Tag: RBI

Store all data in India, RBI says to payment system operators

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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All payment system operators in the country will henceforth be required to store data within India to ensure safety and security of users’ information, the RBI said today.

The operators will be given six months’ time to comply with the directive of the central bank. In recent times, the payment ecosystem in India has expanded considerably with the emergence of new payment systems, players and platforms.

“Ensuring the safety and security of payment systems data by adoption of the best global standards and their continuous monitoring and surveillance is essential to reduce the risks from data breaches while maintaining a healthy pace of growth in digital payments,” the RBI said in a statement on ‘Developmental and Regulatory Policies’.

The RBI further said that at present “only certain” payment system operators and their outsourcing partners store the payment system data either partly or completely in the country.

“In order to have unfettered access to all payment data for supervisory purposes, it has been decided that all payment system operators will ensure that data related to payment systems operated by them are stored only inside the country within a period of 6 months,” the central said.

The central bank will issue detailed instructions in this regard within one week.

The spotlight on data security comes at a time when social media giant Facebook has faced a global backlash over breach of user data.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI says investment activity, capital goods production boosts FY 19 GDP estimates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The gross domestic product (GDP) growth estimates for fiscal year 2018-19 was raised to 6.6%, compared to the earlier estimate of 6.5%, the RBI said in its first bi-monthly Monetary Policy Statement for 2018-19.

The gross domestic product (GDP) is a key indicator to measure a nation’s economy.

GDP measures the contribution of various sectors in an economy and provides a monetary value for the amount of goods and services produced over a particular period of time.

Capital goods production registered a 19-month high growth in January 2018, indicating a slowdown in investment demand.

Net exports were dragged down by Goods and Services Tax (GST) related working capital disruptions.

Merchandise import growth also weakened because of gold imports, and due to a weak external demand.

In the agriculture sector, the total food grain production for 2017-18 is expected to be 277.5 million tons, up about 0.9% from the previous year.

The manufacturing sector improved and remained in an expansionary mode for the eighth consecutive month in March, driven by increasing output and new orders.

In the services sector, growth of value added services surged, driven by trade, hotels, transport, communication and a significant uptick in construction activity.

Increased sales of commercial vehicles, tractors and two-wheelers, a strong upturn in production of consumer durables, rise in domestic and international air passenger traffic, also contributed to a significant rise in the GDP, the report said.

On the growth outlook front, RBI said that it expects GDP to strengthen from 6.6% in 2017-18 to 7.4% in 2018-19 due to sustained expansion of capital goods production and an increase in imports.

GDP growth for the first half is expected to be in the range of 7.3-7.4%  and 7.3-7.6% for the second half of the financial year.

Exports are also expected to rise due to higher global demand, and boost fresh investment.

In a poll conducted by CNBC-TV18, 10% of the respondents had expected RBI to cut its FY18 GDP forecast to lower than 6.5%, while 90% expected RBI to keep FY18 forecast unchanged at 6.6%.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI keeps repo rate unchanged at 6%; CPI inflation medium-term target at 4%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Thursday kept the policy repo rate unchanged at 6% in the first bi-monthly meeting this financial year.

Yet again, the central bank’s decision seemed consistent as they took a neutral stance on policy, keeping in mind “the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a range of +/- 2%, while supporting growth.”

In the February meet, the central bank had projected the CPI inflation at 5.1% in Q418 and had expected the inflation range for the first half of FY19 to be in the 5.1-5.6% range.

The RBI forecasted the inflation for the second half of FY19 to be in the 4.5-4.6% range.

The actual inflation outcomes in January-February averaged 4.8%, and mainly showed a sharp decline in vegetable prices.

Global markets have experienced a lot of uncertainty because of tensions in US-China trade. Likewise, the US-India trade agreement also faces stress, with the US mounting a challenge against Indian export subsidies at the World Trade Organisation (WTO).

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI keeps repo rates unchanged at 6%; key takeaways

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India kept its benchmark repo rate unchanged at 6.0% under the liquidity adjustment facility (LAF), in first policy meet of the 2018-19 financial year, in line with market expectations.

The Monetary Policy Committee (MPC) also kept the reverse repo rate under the LAF unchanged  at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent.

The MPC’s decision is consistent with the neutral stance of monetary policy in achieving a medium-term target for consumer price index (CPI) inflation of 4 %.

Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Viral V. Acharya and Dr. Urjit R. Patel voted in favour of the monetary policy decision. Dr. Michael Debabrata Patra voted for an increase in the policy rate of 25 basis points.

Read more here: Inflation worries, fiscal slippage cause RBI to keep repo rate unchanged at 6%

Key takeaways: 

Taking these factors into consideration, projected CPI inflation for 2018-19 is revised to 4.7-5.1 per cent in H1:2018-19 and 4.4 per cent in H2, including the HRA impact for central government employees, with risks tilted to the upside. Excluding the impact of HRA revisions, CPI inflation is projected at 4.4-4.7 per cent in H1:2018-19 and 4.4 per cent in H2.

The 6th bi-monthly resolution of 2017-18 in February projected CPI inflation at 5.1 per cent in Q4:2017-18; and in the range of 5.1-5.6 per cent in H1:2018-19 and 4.5-4.6 per cent in H2, including the HRA impact, with risks tilted to the upside.

Actual inflation outcomes in January-February averaged 4.8 per cent, largely reflecting the sharp decline in vegetable prices and significant moderation in fuel group inflation. The available information suggests that vegetable prices continued to moderate in March as well. Accordingly, inflation in Q4:2017-18 is nowprojected at 4.5 per cent.

There are now clearer signs of revival in investment activity as reflected in the sustained expansion in capital goods production and still rising imports, albeit at a slower pace than in January. 

Also read: RBI says investment activity, capital goods production boosts FY 19 GDP estimates

Growth has been recovering and the output gap is closing. This is also reflected in a pick-up in credit offtake in recent months. The large mobilisation of resources from the primary capital market should support investment activity further.

Global demand has been improving, which should encourage exports and boost fresh investment. On the whole, GDP growth is projected to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19 – in the range of 7.3-7.4 per cent in H1 and 7.3-7.6 per cent in H2 – with risks evenly balanced.

International crude oil prices have become volatile in the recent period, with a distinct hardening bias in the second half of March, even as the increase in shale production was more than expected. This has adversely impacted the outlook for crude oil prices.

Also read: RBI meet: Uneventful policy, eventful press conference?

Indian domestic demand is expected to strengthen during the course of the year. Fourth, the statistical impact of an increase in HRA for central government employees under the 7th CPC will continue till mid-2018, and gradually dissipate thereafter.

Retail inflation, measured by the year-on-year change in the CPI, fell from a high of 5.1 per cent in January to 4.4 per cent in February due to a decline in inflation in food and fuel.

Food inflation declined by 120 bps in February, pulled down by a sharp decline in vegetable prices, especially of onions and tomatoes, along with continuing deflation in pulses. The fall in prices was also observed in other food components such as eggs, sugar, meat and fish, oils, spices, cereals and milk.

Inflation in respect of liquefied petroleum gas declined in line with international price movements. Furthermore, the rate of increase in prices of firewood and chips, and dung cake moderated.

CPI inflation excluding food and fuel remained unchanged at 5.2 per cent for the third consecutive month in February, after rising from its trough in June 2017.

Households’ inflation expectations, measured by the March 2018 round of the Reserve Bank’s survey of households, edged up for both three-month and one-year ahead horizons.

Manufacturing firms covered in the Reserve Bank’s Industrial Outlook Survey reported input price pressures and an increase in selling prices in Q4:2017-18, which are expected to continue in Q1:2018-19. Manufacturing and services firms polled by PMI also showed a rise in input and output prices in Q4.

Liquidity in the system moved between surplus and deficit during February-March 2018. From a daily net average surplus of ` 272 billion during February 1-11, 2018, liquidity moved into deficit during February 12-March 1, reflecting a slowdown in government spending and large tax collections.

After turning into surplus during March 2-15, the system moved into deficit again during March 16-22 mainly on account of quarterly advance tax outflows.

Anticipating the seasonal tightening of liquidity at the end of March, the Reserve Bank conducted four additional longer tenor (24-31 days) variable rate repo operations aggregating ` 1 trillion, apart from the regular repo operations.

In mid-March, additional liquidity of ` 1 trillion got released into the system through redemption of Treasury Bills issued under the Market Stabilisation Scheme (MSS) in April and May 2017

On the whole, the Reserve Bank injected ` 60 billion and ` 213 billion on a net daily average basis in February and March, respectively. The weighted average call rate (WACR) inched closer to the policy repo rate from 12 basis points below the policy rate in January to 7 bps in February, and 5 bps in March.

Merchandise export growth decelerated in January and February 2018, pulled down by a slowdown in exports of gems and jewellery, readymade garments and engineering goods.

As import growth continued to exceed export growth in January-February, the trade deficit widened. The current account deficit increased in Q3:2017-18, primarily on account of the higher trade deficit.

Net foreign direct investment moderated in April-January 2017-18 visà-vis the level a year ago. Foreign portfolio investors made net purchases in 2017-18, despite net sales in the wake of a global sell-off in February. India’s foreign exchange reserves were at US$ 424.4 billion on March 30, 2018.

Read the full text here: RBI keeps repo rate unchanged at 6%; CPI inflation medium-term target at 4%

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI meet: Uneventful policy, eventful press conference?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bond yields have seen so much volatility in recent weeks that market men don’t expect and don’t even want an eventful policy. After starting 2018 at below 7.1%, 10-year bond yields shot up to 7.4% on January 15 after the RBI deputy governor ticked off banks for thoughtless investment and zero risk management.

Yields further climbed to 7.6% by early February on fears of a large fiscal deficit based on overstated tax collections and under–provided expenditure. Rising crude prices pulled yields to 7.75% by early March. And then, quite unexpectedly, on march 26, yields crashed to 7.3% on the government cutting its first half borrowing by 22% versus year ago levels.

The RBI, again, unexpectedly, met the government half way by allowing easier provisioning for banks on bond losses.

After so much drama, possibly no side is interested in an “eventful” monetary policy. Also the noise in  global trade and the reality of rate hikes warrant a cautious approach. Under the circumstances a no-action policy is what the doctor ordered and that’s what the patient may get.

But there is much to watch in the RBI’s statement and in the accompanying monetary policy report. The RBI’s current inflation forecast for the first half of this year is 5.1%-5.6% and for the second half is 4.5-4.6%. But this was probably predicated on crude at $55/barrel.

Now if the assumption is upped to $65, will the trajectory change? As well, the RBI and the markets are still guessing what the minimum support price for key crops is likely to be. If the government intends to pay farmers the full difference between the market price and 1.5X their cost of production, the fiscal deficit too could be higher.

Then there are farm loans and  house rent allowance increases to state government employees. The RBI saw risks to inflation titled to the upside even its last forecast. There is much in the data for the central bank to up the CPI forecast. That would be a serious negative for the bond markets, undoing much of the recent sobering of yields.

ALSO READ: CNBC-TV18’s Poll Result on RBI’s Monetary Policy

One wouldn’t have worried about growth forecasts, but in the last policy, the RBI went out of its way to state that ,”the committee is of the view that the nascent recovery needs to be carefully nurtured and growth put on a sustainably higher path through conducive and stable macro-financial management”.

The RBI’s growth forecast for the current year is 7.2%, much lower than the consensus. Does this factor  in the crucial NPA resolution circular that it brought out just 5 days after the policy? It certainly couldn’t have factored in the PNB fraud or the cloud over the ICICI and Axis Bank leadership. With most corporate lenders weighed down either by NPAs or an embattled leadership or both, is there enough spunk to “carefully nurture the nascent recovery” as the MPC put it? So, will the RBI lower growth forecasts? If it does, are stock and bond markets prepared for this?

Actually more than the monetary policy, it is the developmental and banking related announcements that are awaited eagerly by bankers. After the recent moderation of its stance on mark-to-market losses of banks, there is widespread expectation that the RBI will also moderate its NPA resolution rules.

Bankers hope that they will have to begin reporting stressed loans not on first day of default but may be 30 days after default, so as to give companies elbow room for “legitimate” delays. Bankers also want to upgrade restructured loans a little faster than RBI’s new rules allow.

Perhaps most interesting will be the governor’s press conference –not for monetary policy questions but for other questions – on PNB, ICICI and Axis.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI likely to hold rates in monetary policy review on April 5

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Economists and bankers polled by CNBC-TV18 unanimously expect a no-action policy from the MPC, as it remains in a ‘wait and watch’ mode.

The Monetary Policy Committee of the Reserve Bank of India is caught in a bind as it meets to announce the first bi-monthly monetary policy on Thursday.

Rising crude oil prices and global uncertainty over the looming Fed rate hike is likely to prevent the RBI from moving on the repo rates in this policy, despite inflation dropping below its forecast range of 5.1% for the January-March quarter.

80% said that the tone of the monetary policy, which is as keenly eyed as the policy itself, will be similar to the last policy as the RBI acknowledges both developments- good news on the domestic front and uncertainty on the external front.

Anxiety about a fiscal slippage, and the deteriorating health of the banking sector remain a key worry, though domestic growth is rising and inflation has inched down.

As for the external developments, US President Donald trump’s trade war with China, the imminent Fed rate hike, and rising crude oil prices may cast a shadow on India’s growth prospects.

The RBI maintained policy rate at 6% in the previous policy in February this year, on the grounds that the “nascent recovery” in the economy would have to be “carefully nurtured”.

Growth would have to be put on a sustainably higher path through “conducive and stable macro-financial management,” the central bank had said.

A majority of respondents to CNBC-TV18’s poll added that they expect no rate action whatsoever from RBI in the entire calendar year 2018, while 30% said they expect a 25 basis point hike later this year.

A majority of respondents expected no change from the stated 6.6% Gross Value Added growth projection for FY18 and 7.2% for FY19, even as data from the Central Statistical Office showed that GDP grew faster than the previous five quarters at 7.2% for the October-December 2017 quarter.

The widely-tracked Consumer Price Inflation (CPI) has also fallen from a 17-month high of 5.21% in December 2017 to 4.4% in February this year.

This is below the 5.1% projected by RBI in its previous policy.

Three out of five respondents to CNBC-TV18’s poll said RBI should revise this forecast, albeit retrospectively, to below 5.1% for Jan-March quarter in the light of recent developments.

60% of the respondents also believe RBI may leave the 5.1%-5.6% CPI range for the first half of FY19 unchanged, and half the respondents believe the 4.5%-4.6% estimate for the second half will be left unchanged.

About 40% expect the 4.5%-4.6% estimate for the second half of FY19 to be lowered in this policy.

The respondents were unanimous in their expectation of the central bank maintaining its neutral stance.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI did not do proper auditing, says CVC on PNB fraud

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Central Vigilance Commissioner K V Chowdary on Tuesday said the Reserve Bank of India (RBI) had apparently not conducted an audit during the period of time when a Rs 13,000-crore scam hit the Punjab National Bank.

Chowdary stressed the need to put into place a more robust auditing system.

“They did not do this (an audit),” the head of the probity watchdog told PTI.

The CVC exercises superintendence over the CBI, which is looking into the over Rs 13,000-crore PNB fraud case.

The RBI had the regulatory responsibility for the banking sector but any lack of integrity would be looked at by the Central Vigilance Commission, he added.

Chowdary said according to the RBI, it had switched over from a periodic audit to a “risk-based” audit, which is conducted when there is a financial risk involved.

“To determine risk, they must have some parameters. Based on that they would have done that (auditing). (But) there was no apparent audit by the RBI during this period (of fraud),” Chowdary said.

Union Finance Minister Arun Jaitley had in February slammed regulators for failing to detect the fraud, saying that unlike politicians, regulators in the Indian system were unaccountable.

Chowdary pointed out that the RBI issues general guidelines as a regulator and also when foreign exchange is involved.

“They are not going to see from branch to branch and bank to bank what they are supposed to do,” he said.

It was primarily the responsibility of the banks to ensure that their business was conducted in a proper and ethical way, he added.

He said when something goes wrong, “one cannot blame everybody”.

“There is a systemic issue (here),” Chowdary said. “They (RBI) have decided instead of every year or every once in two, three or four years, they will do it (risk-based auditing). It is a good policy. But how they determine the risk parameters… and why this (fraud) did not come up are matters of detail.”

He, however, clarified that it was not just the PNB where an alleged fraud had taken place or that other banks were “100% correct”.

“But we have to only hope that they (the other banks) have a better system and that they are following the system,” Chowdary said.

On a bank’s role in checking frauds, he said there are “no timelines” when it comes to deeper decision making processes.

“There should be defined timelines. The preventive vigilance mechanism has to be strengthened. The guidelines and operating procedures have to be strengthened. It has to be ensured that they are followed,” said CVC.

Asked about the investigation in the PNB scam, he said what the CVC was doing in the case could not be disclosed now as “it is work in progress”.

“There are so many issues that the CVC is examining both with reference to processes set in motion by the RBI,” Chowdary said.

The CBI is among various agencies looking into the over Rs 13,000-crore fraud allegedly committed by billionaire jeweller Nirav Modi and his uncle and Gitanjali Gems promoter Mehul Choksi.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI drops Axis Bank from list of bullion importers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) late on Monday dropped Axis Bank from a list of banks it has cleared to import gold and silver in the current financial year that began April 1.

It was unclear why Axis, one of India’s leading importers of bullion, did not feature in the list that was released late on Monday.

Axis Bank and the Reserve Bank of India were not immediately reachable for comment. Bank of Baroda, HDFC Bank and Bank of Nova Scotia were among the 16 banks allowed to import bullion. Two other small banks Karur Vyasa and South Indian Bank, were also dropped from the RBI list.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Axis Bank says CEO appointment process still going on

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Axis bank has clarified that the process of forwarding recommendations for the appointments is still going on. The clarification came after it emerged that the Reserve Bank of India had asked the bank to reconsider its plan to give another term to CEO Shikha Sharma.

The bank further clarified and said the board on its part will forward its recommendation to the regulator to any extend it deems necessary. Further, the report stated that the Bank also clarified that it follows a standard procedure when it comes to the appointment of senior officials.

Also Read: RBI asks Axis Bank to reconsider CEO Shikha Sharma’s 4th term

Earlier, in a letter possibly addressed to Axis Bank chairman Sanjiv Misra, RBI had asked to review the decision to give another term to the CEO. This intervention from RBI came in view of the recent performance of the bank. With a total worth of over Rs 25000 crore, Non-Performing Assets (NPAs) have risen to 336% over the last three years in the bank. The bank’s Gross NPA ratio currently stands at 5.28%, compared to 1.23% in December 2010. Reports have also emerged that the bank may appoint Sharma for another year in order to buy time to find a new CEO.

With recent unearthing of various cases involving banks and their bad loans, RBI too may likely get more involved in various aspects of operations in the banking sector.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow