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

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

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

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

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

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

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

RBI restricts activities of PMC Bank due to heightened risks

Shares traded higher on expectations that the government will dole out stimulus measures on Friday to support the economy, amid demands over reduced tax burden on products.

The broader NSE Nifty was up 0.21% at 10,727.6, as of 0412 GMT on Friday, while the benchmark BSE Sensex was trading 0.3% higher at 36,205.52.

The country's Goods and Services Tax (GST) Council is set to meet in Goa to recommend tax cuts on 20-25 products, sources told Reuters.

The GST council meeting comes amid demands raised by various industries and consumers for government help to boost a sagging economy.

Separately, Reserve Bank of India chief Shaktikanta Das said there is room for further interest rate cuts to bolster economic growth since inflation continues to remain within the central bank's target, other media reported.

The rupee strengthened by 0.26% to 71.11 against the dollar, while the benchmark 10-year bond yield was trading at 6.57%, versus the previous close of 6.64%.

Shares in other Asian markets also edged higher as economic stimulus boost around the world, including monetary easing by the US Federal Reserve and the European Central Bank, eased fears over a global slowdown.

The local indexes, however, were set for their worst week since early May, after a surge in crude prices triggered heavy selling in stock markets earlier this week.

Shares of private-sector lender Yes Bank Ltd, which suffered a sharp drop in the previous session, rose as much as 6.8%.

HDFC Bank Ltd, which is among the top boosts in the index, gained as much as 1.7%.

Media firm Zee Entertainment Enterprises Ltd slumped 11% to its lowest in five years, and was the top loser in the NSE Nifty. The stock is set for a fifth straight session of losses.

Shares traded higher on expectations that the government will dole out stimulus measures on Friday to support the economy, amid demands over reduced tax burden on products.

Shares traded higher on expectations that the government will dole out stimulus measures on Friday to support the economy, amid demands over reduced tax burden on products. The broader NSE Nifty was up 0.21% at 10,727.6, as of 0412 GMT on Friday, while the benchmark BSE Sensex was trading 0.3% higher at 36,205.52. The country's Goods and Services Tax (GST) Council is set to meet in Goa to recommend tax cuts on 20-25 products, sources told Reuters. The GST council meeting comes amid demands raised by various industries and consumers for government help to boost a sagging economy. Separately, Reserve Bank of India chief Shaktikanta Das said there is room for further interest rate cuts to bolster economic growth since inflation continues to remain within the central bank's target, other media reported. The rupee strengthened by 0.26% to 71.11 against the dollar, while the benchmark 10-year bond yield was trading at 6.57%, versus the previous close of 6.64%. Shares in other Asian markets also edged higher as economic stimulus boost around the world, including monetary easing by the US Federal Reserve and the European Central Bank, eased fears over a global slowdown. The local indexes, however, were set for their worst week since early May, after a surge in crude prices triggered heavy selling in stock markets earlier this week. Shares of private-sector lender Yes Bank Ltd, which suffered a sharp drop in the previous session, rose as much as 6.8%. HDFC Bank Ltd, which is among the top boosts in the index, gained as much as 1.7%. Media firm Zee Entertainment Enterprises Ltd slumped 11% to its lowest in five years, and was the top loser in the NSE Nifty. The stock is set for a fifth straight session of losses.

Nifty, Sensex gain ahead of tax council meet

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

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

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

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

India's current account and fiscal deficit might take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend, the Reserve Bank of India chief said on Monday.

"We should allow a few more days to see how the situation plays out before taking a final view...depending on how long it persists it will have some impact on the current account deficit and further perhaps on the fiscal deficit if it lasts longer," Governor Shaktikanta Das told the CNBC-TV18 news channel.

US officials blamed Iran for the attack, which damaged the world's biggest crude oil processing plant and led to a 19% surge in oil prices. Iran denied blame and said it was ready for "full-fledged war".

A jump in oil prices is negative for emerging markets such as India, which is the world's third-biggest importer of oil.

The country is already likely to miss its fiscal deficit target for the current financial year, despite receiving an additional dividend from the central bank, five government officials and advisers told Reuters earlier this month, as tax collections have sunk amid a sharp economic slowdown.

India's current account and fiscal deficit might take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend, the Reserve Bank of India chief said on Monday.

India's current account and fiscal deficit might take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend, the Reserve Bank of India chief said on Monday. "We should allow a few more days to see how the situation plays out before taking a final view...depending on how long it persists it will have some impact on the current account deficit and further perhaps on the fiscal deficit if it lasts longer," Governor Shaktikanta Das told the CNBC-TV18 news channel. US officials blamed Iran for the attack, which damaged the world's biggest crude oil processing plant and led to a 19% surge in oil prices. Iran denied blame and said it was ready for "full-fledged war". A jump in oil prices is negative for emerging markets such as India, which is the world's third-biggest importer of oil. The country is already likely to miss its fiscal deficit target for the current financial year, despite receiving an additional dividend from the central bank, five government officials and advisers told Reuters earlier this month, as tax collections have sunk amid a sharp economic slowdown.

India's current account under threat if oil surge continues: RBI Governor

India is likely to miss its fiscal deficit target for the current financial year, despite receiving an additional dividend from the the Reserve Bank of India (RBI), five government officials and advisers said, as tax collections have sunk amid a sharp slowdown.

India is likely to miss its fiscal deficit target for the current financial year, despite receiving an additional dividend from the the Reserve Bank of India (RBI), five government officials and advisers said, as tax collections have sunk amid a sharp slowdown. With economic growth falling to a six-year low of 5% in the April-June quarter, the sources said the government could toward the end of 2019 be forced to raise the fiscal deficit target to 3.5% of GDP from 3.3%, amid pressure for additional stimulus measures. The officials asked not to be identified as they have not been authorized to discuss the matter with media. A Finance Ministry spokesman did not immediately respond to requests for comment. Tax collections could fall by as much as 1 trillion rupees ($14 billion), or 4% of $344 billion annual target, two of the officials said, noting that sharp shortfalls are expected both in goods and services tax (GST) and income tax collections. "Overshooting the fiscal deficit target is inevitable this year as the economic slowdown has hit government revenue," a senior adviser said, adding the deficit would rise unless the government resorts to hefty spending cuts. Separately, a finance ministry official said plans to sell minority stakes in some state-run entities including electricity producer NTPC, state insurer General Insurance Corp and construction finance company HUDCO could be deferred, as market sentiment has weakened. Two government advisers said they have also urged the Prime Minister Narendra Modi-led government to defer the fiscal target to tackle the economic slowdown and outline stimulus steps to help the hard hit sectors such as autos and textiles. Downward revisions Private economists have revised growth forecasts to as low as 5.8% for 2019/20, one percentage point lower than the prior year, saying the slowdown could persist for two or three years while much needed cyclical as well as structural reforms are put in place. The flat manufacturing sector growth of 0.6% during the April-June period, and contraction in the auto sector by nearly 30% in July, has hit GST and corporate tax collections, while consumer spending cuts amid job losses have dented revenue collections. So far, the government has resisted pressure to announce a big bang stimulus package while nudging the RBI to cut its benchmark repo rate, which is already down 110 basis points since February. Another government adviser said despite receiving a bonanza of around $8 billion in extra dividends from the RBI, the fiscal deficit would rise as nominal GDP growth has fallen well below the budgeted estimate for the fiscal year. Policy advisers fear that the government's recently outlined plan to merge 10 state-run banks into four mega banks this year, could also prove to be a distraction for bankers, reducing their focus on credit growth, delaying recoveries on bad loans, and in turn impacting their profits and their dividend payouts to the government. In 2018/19, government revenue receipts fell 11% against the budgeted target, and the government resorted to spending cuts of 1.46 trillion rupees ($20.42 billion), and the deficit rose 3.4% of GDP against initial target of 3.3%.

India likely to miss fiscal deficit target amid pressure for more stimulus: Report

A task force set up by India's central bank on Tuesday recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from banks.

A task force set up by India's central bank on Tuesday recommended a slew of measures for developing a secondary market for corporate loans, including easing of regulations to allow foreign portfolio investors (FPIs) to directly purchase distressed loans from banks. These moves are aimed at developing India's credit markets and come at a time when the country is facing a liquidity crisis among its shadow banks after the collapse of IL&FS, one of the biggest shadow banks, last year. FPIs, who so far were allowed to invest in stressed assets through asset reconstruction companies (ARCs), can directly participate in the bad loan market within an annual limit set by the Reserve Bank of India (RBI) in consultation with the government, the task force recommended. RBI's task force also recommended easing rules around the securitisation of loan assets and permitting wider participation from funds and insurance companies in trading these securities, the central bank said. It also proposed setting up a self-regulatory body to standardise loan documents and promote transparency in the secondary market. RBI has posted the recommendations on its website for comments from stakeholders and they are subject to the central bank's approval. The task force was formed in May to review the existing state of the market for loans in India and to make recommendations for the development of a secondary market for corporate loans.

RBI's task force recommends moves to ease credit markets

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

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

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

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

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

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

Indian shares rose for a third straight session on Tuesday, as sentiment was boosted by easing global trade war worries and expectations of additional stimulus supported by a huge dividend from the Reserve Bank of India.

The broader NSE Nifty was up 0.49% at 11,110.20 as of 0409 GMT, while the benchmark BSE Sensex was 0.38% higher at 37,625.

The government is set to receive a much higher-than-expected dividend of 1.76 trillion rupees ($24.62 billion) from the central bank, allowing the administration to provide a wobbling economy additional fiscal stimulus.

"Markets may now consolidate and choose to look at what the government will do with the money," said Saurabh Jain, assistant vice-president of research at SMC Global Securities in New Delhi.

"It is essential to see where this money will go and which pockets will benefit, given the state of the economy."

Markets have gained on the back of the government's move to roll back a recently announced tax surcharge on foreign and domestic equity investors, speed up capital infusion to state-run banks and support the beleaguered domestic auto industry.

The India volatility index plummeted as much as 13.42% on Tuesday.

Broader Asian shares tracked global stocks higher as signs of easing hostilities between the United States and China restored investor confidence.

The Nifty PSU bank index, tracking state-owned banks, gained as much as 2.13%, with State Bank of India rising about 2.3%.

Tata Motors Ltd was the top gainer among the Nifty stocks, rising as much as 2.89%, while Tata Steel Ltd gained as much as 3.76%.

Among the few losers on the NSE Nifty were IT stocks, weighed down by a decline in the rupee to 71.83 rupees per dollar vs last close of 72.03 rupees.

Tata Consultancy Ltd and Infosys Ltd fell as much as 1.24% and 1.76%, respectively.

Indian shares rose for a third straight session on Tuesday, as sentiment was boosted by easing global trade war worries and expectations of additional stimulus supported by a huge dividend from the Reserve Bank of India.

Indian shares rose for a third straight session on Tuesday, as sentiment was boosted by easing global trade war worries and expectations of additional stimulus supported by a huge dividend from the Reserve Bank of India. The broader NSE Nifty was up 0.49% at 11,110.20 as of 0409 GMT, while the benchmark BSE Sensex was 0.38% higher at 37,625. The government is set to receive a much higher-than-expected dividend of 1.76 trillion rupees ($24.62 billion) from the central bank, allowing the administration to provide a wobbling economy additional fiscal stimulus. "Markets may now consolidate and choose to look at what the government will do with the money," said Saurabh Jain, assistant vice-president of research at SMC Global Securities in New Delhi. "It is essential to see where this money will go and which pockets will benefit, given the state of the economy." Markets have gained on the back of the government's move to roll back a recently announced tax surcharge on foreign and domestic equity investors, speed up capital infusion to state-run banks and support the beleaguered domestic auto industry. The India volatility index plummeted as much as 13.42% on Tuesday. Broader Asian shares tracked global stocks higher as signs of easing hostilities between the United States and China restored investor confidence. The Nifty PSU bank index, tracking state-owned banks, gained as much as 2.13%, with State Bank of India rising about 2.3%. Tata Motors Ltd was the top gainer among the Nifty stocks, rising as much as 2.89%, while Tata Steel Ltd gained as much as 3.76%. Among the few losers on the NSE Nifty were IT stocks, weighed down by a decline in the rupee to 71.83 rupees per dollar vs last close of 72.03 rupees. Tata Consultancy Ltd and Infosys Ltd fell as much as 1.24% and 1.76%, respectively.

Sensex and Nifty rise on trade optimism, hopes of more stimulus

The Central Board of the Reserve Bank of India (RBI) on Monday approved the transfer of Rs 1,76,051 crore to the Government of India.

The top bank's decision is in line with the recommendations of the Bimal Jalan Committee.

A press note from the RBI said that it has decided "to transfer a sum of Rs 1,76,051 crore to the Government of India comprising Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the Central Board today."

It may be recalled that the RBI in consultation with the Government of India had constituted an Expert Committee to Review the Extant Economic Capital Framework of the Reserve Bank of India under the chairmanship of Dr Bimal Jalan.

"The Committee's recommendations were based on the consideration of the role of central banks'&nbsp;financial resilience, cross-country practices, statutory provisions and the impact of the RBI's public policy mandate and operating environment on its balance sheet and the risks involved," the note said.

The note further said, "The Committee`s recommendations were guided by the fact that the RBI forms the primary bulwark for monetary, financial and external stability."

"Hence, the resilience of the RBI needs to be commensurate with its public policy objectives and must be maintained above the level of peer central banks as would be expected of a central bank of one of the fastest-growing large economies of the world," added the note.

The Central Board of the Reserve Bank of India (RBI) on Monday approved the transfer of Rs 1,76,051 crore to the Government of India. The top bank's decision is in line with the recommendations of the Bimal Jalan Committee.

The Central Board of the Reserve Bank of India (RBI) on Monday approved the transfer of Rs 1,76,051 crore to the Government of India. The top bank's decision is in line with the recommendations of the Bimal Jalan Committee. A press note from the RBI said that it has decided "to transfer a sum of Rs 1,76,051 crore to the Government of India comprising Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the Central Board today." It may be recalled that the RBI in consultation with the Government of India had constituted an Expert Committee to Review the Extant Economic Capital Framework of the Reserve Bank of India under the chairmanship of Dr Bimal Jalan. "The Committee's recommendations were based on the consideration of the role of central banks' financial resilience, cross-country practices, statutory provisions and the impact of the RBI's public policy mandate and operating environment on its balance sheet and the risks involved," the note said. The note further said, "The Committee`s recommendations were guided by the fact that the RBI forms the primary bulwark for monetary, financial and external stability." "Hence, the resilience of the RBI needs to be commensurate with its public policy objectives and must be maintained above the level of peer central banks as would be expected of a central bank of one of the fastest-growing large economies of the world," added the note.

Reserve Bank of India to transfer Rs 1,76,051 crore to Government

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

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

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

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

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

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

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

Fixing weak growth is highest priority: RBI policy minutes

The Reserve Bank of India (RBI) is looking to get banks to link some new loans to its key policy rate or other external benchmarks, <a href="https://www.wionews.com/india-news/global-economy-seems-to-be-moving-into-new-unsettling-phase-rbi-governor-shaktikanta-das-238764">Governor Shaktikanta Das</a> said on Monday, as he pushes them to cut rates faster to stimulate a flagging economy.

Since February, the RBI has cut the repo rate by 110 basis points (bps), but most Indian banks - which rely on an opaque rate-setting mechanism, have not come close to the following suit.

The State Bank of India (SBI), the largest lender by assets, has cut its benchmark lending rate by 30 bps.

Commercial banks cite high deposit rates for their inability to cut loan ones.&nbsp;

Marginal reductions restrict how much borrowers benefit from the repo cuts.

"Today, the economy requires a certain amount of push not just from the monetary policy but also from its transmission," Das said. "I think the time has now come to formalise this linking of new loans to external benchmarks like the repo rate."

"We'd kept the external benchmarks in abeyance earlier because we wanted to see how the market evolves," the governor told a banking conference in Mumbai.

SBI, the largest lender by assets, earlier this year linked its savings bank deposits and short-term loans to the repo rate, becoming the first Indian bank to do so.

"I expect more initiatives and this process to become faster," Das said, adding that the RBI has been in talks with banks ensure "faster and greater" adjustment of rates.

Das also said the central bank was in talks with non-bank housing finance companies (NBFCs) to ensure that none collapse amid a debt crisis in the sector that has contributed to a broader economic slowdown.

The RBI is closely monitoring the 50 biggest NBFCs and housing finance companies, including their capital adequacy, stability and cash flows, Das said.

The collapse of Infrastructure Leasing &amp; Financial Services (IL&amp;FS) late last year created contagion fears that hit many other Indian NBFCs and dented credit growth, which has severely stung the auto and real estate sectors.

However, Das said there was no proposal at the moment for any asset quality review for NBFCs. 
&nbsp;

The Reserve Bank of India (RBI) is looking to get banks to link some new loans to its key policy rate or other external benchmarks, Governor Shaktikanta Das said on Monday, as he pushes them to cut rates faster to stimulate a flagging economy.

The Reserve Bank of India (RBI) is looking to get banks to link some new loans to its key policy rate or other external benchmarks, Governor Shaktikanta Das said on Monday, as he pushes them to cut rates faster to stimulate a flagging economy. Since February, the RBI has cut the repo rate by 110 basis points (bps), but most Indian banks - which rely on an opaque rate-setting mechanism, have not come close to the following suit. The State Bank of India (SBI), the largest lender by assets, has cut its benchmark lending rate by 30 bps. Commercial banks cite high deposit rates for their inability to cut loan ones. Marginal reductions restrict how much borrowers benefit from the repo cuts. "Today, the economy requires a certain amount of push not just from the monetary policy but also from its transmission," Das said. "I think the time has now come to formalise this linking of new loans to external benchmarks like the repo rate." "We'd kept the external benchmarks in abeyance earlier because we wanted to see how the market evolves," the governor told a banking conference in Mumbai. SBI, the largest lender by assets, earlier this year linked its savings bank deposits and short-term loans to the repo rate, becoming the first Indian bank to do so. "I expect more initiatives and this process to become faster," Das said, adding that the RBI has been in talks with banks ensure "faster and greater" adjustment of rates. Das also said the central bank was in talks with non-bank housing finance companies (NBFCs) to ensure that none collapse amid a debt crisis in the sector that has contributed to a broader economic slowdown. The RBI is closely monitoring the 50 biggest NBFCs and housing finance companies, including their capital adequacy, stability and cash flows, Das said. The collapse of Infrastructure Leasing & Financial Services (IL&FS) late last year created contagion fears that hit many other Indian NBFCs and dented credit growth, which has severely stung the auto and real estate sectors. However, Das said there was no proposal at the moment for any asset quality review for NBFCs.

Reserve Bank of India weighs linking some new bank loans to the policy rate

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

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

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

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

The Reserve Bank of India (RBI) plans to make online payment system National Electronic Funds Transfer (NEFT) available round-the-clock in a bid to boost digital transactions.

At present, the transfer of funds via NEFT is dependent on bank working hours.&nbsp;

The facility of electronic transfer of funds is available from 8 am to 7 pm on all working days of the week, except the second and fourth Saturdays in a month.&nbsp;

The NEFT system is used for fund transfers up to Rs two lakh."As mentioned in the Payment System Vision 2021 document, the Reserve Bank will make available the NEFT system on a 24x7 basis from December 2019.&nbsp;

This is expected to revolutionise the retail payments system of the country," the RBI said in a statement on Wednesday.

Last month, the banking regulator had scrapped the levy on online transactions such as NEFT to make the transfer of funds cheaper.

The RBI also proposed the creation of a central payment fraud registry that will track banking fraud. At present, there is a Central Fraud Monitoring Cell of the central bank.

Payment system companies will be provided access to the registry for near-real-time fraud monitoring and the aggregated fraud data will be published to educate customers on emerging risks.&nbsp;

A detailed framework in this regard will be put in place by the end of October, said the RBI.

"With the digital payment ecosystem making substantial progress in terms of growth of payment infrastructure as well as volume and value of digital payment transactions, fraud risk monitoring and management by the stakeholders have assumed importance. It has always been the endeavour of the Reserve Bank to improve the confidence of customers in the payment systems," it said.

The Reserve Bank of India (RBI) plans to make online payment system National Electronic Funds Transfer (NEFT) available round-the-clock in a bid to boost digital transactions.

The Reserve Bank of India (RBI) plans to make online payment system National Electronic Funds Transfer (NEFT) available round-the-clock in a bid to boost digital transactions. At present, the transfer of funds via NEFT is dependent on bank working hours. The facility of electronic transfer of funds is available from 8 am to 7 pm on all working days of the week, except the second and fourth Saturdays in a month. The NEFT system is used for fund transfers up to Rs two lakh."As mentioned in the Payment System Vision 2021 document, the Reserve Bank will make available the NEFT system on a 24x7 basis from December 2019. This is expected to revolutionise the retail payments system of the country," the RBI said in a statement on Wednesday. Last month, the banking regulator had scrapped the levy on online transactions such as NEFT to make the transfer of funds cheaper. The RBI also proposed the creation of a central payment fraud registry that will track banking fraud. At present, there is a Central Fraud Monitoring Cell of the central bank. Payment system companies will be provided access to the registry for near-real-time fraud monitoring and the aggregated fraud data will be published to educate customers on emerging risks. A detailed framework in this regard will be put in place by the end of October, said the RBI. "With the digital payment ecosystem making substantial progress in terms of growth of payment infrastructure as well as volume and value of digital payment transactions, fraud risk monitoring and management by the stakeholders have assumed importance. It has always been the endeavour of the Reserve Bank to improve the confidence of customers in the payment systems," it said.

Reserve Bank of India to make NEFT available 24x7 for encouraging digital payments

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

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

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

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

The Reserve Bank of India (RBI) is likely to cut rates next week for a fourth time in 2019 as benign inflation gives it room to help an economy that is growing at its slowest in nearly five years.

If the RBI does cut by 25 basis points on Wednesday, the repo rate would to come down to 5.50 per cent, and make RBI the most dovish among major Asian central banks.

Almost 80 per cent&nbsp;of 66 economists surveyed by Reuters expected the RBI to cut its benchmark repo rate by 25 bps. Three respondents predicted a 50 bps cut and the remaining 10 forecast the rate would be left unchanged.

Reducing interest rates would please Finance Minister Nirmala Sitharaman, who delivered her first budget last month after being promoted by Prime Minister Narendra Modi following his re-election in May.

"I'll honestly wish (for a) rate cut ... a significant rate cut would do a lot of good for the country," Sitharaman told the Economic Times newspaper in an interview published on Monday.

Her budget had included measures aimed at improving the investment climate but lacked any direct steps to stimulate an economy that grew just 5.8 per cent&nbsp;year-on-year in the January-March quarter, its slowest pace in five years, and well below the double-digit growth levels that Modi wants.

Aside from defending against inflation and protecting the Indian rupee's health, the RBI has oversight of the state-owned banks and a mandate to protect financial stability, which could be undermined if economic growth stays low given the stress prevailing among banks and shadow lenders.

The last time the RBI made so many back-to-back cuts was after the global financial crisis over a decade ago, when most major central banks were desperate to revive economic growth.

"If the inflation estimate is lower than target and RBI has space they should cut. I expect a 25 bps cut and a dovish tone," said A. Prasanna, chief economist at ICICI Securities Primary Dealership.

Running at 3.18 per cent&nbsp;in June, India's retail inflation has remained below the central bank's medium-term target of 4 per cent&nbsp;for almost a year and is not expected to rise significantly above that until at least 2021, according to a separate Reuters poll.

But, currency and bond dealers noted that external influences could limit India's room for future rate reductions, as the head of the U.S. Federal Reserve warned against expecting a lengthy easing cycle after cutting U.S. interest rates for the first time in over a decade on Wednesday.

But, rate cuts alone cannot help India's economy unless the benefits are passed on to consumers and corporate borrowers. And saddled with bad debt, and scared of losing depositors, banks have been slow to reduce lending and deposit rates despite the RBI's prodding.

State Bank of India cut interest rates on deposits across all maturities on Monday, but analysts said it would take time for the country's largest bank to make matching cuts in its lending rates.

"It will be important to study the policy narrative to get a direction of likely future action by the RBI, liquidity measures, any other structural changes etc.," said Shanti Ekambaram, President, Consumer Banking at Kotak Mahindra Bank.

"Suffice it to say that inflation will be the central theme balanced with the need to boost growth".

At least the monsoon rains, after a poor start, appear to becoming kinder, which is good news for around two-thirds of Indians who depend on the farm sector for their livelihoods.

The Reserve Bank of India (RBI) is likely to cut rates next week for a fourth time in 2019 as benign inflation gives it room to help an economy that is growing at its slowest in nearly five years.

The Reserve Bank of India (RBI) is likely to cut rates next week for a fourth time in 2019 as benign inflation gives it room to help an economy that is growing at its slowest in nearly five years. If the RBI does cut by 25 basis points on Wednesday, the repo rate would to come down to 5.50 per cent, and make RBI the most dovish among major Asian central banks. Almost 80 per cent of 66 economists surveyed by Reuters expected the RBI to cut its benchmark repo rate by 25 bps. Three respondents predicted a 50 bps cut and the remaining 10 forecast the rate would be left unchanged. Reducing interest rates would please Finance Minister Nirmala Sitharaman, who delivered her first budget last month after being promoted by Prime Minister Narendra Modi following his re-election in May. "I'll honestly wish (for a) rate cut ... a significant rate cut would do a lot of good for the country," Sitharaman told the Economic Times newspaper in an interview published on Monday. Her budget had included measures aimed at improving the investment climate but lacked any direct steps to stimulate an economy that grew just 5.8 per cent year-on-year in the January-March quarter, its slowest pace in five years, and well below the double-digit growth levels that Modi wants. Aside from defending against inflation and protecting the Indian rupee's health, the RBI has oversight of the state-owned banks and a mandate to protect financial stability, which could be undermined if economic growth stays low given the stress prevailing among banks and shadow lenders. The last time the RBI made so many back-to-back cuts was after the global financial crisis over a decade ago, when most major central banks were desperate to revive economic growth. "If the inflation estimate is lower than target and RBI has space they should cut. I expect a 25 bps cut and a dovish tone," said A. Prasanna, chief economist at ICICI Securities Primary Dealership. Running at 3.18 per cent in June, India's retail inflation has remained below the central bank's medium-term target of 4 per cent for almost a year and is not expected to rise significantly above that until at least 2021, according to a separate Reuters poll. But, currency and bond dealers noted that external influences could limit India's room for future rate reductions, as the head of the U.S. Federal Reserve warned against expecting a lengthy easing cycle after cutting U.S. interest rates for the first time in over a decade on Wednesday. But, rate cuts alone cannot help India's economy unless the benefits are passed on to consumers and corporate borrowers. And saddled with bad debt, and scared of losing depositors, banks have been slow to reduce lending and deposit rates despite the RBI's prodding. State Bank of India cut interest rates on deposits across all maturities on Monday, but analysts said it would take time for the country's largest bank to make matching cuts in its lending rates. "It will be important to study the policy narrative to get a direction of likely future action by the RBI, liquidity measures, any other structural changes etc.," said Shanti Ekambaram, President, Consumer Banking at Kotak Mahindra Bank. "Suffice it to say that inflation will be the central theme balanced with the need to boost growth". At least the monsoon rains, after a poor start, appear to becoming kinder, which is good news for around two-thirds of Indians who depend on the farm sector for their livelihoods.

India seen set for fourth interest rate cut of 2019

The <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/india-news/supreme-court-adjourns-vijay-mallyas-property-case-239158&amp;sa=U&amp;ved=2ahUKEwj5v8KB_9njAhVMvo8KHY7fCmQQFjAAegQIABAC&amp;usg=AOvVaw20rKRrKHpKk5VpcBNhjdBR">State Bank of India (SBI)</a> cut interest rates on deposits across all maturities on Monday but analysts said it would take time for the country's largest bank to make matching cuts in its lending rates.

State-owned SBI made the largest cuts on shorter-term deposits. Annual rates for 7-45 days are being reduced to 5.0% from 5.75% while for 46 days to 179 days, the rate is getting cut to 5.75% from 6.25%.

For deposits of 180 days up to 10 years, the rate is being cut by up to 20 bps for individual retail customers and by up to 35 bps for the bulk segment, defined as a single deposit of 20 million rupees ($290,626) and above.

The rate changes will be effective August 1.

The <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/india-news/reserve-bank-of-india-to-cut-rates-again-in-august-as-doves-prevail-report-238360&amp;sa=U&amp;ved=2ahUKEwixlJPW_tnjAhUMgI8KHXQlBtgQFjABegQIDxAC&amp;usg=AOvVaw3zrXFTWUMT6pHc9S-9JsLA">Reserve Bank of India (RBI)</a> has cut its key repo rate by 75 basis points (bps) this year but commercial banks have mostly responded with just around 15-20 bps cuts in their key lending rates.

Banks often cite the high-interest rates they say they need to offer on deposits as a hindrance to being able to cut lending rates.

"We are in a global low-interest rate scenario. That is a clear fact. If the RBI reduces rates, SBI will reduce albeit with a lag and at a lesser rate," said Jagannadham Thunuguntla, head of research at Centrum Wealth Management.

The Indian government has already reduced interest rates on small savings schemes such as the National Savings Scheme, Public Provident Fund among others in late June by 10 bps.

Analysts said other banks may follow SBI's lead in cutting deposit rates but the timing and size of the moves will vary.

"In the current environment, people are looking at bank fixed deposits for the safety of capital due to extreme risk-aversion sentiment," Thunuguntla said.

"But once that sentiment revives, the low-interest rates on risk-free assets will act as a strong motivating factor for money to move into the more riskier assets."

The State Bank of India (SBI) cut interest rates on deposits across all maturities on Monday but analysts said it would take time for the country's largest bank to make matching cuts in its lending rates.

The State Bank of India (SBI) cut interest rates on deposits across all maturities on Monday but analysts said it would take time for the country's largest bank to make matching cuts in its lending rates. State-owned SBI made the largest cuts on shorter-term deposits. Annual rates for 7-45 days are being reduced to 5.0% from 5.75% while for 46 days to 179 days, the rate is getting cut to 5.75% from 6.25%. For deposits of 180 days up to 10 years, the rate is being cut by up to 20 bps for individual retail customers and by up to 35 bps for the bulk segment, defined as a single deposit of 20 million rupees ($290,626) and above. The rate changes will be effective August 1. The Reserve Bank of India (RBI) has cut its key repo rate by 75 basis points (bps) this year but commercial banks have mostly responded with just around 15-20 bps cuts in their key lending rates. Banks often cite the high-interest rates they say they need to offer on deposits as a hindrance to being able to cut lending rates. "We are in a global low-interest rate scenario. That is a clear fact. If the RBI reduces rates, SBI will reduce albeit with a lag and at a lesser rate," said Jagannadham Thunuguntla, head of research at Centrum Wealth Management. The Indian government has already reduced interest rates on small savings schemes such as the National Savings Scheme, Public Provident Fund among others in late June by 10 bps. Analysts said other banks may follow SBI's lead in cutting deposit rates but the timing and size of the moves will vary. "In the current environment, people are looking at bank fixed deposits for the safety of capital due to extreme risk-aversion sentiment," Thunuguntla said. "But once that sentiment revives, the low-interest rates on risk-free assets will act as a strong motivating factor for money to move into the more riskier assets."

State Bank of India cuts deposit rates, keeps lending rates unchanged

Reserve Bank of India (RBI) Governor Shaktikanta Das has listed out a set of challenges for the global economy, which, he said, is moving towards a new and unsettling phase.

"Solutions are turning difficult to come by as global economy seems to be moving into a new and unsettling phase in an environment of stressed trade negotiations, rising geopolitical confrontation and limited policy space, and high debt levels in several economies," Das said at an event here on Friday.

"General government debt of advanced economies as a group has surpassed 100 per cent of GDP. Fiscal space is also constrained in many of the advanced economies," he added.

In light of the challenges that lie ahead for the economy, Das said monetary and fiscal policies need to be well-calibrated to support growth.

"It is important, in the backdrop of slowing global growth, that policies of monetary and fiscal authorities are well-calibrated so they support growth without further build-up of leverage and asset price bubbles. Prudent policies are critical to growth with macroeconomic stability," he said.

Das also said globally, there is a need to focus on policy space, judiciously use it and simultaneously take structural reforms to undertake productivity, innovation and job creation.

The central bank governor also said how the International Monetary Fund (IMF) and central banks provide guidance will be the key to sustaining global economic growth while maintaining financial stability.

"The coming year will test the IMF for its policy advice on these areas," he added.

Das was speaking at the launch of a book titled 'India's Relations with International Monetary Fund' authored by V Srinivas.

Reserve Bank of India (RBI) Governor Shaktikanta Das has listed out a set of challenges for the global economy, which, he said, is moving towards a new and unsettling phase.

Reserve Bank of India (RBI) Governor Shaktikanta Das has listed out a set of challenges for the global economy, which, he said, is moving towards a new and unsettling phase. "Solutions are turning difficult to come by as global economy seems to be moving into a new and unsettling phase in an environment of stressed trade negotiations, rising geopolitical confrontation and limited policy space, and high debt levels in several economies," Das said at an event here on Friday. "General government debt of advanced economies as a group has surpassed 100 per cent of GDP. Fiscal space is also constrained in many of the advanced economies," he added. In light of the challenges that lie ahead for the economy, Das said monetary and fiscal policies need to be well-calibrated to support growth. "It is important, in the backdrop of slowing global growth, that policies of monetary and fiscal authorities are well-calibrated so they support growth without further build-up of leverage and asset price bubbles. Prudent policies are critical to growth with macroeconomic stability," he said. Das also said globally, there is a need to focus on policy space, judiciously use it and simultaneously take structural reforms to undertake productivity, innovation and job creation. The central bank governor also said how the International Monetary Fund (IMF) and central banks provide guidance will be the key to sustaining global economic growth while maintaining financial stability. "The coming year will test the IMF for its policy advice on these areas," he added. Das was speaking at the launch of a book titled 'India's Relations with International Monetary Fund' authored by V Srinivas.

Global economy seems to be moving into 'new, unsettling phase': RBI Governor Shaktikanta Das

The <a href="https://www.wionews.com/business-economy/governments-outstanding-loans-from-rbi-at-78943-billion-rupees-in-july-12-week-237181">Reserve Bank of India</a> is set to cut interest rates in August for the fourth meeting in a row, according to a Reuters poll of economists, a majority of whom said risks to their already-modest growth forecasts were skewed more to the downside.

If the RBI does cut rates next month, it will be the most aggressive amongst dovish central banks in Asia. The last time the RBI delivered so many back-to-back cuts was after the global financial crisis over a decade ago when most major central banks went on a cutting spree to revive economic growth.

Almost 80 per cent of 66 economists in the July 17-24 poll expected the RBI to cut its benchmark repo rate by 25 basis points to 5.50 per cent at the Aug. 7 meeting. Three respondents predicted 50 basis points cut and the remaining 10 forecast policy on hold.

"It is baked in the cake. They are going to cut rates in August and again later, mainly due to low growth and weak inflation," said Gareth Leather, senior Asia economist at Capital Economics.

India's inflation has remained below the central bank's medium-term target of 4 per cent for almost a year and is not expected to rise significantly above that until at least 2021.&nbsp;

The poll's findings support <a href="https://www.wionews.com/business-economy/economic-activity-clearly-losing-traction-rbi-governor-shaktikanta-das-at-mpc-meet-229011">RBI Governor Shaktikanta Das</a>' recent comments about the central bank's accommodative stance and suggest further easing.

Indeed, following next month's expected move, the next rate cut is seen in early 2020, after which the RBI is forecast to keep rates on hold at 5.25 per cent through to end-2020.

Yet despite three interest rate cuts, this year and expectations for more, India's growth outlook was downgraded in the latest poll compared to the previous quarterly economic survey in April.

Asia's third-largest economy expanded at 5.8 per cent year-on-year in the January-March quarter, its slowest pace in five years and losing its title to China as the fastest-growing economy. India is now forecast to grow in the range of 6.3 per cent to 7.2 per cent each quarter through to end-March 2021.

The risks to the more modest growth forecasts for this fiscal year were skewed more to the downside, said a majority of economists who answered an additional question.

Annual growth forecasts were lowered to 6.8 per cent for this fiscal year from 7.2 per cent in the previous poll. That is a tad slower than the International Monetary Fund's latest growth projection of 7.0 per cent for this year.

"India's economy continues to show weak growth momentum. We believe that while recovery is nascent, maturity is still a far way off," said Rini Sen, India economist at ANZ.

"The impact of easy liquidity and dovish monetary policy is gradually flowing through. In the absence of a substantial fiscal push, however, more is needed on the monetary side."

When asked whether the RBI should consider core inflation instead of retail inflation as the main measure for its monetary policy framework, a majority of economists said no, although nearly 30 per cent of respondents said it should be.

"Core inflation is a better measure for underlying price pressures than the headline rate is. So, it should give a better indication of where the economy is in terms of the economic cycle," said Shilan Shah, senior India economist at Capital Economics.

"Food and fuel prices are very volatile and they don't say much about the demand on the ground."

The Reserve Bank of India is set to cut interest rates in August for the fourth meeting in a row, according to a Reuters poll of economists, a majority of whom said risks to their already-modest growth forecasts were skewed more to the downside.

The Reserve Bank of India is set to cut interest rates in August for the fourth meeting in a row, according to a Reuters poll of economists, a majority of whom said risks to their already-modest growth forecasts were skewed more to the downside. If the RBI does cut rates next month, it will be the most aggressive amongst dovish central banks in Asia. The last time the RBI delivered so many back-to-back cuts was after the global financial crisis over a decade ago when most major central banks went on a cutting spree to revive economic growth. Almost 80 per cent of 66 economists in the July 17-24 poll expected the RBI to cut its benchmark repo rate by 25 basis points to 5.50 per cent at the Aug. 7 meeting. Three respondents predicted 50 basis points cut and the remaining 10 forecast policy on hold. "It is baked in the cake. They are going to cut rates in August and again later, mainly due to low growth and weak inflation," said Gareth Leather, senior Asia economist at Capital Economics. India's inflation has remained below the central bank's medium-term target of 4 per cent for almost a year and is not expected to rise significantly above that until at least 2021. The poll's findings support RBI Governor Shaktikanta Das' recent comments about the central bank's accommodative stance and suggest further easing. Indeed, following next month's expected move, the next rate cut is seen in early 2020, after which the RBI is forecast to keep rates on hold at 5.25 per cent through to end-2020. Yet despite three interest rate cuts, this year and expectations for more, India's growth outlook was downgraded in the latest poll compared to the previous quarterly economic survey in April. Asia's third-largest economy expanded at 5.8 per cent year-on-year in the January-March quarter, its slowest pace in five years and losing its title to China as the fastest-growing economy. India is now forecast to grow in the range of 6.3 per cent to 7.2 per cent each quarter through to end-March 2021. The risks to the more modest growth forecasts for this fiscal year were skewed more to the downside, said a majority of economists who answered an additional question. Annual growth forecasts were lowered to 6.8 per cent for this fiscal year from 7.2 per cent in the previous poll. That is a tad slower than the International Monetary Fund's latest growth projection of 7.0 per cent for this year. "India's economy continues to show weak growth momentum. We believe that while recovery is nascent, maturity is still a far way off," said Rini Sen, India economist at ANZ. "The impact of easy liquidity and dovish monetary policy is gradually flowing through. In the absence of a substantial fiscal push, however, more is needed on the monetary side." When asked whether the RBI should consider core inflation instead of retail inflation as the main measure for its monetary policy framework, a majority of economists said no, although nearly 30 per cent of respondents said it should be. "Core inflation is a better measure for underlying price pressures than the headline rate is. So, it should give a better indication of where the economy is in terms of the economic cycle," said Shilan Shah, senior India economist at Capital Economics. "Food and fuel prices are very volatile and they don't say much about the demand on the ground."

Reserve Bank of India to cut rates again in August as doves prevail: Report

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

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

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

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

The <a href="https://www.wionews.com/business-economy/reserve-bank-of-india-to-enhance-monitoring-of-shadow-banking-firms-governor-225678">Reserve Bank of India (RBI) </a>has imposed a penalty of Rs 7 crore on <a href="https://www.wionews.com/business-economy/budget-likely-to-spell-out-roadmap-for-banking-sector-reforms-consolidation-225649">State Bank of India</a> for non-compliance of directions.

The regulatory lapses relate to bad loan classification, fraud risk management and reporting of frauds.

The RBI directions specifically relate to Income Recognition and Asset Classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), fraud risk management and classification and reporting of frauds.

&nbsp;The penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A (1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act 1949.

"Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by RBI," said a statement issued by the banking regulator.

"RBI came to the conclusion that the charges above of non-compliance with RBI directions were substantiated and warranted the imposition of monetary penalty," it said adding the action is based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

The Reserve Bank of India (RBI) has imposed a penalty of Rs 7 crore on State Bank of India for non-compliance of directions. The regulatory lapses relate to bad loan classification, fraud risk management and reporting of frauds.

The Reserve Bank of India (RBI) has imposed a penalty of Rs 7 crore on State Bank of India for non-compliance of directions. The regulatory lapses relate to bad loan classification, fraud risk management and reporting of frauds. The RBI directions specifically relate to Income Recognition and Asset Classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), fraud risk management and classification and reporting of frauds. The penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A (1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act 1949. "Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by RBI," said a statement issued by the banking regulator. "RBI came to the conclusion that the charges above of non-compliance with RBI directions were substantiated and warranted the imposition of monetary penalty," it said adding the action is based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Reserve Bank of India imposes a penalty of Rs 7 crore on State Bank of India for regulatory lapses

The Allahabad Bank on Saturday became the second Indian state-owned bank to report a major alleged fraud by bankrupt steelmaker Bhushan Power &amp; Steel Ltd this month, adding to concerns about a banking industry burdened with bad debts.

Allahabad Bank said in a statement that it had told the Reserve Bank of India (RBI) that it had identified a fraud worth $259 million in Bhushan's accounts.

On July 6, state-run Punjab National Bank (PNB) said it had reported an alleged fraud of $554.6 million in the steelmaker's accounts.

"It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks," Allahabad Bank said in its statement, adding that it had made provisions of about $131 million against the bank's exposure.

Bhushan Power &amp; Steel, one of India's most indebted companies, was among the first 12 companies referred by the RBI to a bankruptcy court for a debt resolution process under India's new insolvency law.

Prime Minister Narendra Modi's government introduced new bankruptcy resolution rules in 2016 to help with faster resolution of bad loans, but litigation has tied down some big restructuring deals.

To revive the banking sector the Indian government has injected about $36 billion of taxpayers' money into the banks in the past five years and initiated an asset quality review by the central bank.

Only about 5% of the stressed assets of banks have so far been dealt with through the bankruptcy process.

Bhushan Power &amp; Steel could not be immediately reached for comment on the latest allegation.

The Allahabad Bank on Saturday became the second Indian state-owned bank to report a major alleged fraud by bankrupt steelmaker Bhushan Power & Steel Ltd this month, adding to concerns about a banking industry burdened with bad debts.

The Allahabad Bank on Saturday became the second Indian state-owned bank to report a major alleged fraud by bankrupt steelmaker Bhushan Power & Steel Ltd this month, adding to concerns about a banking industry burdened with bad debts. Allahabad Bank said in a statement that it had told the Reserve Bank of India (RBI) that it had identified a fraud worth $259 million in Bhushan's accounts. On July 6, state-run Punjab National Bank (PNB) said it had reported an alleged fraud of $554.6 million in the steelmaker's accounts. "It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks," Allahabad Bank said in its statement, adding that it had made provisions of about $131 million against the bank's exposure. Bhushan Power & Steel, one of India's most indebted companies, was among the first 12 companies referred by the RBI to a bankruptcy court for a debt resolution process under India's new insolvency law. Prime Minister Narendra Modi's government introduced new bankruptcy resolution rules in 2016 to help with faster resolution of bad loans, but litigation has tied down some big restructuring deals. To revive the banking sector the Indian government has injected about $36 billion of taxpayers' money into the banks in the past five years and initiated an asset quality review by the central bank. Only about 5% of the stressed assets of banks have so far been dealt with through the bankruptcy process. Bhushan Power & Steel could not be immediately reached for comment on the latest allegation.

Allahabad Bank reports $259 million alleged fraud by Bhushan Power & Steel

India will closely monitor its shadow lending sector, Finance Minister Nirmala Sitharaman said on Saturday, a day after announcing the RBI would get much more regulatory authority over non-banking financial companies (NBFCs), reported news agency Reuters.

Prime Minister Narendra Modi's government, in the budget for the fiscal year ending March 31, 2020, on Friday announced credit guarantees to support NBFCs in a move aimed at boosting lending and reviving a sagging economy.

The government has tried to address issues such as liquidity and solvency at NBFCs, finance minister told a news conference, adding that New Delhi plans to give the central bank powers to regulate the sector as well as to resolve problems plaguing it.

India has over 10,000 registered NBFCs lending to millions of households who may not have the creditworthiness to borrow directly from a commercial bank.

NBFCs borrow much of their money from banks, mutual funds and via debt sales but after defaults by Infrastructure Leasing &amp; Financial Services (IL&amp;FS) last year borrowing costs have surged and the sector has come under greater scrutiny.

India will closely monitor its shadow lending sector, Finance Minister Nirmala Sitharaman said on Saturday, a day after announcing the RBI would get much more regulatory authority over non-banking financial companies (NBFCs), reported news agency Reuters.

India will closely monitor its shadow lending sector, Finance Minister Nirmala Sitharaman said on Saturday, a day after announcing the RBI would get much more regulatory authority over non-banking financial companies (NBFCs), reported news agency Reuters. Prime Minister Narendra Modi's government, in the budget for the fiscal year ending March 31, 2020, on Friday announced credit guarantees to support NBFCs in a move aimed at boosting lending and reviving a sagging economy. The government has tried to address issues such as liquidity and solvency at NBFCs, finance minister told a news conference, adding that New Delhi plans to give the central bank powers to regulate the sector as well as to resolve problems plaguing it. India has over 10,000 registered NBFCs lending to millions of households who may not have the creditworthiness to borrow directly from a commercial bank. NBFCs borrow much of their money from banks, mutual funds and via debt sales but after defaults by Infrastructure Leasing & Financial Services (IL&FS) last year borrowing costs have surged and the sector has come under greater scrutiny.

India to closely monitor shadow lending sector, says Sitharaman

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

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

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

Union Budget 2019: Monetary policy not enough

Declining fortunes of <a href="https://www.wionews.com/world/amid-us-china-row-huawei-signs-deal-with-russian-telecom-company-mts-to-develop-5g-network-224867">telecom operators </a>and their increasing vulnerability with chances of spillover to the financial sector is a cause of worry, according to a leading think-tank.

A very sizeable portion of the government`s plans for enhancing service delivery, financial inclusion and skill development (such as the Digital India and Skill India initiatives) are hinged on widespread and affordable access to communications and IT services.&nbsp;

"However, there is a view that the sector may have become victim to its own success and that the public attention on it due to high-profile scandals resulted in more onerous policies," said the Indian Council for Research on International Economic Relations (ICRIER).

Recent consolidations following the entry of Reliance Jio has transformed the competitive landscape of the industry. Leverage levels for most firms are high as debt burdens have risen, resulting in decreasing interest coverage ratios.&nbsp;

In November 2018, the <a href="https://www.wionews.com/business-economy/reserve-bank-of-india-to-enhance-monitoring-of-shadow-banking-firms-governor-225678">Reserve Bank of India </a>had reported banks` exposure to the telecom sector was to the tune of Rs 90,600 crore. "While increasing the vulnerability of the sector itself, the spill over to the financial system is also a cause for worry," it said in the working paper titled `A Study of the Financial Health of the Telecom Sector.`&nbsp;

The emergence of disruptive technologies and their potential to impact traditional telecom operations is widely accepted. Under the current framework of regulatory asymmetry, operators must acquire licenses to provide services that over-the-top (OTT) content providers can offer for dramatically lower prices without a license.&nbsp;

The Goods and Services Tax (GST) regime also impacted the sector`s liquidity. The current standard rate of GST on the supply of telecom services and products is 18 per cent. Besides, spectrum acquisition is a huge cost to the industry. Since 2010-11, the total spectrum acquisition charge adds up to Rs 2.55 lakh crore.

"Given these challenges, sectoral growth must be catalysed through policy action to ease existing constraints," said the paper, adding also on the reform anvil is the rationalisation of penalties, the scale and a sheer number of which adds to operational costs.

&nbsp;Given the seriousness and speed with which the government aims to enable digital citizenship and the essential role that private operators must play in this transformation, it is important that policy prioritises between short-term benefits of immediate revenue generation and long-term dividends that a robust connected economy can create.&nbsp;

India has not yet exhausted potential returns from the telecom sector. In fact, the second round of dividends may be around the corner from the data economy and 5G.&nbsp;

The policy must do all it can to maximise this potential. "Effecting most of these changes will hinge on institutional reform especially in the form of greater cooperation between the line ministry and the independent regulator which is a first order priority," said the ICRIER paper authored by Rajat Kathuria, Mansi Kedia and Richa Sekhani.

Declining fortunes of telecom operators and their increasing vulnerability with chances of spillover to the financial sector is a cause of worry, according to a leading think-tank.

Declining fortunes of telecom operators and their increasing vulnerability with chances of spillover to the financial sector is a cause of worry, according to a leading think-tank. A very sizeable portion of the government`s plans for enhancing service delivery, financial inclusion and skill development (such as the Digital India and Skill India initiatives) are hinged on widespread and affordable access to communications and IT services. "However, there is a view that the sector may have become victim to its own success and that the public attention on it due to high-profile scandals resulted in more onerous policies," said the Indian Council for Research on International Economic Relations (ICRIER). Recent consolidations following the entry of Reliance Jio has transformed the competitive landscape of the industry. Leverage levels for most firms are high as debt burdens have risen, resulting in decreasing interest coverage ratios. In November 2018, the Reserve Bank of India had reported banks` exposure to the telecom sector was to the tune of Rs 90,600 crore. "While increasing the vulnerability of the sector itself, the spill over to the financial system is also a cause for worry," it said in the working paper titled `A Study of the Financial Health of the Telecom Sector.` The emergence of disruptive technologies and their potential to impact traditional telecom operations is widely accepted. Under the current framework of regulatory asymmetry, operators must acquire licenses to provide services that over-the-top (OTT) content providers can offer for dramatically lower prices without a license. The Goods and Services Tax (GST) regime also impacted the sector`s liquidity. The current standard rate of GST on the supply of telecom services and products is 18 per cent. Besides, spectrum acquisition is a huge cost to the industry. Since 2010-11, the total spectrum acquisition charge adds up to Rs 2.55 lakh crore. "Given these challenges, sectoral growth must be catalysed through policy action to ease existing constraints," said the paper, adding also on the reform anvil is the rationalisation of penalties, the scale and a sheer number of which adds to operational costs. Given the seriousness and speed with which the government aims to enable digital citizenship and the essential role that private operators must play in this transformation, it is important that policy prioritises between short-term benefits of immediate revenue generation and long-term dividends that a robust connected economy can create. India has not yet exhausted potential returns from the telecom sector. In fact, the second round of dividends may be around the corner from the data economy and 5G. The policy must do all it can to maximise this potential. "Effecting most of these changes will hinge on institutional reform especially in the form of greater cooperation between the line ministry and the independent regulator which is a first order priority," said the ICRIER paper authored by Rajat Kathuria, Mansi Kedia and Richa Sekhani.

Telecom debt woes spilling into finance sector a cause of worry: Indian Council for Research on International Economic Relations

Current account deficit (CAD) increased to $57.2 billion or 2.1 per cent of GDP in FY19 as against 1.8 per cent in the previous year, the Reserve Bank said Friday. 
The CAD, which is the net of foreign exchange inflows and outflows, had stood at $48.7 billion in FY18.

For FY19, the deficit widened despite a narrowing of the same in the March quarter to 0.7 per cent of GDP or $4.6 billion, as against $27.7 billion or 2.7 per cent in the December quarter and $13 billion or 1.8 per cent in the March 2018 quarter, the central bank data showed.

Overall trade performance was the prime influencer for both the contraction in CAD for the March quarter as well as a widening for the full year.

A lower trade deficit of $35.2 billion in the March quarter, compared to $41.6 billion in the year-ago period helped in CAD contraction, it said.

Similarly, an increase in the trade deficit to $180.3 billion for the year as a whole as against $160 billion in the year-ago period led to the widening of the CAD in FY19, the central bank said.

Net services receipts increased 5.8 per cent to $21.3 billion on the back of a rise in net earnings from telecommunications, computer and information services during the March quarter.

Private transfer receipts, representing mainly the remittances by expat Indians, declined by 0.9 per cent to $17.9 billion in the March quarter, it said.

It can be noted that inflows from the diaspora have been increasing for many years now, making the country the biggest beneficiary of remittances globally.

The net foreign direct investment stood at $6.4 billion in March quarter, the same level as the year-ago period, and rose marginally to $30.7 billion for the year as a whole.

Foreign portfolio investment recorded net inflow of $9.4 billion in March quarter versus $2.3 billion in the year-ago period on account of net purchases in both debt and equity markets, the RBI said.

However, for the entire year as a whole, net FPI flows dipped sharply to $2.4 billion as against $22.1 billion in the year-ago period.

The net inflows on account of external commercial borrowings jumped to $7.2 billion in the March quarter from $1 billion a year ago.

From a forex reserves perspective, there was a $3.3 billion depletion during the year, the central bank said.

Current account deficit (CAD) increased to $57.2 billion or 2.1 per cent of GDP in FY19 as against 1.8 per cent in the previous year, the Reserve Bank said Friday.

Current account deficit (CAD) increased to $57.2 billion or 2.1 per cent of GDP in FY19 as against 1.8 per cent in the previous year, the Reserve Bank said Friday. The CAD, which is the net of foreign exchange inflows and outflows, had stood at $48.7 billion in FY18. For FY19, the deficit widened despite a narrowing of the same in the March quarter to 0.7 per cent of GDP or $4.6 billion, as against $27.7 billion or 2.7 per cent in the December quarter and $13 billion or 1.8 per cent in the March 2018 quarter, the central bank data showed. Overall trade performance was the prime influencer for both the contraction in CAD for the March quarter as well as a widening for the full year. A lower trade deficit of $35.2 billion in the March quarter, compared to $41.6 billion in the year-ago period helped in CAD contraction, it said. Similarly, an increase in the trade deficit to $180.3 billion for the year as a whole as against $160 billion in the year-ago period led to the widening of the CAD in FY19, the central bank said. Net services receipts increased 5.8 per cent to $21.3 billion on the back of a rise in net earnings from telecommunications, computer and information services during the March quarter. Private transfer receipts, representing mainly the remittances by expat Indians, declined by 0.9 per cent to $17.9 billion in the March quarter, it said. It can be noted that inflows from the diaspora have been increasing for many years now, making the country the biggest beneficiary of remittances globally. The net foreign direct investment stood at $6.4 billion in March quarter, the same level as the year-ago period, and rose marginally to $30.7 billion for the year as a whole. Foreign portfolio investment recorded net inflow of $9.4 billion in March quarter versus $2.3 billion in the year-ago period on account of net purchases in both debt and equity markets, the RBI said. However, for the entire year as a whole, net FPI flows dipped sharply to $2.4 billion as against $22.1 billion in the year-ago period. The net inflows on account of external commercial borrowings jumped to $7.2 billion in the March quarter from $1 billion a year ago. From a forex reserves perspective, there was a $3.3 billion depletion during the year, the central bank said.

India's Current Account Deficit inches up to 2.1% to $57.2 billion

<a href="https://www.wionews.com/business-economy/indias-retail-inflation-rate-hits-17-month-low-in-november-183540">India's retail inflation</a> rate hit a seven-month high in May due to higher food prices, government data showed on Wednesday, but stayed below the central bank's target and potentially gives it room for more interest rate cuts to help a sluggish economy.

Annual retail inflation in May was 3.05 per cent, up from the revised 2.99 per cent&nbsp;in the previous month, and above forecasts by analysts.

A Reuters poll had predicted a retail inflation rate of 3.01 per cent for May.

Core consumer inflation, which strips out food and fuel prices, was estimated at 4.1-4.2 per cent&nbsp;in May, lower than April's 4.53 per cent-4.57 per cent, three analysts said after seeing the inflation figures on Wednesday.

While food <a href="https://www.wionews.com/business-%26-economy/retail-inflation-eases-rbi-may-keep-interest-rates-on-hold-158931">inflation</a> has been rising, the moderation in core inflation has capped the overall inflationary pressures in the economy, said Tushar Arora, senior economist at HDFC Bank.

"We believe that overall inflation would remain subdued, allowing the central bank to cut the policy rate yet again," he said.

Inflation has sharply come down from a peak of more than 12 per cent&nbsp;in 2013 and has now come in below the Reserve Bank of India's medium-term target of 4 per cent&nbsp;for ten consecutive months.

Comforted by the subdued price pressures, and increasingly concerned by the economy's faltering growth, the RBI has cut its policy rate three times since February.

The most recent reduction was last week when the RBI lowered its repo rate by 25 basis points to 5.75 per cent and changed its policy stance to "accommodative" to meet the needs of the economy and a banking system laden with bad debts.

Prime Minister Narendra Modi secured a second term after a landslide election victory last month despite the economic slowdown.

During the January-March quarter, the gross domestic product grew 5.8 per cent annually, the lowest in over four years and well below the rate needed to generate enough jobs for millions of young Indians entering the labour market each month.

The combination of low growth and low inflation is particularly difficult for farmers, who benefit from higher food prices.

Retail food prices, which make up nearly half of India's inflation basket, increased 1.83 per cent in May from a year earlier, up from 1.10 per cent in April. Food prices began rising again in March, having fallen in the five months through February.

The monsoon season rains arrived a week late this month, by which time reservoirs had dried up in many places, and economists say inflation could pick up in coming months if any shortfall in rains causes a spike in food prices.

RBI's raised its inflation outlook for April-September to 3.0-3.1 per cent, from its April outlook of 2.9-3.0 per cent.

India's retail inflation rate hit a seven-month high in May due to higher food prices, government data showed on Wednesday, but stayed below the central bank's target and potentially gives it room for more interest rate cuts to help a sluggish economy.

India's retail inflation rate hit a seven-month high in May due to higher food prices, government data showed on Wednesday, but stayed below the central bank's target and potentially gives it room for more interest rate cuts to help a sluggish economy. Annual retail inflation in May was 3.05 per cent, up from the revised 2.99 per cent in the previous month, and above forecasts by analysts. A Reuters poll had predicted a retail inflation rate of 3.01 per cent for May. Core consumer inflation, which strips out food and fuel prices, was estimated at 4.1-4.2 per cent in May, lower than April's 4.53 per cent-4.57 per cent, three analysts said after seeing the inflation figures on Wednesday. While food inflation has been rising, the moderation in core inflation has capped the overall inflationary pressures in the economy, said Tushar Arora, senior economist at HDFC Bank. "We believe that overall inflation would remain subdued, allowing the central bank to cut the policy rate yet again," he said. Inflation has sharply come down from a peak of more than 12 per cent in 2013 and has now come in below the Reserve Bank of India's medium-term target of 4 per cent for ten consecutive months. Comforted by the subdued price pressures, and increasingly concerned by the economy's faltering growth, the RBI has cut its policy rate three times since February. The most recent reduction was last week when the RBI lowered its repo rate by 25 basis points to 5.75 per cent and changed its policy stance to "accommodative" to meet the needs of the economy and a banking system laden with bad debts. Prime Minister Narendra Modi secured a second term after a landslide election victory last month despite the economic slowdown. During the January-March quarter, the gross domestic product grew 5.8 per cent annually, the lowest in over four years and well below the rate needed to generate enough jobs for millions of young Indians entering the labour market each month. The combination of low growth and low inflation is particularly difficult for farmers, who benefit from higher food prices. Retail food prices, which make up nearly half of India's inflation basket, increased 1.83 per cent in May from a year earlier, up from 1.10 per cent in April. Food prices began rising again in March, having fallen in the five months through February. The monsoon season rains arrived a week late this month, by which time reservoirs had dried up in many places, and economists say inflation could pick up in coming months if any shortfall in rains causes a spike in food prices. RBI's raised its inflation outlook for April-September to 3.0-3.1 per cent, from its April outlook of 2.9-3.0 per cent.

May inflation hits seven-month high; still room for rate cut

<a href="https://www.wionews.com/business-economy/avoiding-temptation-rbi-likely-to-cut-key-rate-by-just-25-basis-points-207455">Reserve Bank of India</a> Governor Shaktikanta Das said the central bank would closely monitor the health of non-banking financial companies and it would not hesitate to take corrective measures, if needed, to address issues in the shadow banking sector.

"We will not hesitate to take any required steps to maintain financial stability in the short-, medium- and long-term," Das said in a speech on Saturday at a convocation ceremony in the western Indian city of Pune.

The comment comes at a time when there are fears that India may be facing a major crisis in its shadow banking sector after shares of Indian mortgage lender Dewan Housing Finance Corp Ltd (DHFL) plunged this week after two credit-rating firms cut their view of DHFL debt to "default" levels.

The looming trouble at DHFL comes nine months after a series of downgrades and defaults at another major NBFC, Infrastructure Leasing and Financial Services (IL&amp;FS), shook stock markets and stoked concerns of a malaise in the sector.

"<a href="https://www.wionews.com/business-economy/reserve-bank-of-indias-interest-rate-cut-in-monetary-policy-unlikely-to-stimulate-growth-report-224711">The Reserve Bank</a> will continue to monitor the activity and performance of this sector with a focus on major entities and their inter-linkages with other sectors," he said, in a speech that was published on the RBI's website late on Saturday.

The regulator will soon issue final guidelines for liquidity risk management and will put in place a comprehensive information technology framework to strengthen surveillance of NBFCs, the governor said.

Given the importance of NBFCs for the Indian economy, the governor stressed the need for a higher level of supervision of such companies to ensure solid credit growth and asset liability management.

Das said as part of initiatives to enhance supervision of NBFCs, the central bank is putting in place a system to ensure regular interaction with all stakeholders in the shadow banking value chain such as auditors, credit-rating agencies and banks.

The central bank on Friday issued new guidelines around the resolution of stressed assets after India's Supreme Court in April struck down its earlier guidelines saying it had acted beyond its powers.

The new rules "will sustain the improvements in credit culture" and help in making India's financial system strong and resilient, Das said on Saturday.

Das also urged Indian public sector banks (PSBs) to not depend solely on government capital infusions to solidify their balance sheets.

"Depending upon individual situations, PSBs should access the capital market for mobilisation of capital," he said.

Reserve Bank of India Governor Shaktikanta Das said the central bank would closely monitor the health of non-banking financial companies and it would not hesitate to take corrective measures, if needed, to address issues in the shadow banking sector.

Reserve Bank of India Governor Shaktikanta Das said the central bank would closely monitor the health of non-banking financial companies and it would not hesitate to take corrective measures, if needed, to address issues in the shadow banking sector. "We will not hesitate to take any required steps to maintain financial stability in the short-, medium- and long-term," Das said in a speech on Saturday at a convocation ceremony in the western Indian city of Pune. The comment comes at a time when there are fears that India may be facing a major crisis in its shadow banking sector after shares of Indian mortgage lender Dewan Housing Finance Corp Ltd (DHFL) plunged this week after two credit-rating firms cut their view of DHFL debt to "default" levels. The looming trouble at DHFL comes nine months after a series of downgrades and defaults at another major NBFC, Infrastructure Leasing and Financial Services (IL&FS), shook stock markets and stoked concerns of a malaise in the sector. "The Reserve Bank will continue to monitor the activity and performance of this sector with a focus on major entities and their inter-linkages with other sectors," he said, in a speech that was published on the RBI's website late on Saturday. The regulator will soon issue final guidelines for liquidity risk management and will put in place a comprehensive information technology framework to strengthen surveillance of NBFCs, the governor said. Given the importance of NBFCs for the Indian economy, the governor stressed the need for a higher level of supervision of such companies to ensure solid credit growth and asset liability management. Das said as part of initiatives to enhance supervision of NBFCs, the central bank is putting in place a system to ensure regular interaction with all stakeholders in the shadow banking value chain such as auditors, credit-rating agencies and banks. The central bank on Friday issued new guidelines around the resolution of stressed assets after India's Supreme Court in April struck down its earlier guidelines saying it had acted beyond its powers. The new rules "will sustain the improvements in credit culture" and help in making India's financial system strong and resilient, Das said on Saturday. Das also urged Indian public sector banks (PSBs) to not depend solely on government capital infusions to solidify their balance sheets. "Depending upon individual situations, PSBs should access the capital market for mobilisation of capital," he said.

Reserve Bank of India to enhance monitoring of shadow banking firms: governor

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

RBI slahes Repo rates again; cuts by 0.25%

reserve-bank-of-india

Reserve Bank Of India, News on Reserve Bank Of India, stories on Reserve Bank Of India, articles on Reserve Bank Of India, Reserve Bank Of India stories at Wion, Reserve Bank Of India news, Reserve Bank Of India latest news

reserve bank-of-india