inflation target that sent across a message that government agrees with RBI&#39;s way of dealing with inflation, according to media reports.&nbsp; 
 
(Agencies)&nbsp; 
&nbsp;

The Bharatiya Janata Party leader also criticised the media of painting RBI chief Raghuram Rajan as 'some angel' and him as a 'devil'

Senior leader of India's ruling national party, Subramanian Swamy, once again attacked Raghuram Rajan today on the monetary policy, over a month after Prime Minister Narendra Modi had disapproved of his criticism of the Reserve Bank of India (RBI) chief. The Bharatiya Janata Party (BJP) leader also criticised the media of painting Rajan as "some angel" and him as a "devil". "In the Raghuram Rajan case, the whole media was motivated by forces outside this country to support him. They said the stock markets will collapse if he goes. The stock markets are not collapsing, it's gone up in fact. "He was harming the India economy by raising interest rates and making it impossible for small and medium industries to take loans from the banks," Swamy alleged. "...So, it was as if I was some devil, and this man was some angel, who has come from abroad to save us," he said. PM had disapproved of Swamy's attacks The member of parliament in the upper house (Rajya Sabha) was speaking at a function organised here by Virat Hindustan Sangam, to recall his political life during the 'Emergency era' imposed during the tenure of former Indian prime minister Indira Gandhi. Prime Minister Modi on June 27 had disapproved of Swamy's attacks on the RBI governor and some top finance ministry officials, saying they were "inappropriate". Swamy has been accusing Rajan over financial policy attracting widespread media attention. Meanwhile, Rajan has already said that he will not seek a second term as the RBI Governor. Modi-government, however, recently announced its decision to stick to 4 per cent inflation target that sent across a message that government agrees with RBI's way of dealing with inflation, according to media reports. (Agencies)

India's ruling party leader Subramaniam Swamy yet again lashes out at RBI chief

Indian central bank, the Reserve Bank of India on Monday released the much-awaited guidelines for &#39;on tap&#39; universal banking licence, but excluded large industrial houses as eligible entities from the purview, though they can invest in banks up to 10 per cent. 
 
As per the &quot;guidelines for &#39;on tap&#39; licensing of universal banks in the private sector&quot;, the initial minimum paid-up voting equity capital for a bank should be Rs 500 crore and thereafter, the bank should have a minimum net worth of Rs 500 crore at all times. 
 
Individuals/professionals who are &#39;residents&#39; and have 10 years of experience in banking and finance at a senior level and existing non-banking financial companies (NBFCs) that are &#39;controlled by residents&#39; and have a successful track record for at least 10 years can apply for the licence. 
 
Further, &quot;entities/groups in the private sector that are &#39;owned and controlled by residents&#39; and have a successful track record for at least 10 years, provided that if such entity/group has total assets of Rs 5,000 crore or more, the non-financial business of the group does not account for 40 per cent or more in terms of total assets/in terms of gross income&quot; are also eligible promoters. 
 
The applicant would have to pass the &#39;fit and proper&#39; criteria. According to it, promoter/promoting entity/promoter group should have a past record of sound financials, credentials, integrity and have a minimum 10 years of successful track record. 
 
The foreign shareholding in the bank would be as per the existing FDI. At present, the aggregate foreign investment limit is 74 per cent. 
 
&quot;The licensing window will be open on-tap, and the applications...could be submitted to the RBI at any point of time,&quot; the guidelines said. 
 
The applications will be referred to a standing external advisory committee (SEAC) to be set up by the Reserve Bank. 
 
The validity of the in-principle approval issued by the RBI will be 18 months from the date of granting in-principle approval and would thereafter lapse automatically. 
 
The RBI had last issued guidelines for licensing of new banks in the private sector on February 22, 2013. 
Consequently, the RBI issued in-principle approval to two applicants and they have since established the banks (Bandhan Bank and IDFC Bank).&nbsp; 
 
(PTI) 
&nbsp;

The initial minimum paid-up voting equity capital for a bank should be Rs 500 crore

Indian central bank, the Reserve Bank of India on Monday released the much-awaited guidelines for 'on tap' universal banking licence, but excluded large industrial houses as eligible entities from the purview, though they can invest in banks up to 10 per cent. As per the "guidelines for 'on tap' licensing of universal banks in the private sector", the initial minimum paid-up voting equity capital for a bank should be Rs 500 crore and thereafter, the bank should have a minimum net worth of Rs 500 crore at all times. Individuals/professionals who are 'residents' and have 10 years of experience in banking and finance at a senior level and existing non-banking financial companies (NBFCs) that are 'controlled by residents' and have a successful track record for at least 10 years can apply for the licence. Further, "entities/groups in the private sector that are 'owned and controlled by residents' and have a successful track record for at least 10 years, provided that if such entity/group has total assets of Rs 5,000 crore or more, the non-financial business of the group does not account for 40 per cent or more in terms of total assets/in terms of gross income" are also eligible promoters. The applicant would have to pass the 'fit and proper' criteria. According to it, promoter/promoting entity/promoter group should have a past record of sound financials, credentials, integrity and have a minimum 10 years of successful track record. The foreign shareholding in the bank would be as per the existing FDI. At present, the aggregate foreign investment limit is 74 per cent. "The licensing window will be open on-tap, and the applications...could be submitted to the RBI at any point of time," the guidelines said. The applications will be referred to a standing external advisory committee (SEAC) to be set up by the Reserve Bank. The validity of the in-principle approval issued by the RBI will be 18 months from the date of granting in-principle approval and would thereafter lapse automatically. The RBI had last issued guidelines for licensing of new banks in the private sector on February 22, 2013. Consequently, the RBI issued in-principle approval to two applicants and they have since established the banks (Bandhan Bank and IDFC Bank). (PTI)

RBI releases guidelines for 'on-tap' banking licence in private sector, bars large industrial houses

Indian factory activity grew at its fastest pace in four months in July as export orders jumped, but prices remained muted, giving room to the central bank to ease policy further if needed, a private survey showed today. 
 
The Nikkei/Markit Manufacturing Purchasing Managers&#39; Index rose to 51.8 in July from June&#39;s 51.7, marking its seventh month above the 50 level that separates growth from contraction. 
 
&quot;India&#39;s manufacturing economy is reviving at the beginning of the second half of 2016 after the slowdown seen in the April-June quarter, as growth in both production and new orders continued to strengthen in July,&quot; said Pollyanna De Lima, economist at survey compiler Markit. 
 
The output and new orders sub-indexes both rose to their highest since March. 
 
Among new orders, consumer goods saw the strongest pace of expansion, while export orders rose the fastest since January, driven largely by a depreciation in the rupee. 
 
The survey also showed input costs rise at a modest and slower pace, although improving demand meant firms were able to pass on some of that burden. 
 
&quot;With inflation rates remaining lower than their respective long-run averages, it wouldn&#39;t be surprising to see the Reserve Bank of India loosening monetary policy at its August meeting in an effort to encourage investment,&quot; De Lima said. 
 
A majority of economists polled by Reuters last month predicted a rate cut would come sometime between October and December.&nbsp; 
 
That should give the government room to focus on key economic reforms such as the Goods and Services Tax bill, which promises to replace all state and federal levies with a single tax, and is currently pending in parliament. 
 
Consumer inflation in India rose to 5.77 per cent in June, above the RBI&#39;s March 2017 target of 5 per cent, although it could cool if above-average monsoon rains help put a lid on rising food prices. 
 
(Reuters)

Among new orders, consumer goods saw the strongest pace of expansion, while export orders rose the fastest since January

Indian factory activity grew at its fastest pace in four months in July as export orders jumped, but prices remained muted, giving room to the central bank to ease policy further if needed, a private survey showed today. The Nikkei/Markit Manufacturing Purchasing Managers' Index rose to 51.8 in July from June's 51.7, marking its seventh month above the 50 level that separates growth from contraction. "India's manufacturing economy is reviving at the beginning of the second half of 2016 after the slowdown seen in the April-June quarter, as growth in both production and new orders continued to strengthen in July," said Pollyanna De Lima, economist at survey compiler Markit. The output and new orders sub-indexes both rose to their highest since March. Among new orders, consumer goods saw the strongest pace of expansion, while export orders rose the fastest since January, driven largely by a depreciation in the rupee. The survey also showed input costs rise at a modest and slower pace, although improving demand meant firms were able to pass on some of that burden. "With inflation rates remaining lower than their respective long-run averages, it wouldn't be surprising to see the Reserve Bank of India loosening monetary policy at its August meeting in an effort to encourage investment," De Lima said. A majority of economists polled by Reuters last month predicted a rate cut would come sometime between October and December. That should give the government room to focus on key economic reforms such as the Goods and Services Tax bill, which promises to replace all state and federal levies with a single tax, and is currently pending in parliament. Consumer inflation in India rose to 5.77 per cent in June, above the RBI's March 2017 target of 5 per cent, although it could cool if above-average monsoon rains help put a lid on rising food prices. (Reuters)

Indian industry growth at four-month high in July: Survey

A nationwide bank strike in India hit the public transactions like cheque clearances and cash deposits, but the vital treasury operations including a 150 billion rupee ($2.24 billion) government bond auction are unlikely to be affected, traders said. 
 
Staffing in treasuries of banks are likely to be less than normal days but officials will ensure that functions like bidding at the auction will run smoothly, three traders at state-run banks said. 
 
&quot;Treasury people have been allowed to enter the head office of the bank, so there is no problem for us in trading or bidding at the auctions,&quot; said a senior trader at a large state-run bank. 
 
However, there could be some issues in some banks settling the previous day&#39;s trades due to thin staffing. 
 
&quot;Settlement will be a problem at back office,&quot; said a senior official with State Bank of India. 
 
The RBI was also not too worried about the impact of the strike on treasury operations and settlements of banks. 
 
&quot;There shouldn&#39;t be any problem. Primary dealers are also there to underwrite if needed. But auctions should go through smoothly,&quot; the official said. 
 
An estimated 1 million bank staff are expected to strike work, opposing the government&#39;s proposal to merge State Bank of Indi&#39;s (SBI) associate banks with itself. In addition, unions are against the government&#39;s proposed move to privatise IDBI bank, formerly known as Industrial Development Bank of India. 
 
(Reuters) 
 
&nbsp;

An estimated 1 million bank staff are expected to strike work but treasury functions are likely to remain normal

A nationwide bank strike in India hit the public transactions like cheque clearances and cash deposits, but the vital treasury operations including a 150 billion rupee ($2.24 billion) government bond auction are unlikely to be affected, traders said. Staffing in treasuries of banks are likely to be less than normal days but officials will ensure that functions like bidding at the auction will run smoothly, three traders at state-run banks said. "Treasury people have been allowed to enter the head office of the bank, so there is no problem for us in trading or bidding at the auctions," said a senior trader at a large state-run bank. However, there could be some issues in some banks settling the previous day's trades due to thin staffing. "Settlement will be a problem at back office," said a senior official with State Bank of India. The RBI was also not too worried about the impact of the strike on treasury operations and settlements of banks. "There shouldn't be any problem. Primary dealers are also there to underwrite if needed. But auctions should go through smoothly," the official said. An estimated 1 million bank staff are expected to strike work, opposing the government's proposal to merge State Bank of Indi's (SBI) associate banks with itself. In addition, unions are against the government's proposed move to privatise IDBI bank, formerly known as Industrial Development Bank of India. (Reuters)

Nationwide bank strike hits public transactions in India

India&#39;s headline inflation probably stayed near a two-year high in June even as industrial production in May likely contracted, increasing the odds that the central bank will keep interest rates on hold next month. 
 
Consumer prices in June are estimated to have risen 5.73 per cent on an annual basis, according to a Reuters poll, a tad lower than May&#39;s 5.76 per cent - the fastest pace since August 2014.&nbsp;That would be a worry for outgoing Reserve Bank of India (RBI) Governor Raghuram Rajan, who wants inflation kept below at 5 per cent by March 2017. 
 
The Aug. 9 policy meeting will be the last for Rajan, whose three-year term ends in early September. Between January 2015 and this April, he cut the repo rate by 150 basis points, to 6.50 per cent.&nbsp;After holding rates in June, the governor said the central bank was looking for room to reduce them further, but it remained concerned about pressure on food and commodity prices. 
 
Demand-driven pressures are likely to be stoked by the hike of salaries and pensions for about 10 million government employees and pensioners. Vegetable prices, meanwhile, have surged due to seasonal supply disruptions. 
 
While a pick-up in summer monsoon rains in recent weeks is expected to cool food inflation, most analysts don&#39;t expect another rate cut before a new governor is on the job. DBS in Singapore expects a rate cut in the October-December quarter. 
 
New Governor, New Mechanism 
 
Prime Minister Narendra Modi is widely expected to name a new governor before July 18. Government sources say the race is mainly between former RBI deputy governors Rakesh Mohan and Subir Gokarn. 
 
The government has to also constitute a Monetary Policy Committee (MPC) to set interest rates by a majority vote, a departure from the current regime where the decision effectively rests with the RBI chief.&nbsp;It aims to name the six-member committee before the August policy review. Three members of the MPC would be RBI insiders, headed by the governor who would have the casting vote in the event of a 3-3 split. 
 
Three external members would be chosen by a panel comprising Modi&#39;s cabinet secretary, the RBI governor, a top finance ministry bureaucrat and three outside experts named by the government.&nbsp;India&#39;s statistics office will release retail inflation data and industrial production data at 1200 GMT today. 
 
Analysts surveyed by Reuters expect output at factories, mines and utilities to shrink 0.4 per cent in May from a year earlier compared with a surprise 0.8 per cent annual contraction a month ago. 
 
(Reuters)

According to a Reuters poll, consumer prices in June rose 5.73 per cent on an annual basis, a tad lower than May's 5.76

India's headline inflation probably stayed near a two-year high in June even as industrial production in May likely contracted, increasing the odds that the central bank will keep interest rates on hold next month. Consumer prices in June are estimated to have risen 5.73 per cent on an annual basis, according to a Reuters poll, a tad lower than May's 5.76 per cent - the fastest pace since August 2014. That would be a worry for outgoing Reserve Bank of India (RBI) Governor Raghuram Rajan, who wants inflation kept below at 5 per cent by March 2017. The Aug. 9 policy meeting will be the last for Rajan, whose three-year term ends in early September. Between January 2015 and this April, he cut the repo rate by 150 basis points, to 6.50 per cent. After holding rates in June, the governor said the central bank was looking for room to reduce them further, but it remained concerned about pressure on food and commodity prices. Demand-driven pressures are likely to be stoked by the hike of salaries and pensions for about 10 million government employees and pensioners. Vegetable prices, meanwhile, have surged due to seasonal supply disruptions. While a pick-up in summer monsoon rains in recent weeks is expected to cool food inflation, most analysts don't expect another rate cut before a new governor is on the job. DBS in Singapore expects a rate cut in the October-December quarter. New Governor, New Mechanism Prime Minister Narendra Modi is widely expected to name a new governor before July 18. Government sources say the race is mainly between former RBI deputy governors Rakesh Mohan and Subir Gokarn. The government has to also constitute a Monetary Policy Committee (MPC) to set interest rates by a majority vote, a departure from the current regime where the decision effectively rests with the RBI chief. It aims to name the six-member committee before the August policy review. Three members of the MPC would be RBI insiders, headed by the governor who would have the casting vote in the event of a 3-3 split. Three external members would be chosen by a panel comprising Modi's cabinet secretary, the RBI governor, a top finance ministry bureaucrat and three outside experts named by the government. India's statistics office will release retail inflation data and industrial production data at 1200 GMT today. Analysts surveyed by Reuters expect output at factories, mines and utilities to shrink 0.4 per cent in May from a year earlier compared with a surprise 0.8 per cent annual contraction a month ago. (Reuters)

India's retail inflation expected to remain high in June

The Indian&nbsp;government has whittled down its list of candidates for the next governor of its central bank, the Reserve Bank of India (RBI), to four, three of whom are economists and veterans of the central bank and&nbsp;the other is&nbsp;the head of India&#39;s&nbsp;largest bank, State Bank of India.

A senior government official said the four are: RBI deputy governor Urjit Patel; former deputy governors Rakesh Mohan and Subir Gokarn; and State Bank of India&nbsp;Chair Arundhati Bhattacharya.

Two government officials also said that outgoing governor Raghuram Rajan was expected to join the search committee to appoint three external members of a new six-member RBI monetary policy committee (MPC).

The objective, these officials said on condition of anonymity due to the sensitivity of the matter, was to ensure that the MPC is constituted as soon as possible - probably before the appointment of Rajan&#39;s successor. 
 
(Reuters)

Three of them are veterans of the central bank, the fourth heads the country's largest bank

The Indian government has whittled down its list of candidates for the next governor of its central bank, the Reserve Bank of India (RBI), to four, three of whom are economists and veterans of the central bank and the other is the head of India's largest bank, State Bank of India. A senior government official said the four are: RBI deputy governor Urjit Patel; former deputy governors Rakesh Mohan and Subir Gokarn; and State Bank of India Chair Arundhati Bhattacharya. Two government officials also said that outgoing governor Raghuram Rajan was expected to join the search committee to appoint three external members of a new six-member RBI monetary policy committee (MPC). The objective, these officials said on condition of anonymity due to the sensitivity of the matter, was to ensure that the MPC is constituted as soon as possible - probably before the appointment of Rajan's successor. (Reuters)

India whittles list of possible Rajan successors down to four

Indian markets are set to open lower on Monday after Reserve Bank of India (RBI) governor Raghuram Rajan unexpectedly said he will step down in September, though the central bank is likely to step in to support the Rupee, analysts and traders said. 
 
Traders predicted the Rupee would likely fall by 0.15 to 0.20 Rupees per Dollar at the start of trading, but that the RBI would intervene to prevent excessive volatility. 
 
The Rupee closed at 67.0775/67.0875 per Dollar on Friday. 
 
The 10-year benchmark bond yield was seen rising 3-5 basis points after closing at 7.50 per cent on Friday, while shares were forecast to fall at the open. 
 
Any volatility could be magnified given the surprise news that Rajan would step down after just one three-year term comes ahead of a UK referendum on Thursday about whether to leave the European Union, which has kept global investors on tenterhooks. 
 
Still, analysts said markets would stabilise as investors await word on who will be appointed as the next RBI Governor, with RBI deputy governor Urjit Patel and State Bank of India chair-managing director Arundhati Bhattacharya seen as potential replacements. 
 
&quot;There should be a knee-jerk reaction on the Rupee,&quot; said Ashtosh Raina, head of foreign exchange with HDFC Bank. &quot;Then the market will normalise. I think the government would already be on the job to find a suitable replacement.&quot; 
 
Rajan, a former International Monetary Fund chief economist, has been popular with foreign investors for his efforts to tackle inflation and helping to rescue India from its worst crisis in more than two decades when he took the helm in 2013. 
 
But he has faced mounting criticism from a faction within Indian Prime Minister Narendra Modi&#39;s ruling party for keeping interest rates high and over a perception he had begun to stray into politics. 
 
A senior official at a foreign bank said clients were already starting to call him. 
 
&quot;There are concerns. We have started seeing messages from foreign clients whether politics has taken over central banking. They are asking what&#39;s happening in India,&quot; he said, declining to be identified discussing conversations with clients. 
 
Still, analysts said markets would likely withstand any initial volatility, and expressed confidence the government would come up with an appointment that could gain the confidence of investors. 
 
&quot;The timing is certainly bad,&quot; said Rupa Rege Nitsure, group chief economist with L&amp;T Finance Holdings in Mumbai. 
 
&quot;I have confidence in the credibility of the RBI as a public institution and I&#39;m sure whoever fills in his shoes will be able to shoulder the challenge with the help of RBI &#39;s internal talent and skills.&quot; 
(Reuters)

Reserve Bank of India governor Raghuram Rajan unexpectedly said he will step down in September

Indian markets are set to open lower on Monday after Reserve Bank of India (RBI) governor Raghuram Rajan unexpectedly said he will step down in September, though the central bank is likely to step in to support the Rupee, analysts and traders said. Traders predicted the Rupee would likely fall by 0.15 to 0.20 Rupees per Dollar at the start of trading, but that the RBI would intervene to prevent excessive volatility. The Rupee closed at 67.0775/67.0875 per Dollar on Friday. The 10-year benchmark bond yield was seen rising 3-5 basis points after closing at 7.50 per cent on Friday, while shares were forecast to fall at the open. Any volatility could be magnified given the surprise news that Rajan would step down after just one three-year term comes ahead of a UK referendum on Thursday about whether to leave the European Union, which has kept global investors on tenterhooks. Still, analysts said markets would stabilise as investors await word on who will be appointed as the next RBI Governor, with RBI deputy governor Urjit Patel and State Bank of India chair-managing director Arundhati Bhattacharya seen as potential replacements. "There should be a knee-jerk reaction on the Rupee," said Ashtosh Raina, head of foreign exchange with HDFC Bank. "Then the market will normalise. I think the government would already be on the job to find a suitable replacement." Rajan, a former International Monetary Fund chief economist, has been popular with foreign investors for his efforts to tackle inflation and helping to rescue India from its worst crisis in more than two decades when he took the helm in 2013. But he has faced mounting criticism from a faction within Indian Prime Minister Narendra Modi's ruling party for keeping interest rates high and over a perception he had begun to stray into politics. A senior official at a foreign bank said clients were already starting to call him. "There are concerns. We have started seeing messages from foreign clients whether politics has taken over central banking. They are asking what's happening in India," he said, declining to be identified discussing conversations with clients. Still, analysts said markets would likely withstand any initial volatility, and expressed confidence the government would come up with an appointment that could gain the confidence of investors. "The timing is certainly bad," said Rupa Rege Nitsure, group chief economist with L&T Finance Holdings in Mumbai. "I have confidence in the credibility of the RBI as a public institution and I'm sure whoever fills in his shoes will be able to shoulder the challenge with the help of RBI 's internal talent and skills." (Reuters)

Economist stepping down as Indian central bank governor set to hit markets

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