Monetary Policy 14 Jul 2017 by Tojo Jose

Slide in CPI all set to invite RBI’s rate cut

Slide in CPI all set to invite RBI’s rate cut

The Consumer Price Index’s 1.54% inflation rate recorded for June 2017 is the lowest since the start of the index in 2012. According to the CSO release, inflation rate during the month was pulled down by food prices led by vegetable items like tomatoes, pulses and potato. This is the third month in a row that food prices brought down the CPI. The index has registered an inflation rate of 2.18% in May 2017. Present slide in prices is well outside RBI’s predictions. The June 2017 monetary policy review which sets the inflation forecast for the coming year predicted a CPI inflation range of 2% to 3.5 per cent for the first half of fiscal year 2017-18. Now it reached 1.54

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Monetary Policy 23 Jun 2017 by Tojo Jose

RBI warns banks to address big NPAs or to face action on insolvency procedures

RBI warns banks to address big NPAs or to face action on insolvency procedures

The Reserve Bank of India has warned banks to address big NPAs or face procedures under the new Insolvency and Bankruptcy Code on these accounts. In a communique to banks, the RBI urged settlement of 55 high value NPA accounts within six months. Earlier, the RBI’s Internal Advisory Committee (IAC) has identified 12 big NPA accounts that need immediate action. These NPAs accounts for nearly 25% of total NPAs of the banking system. The warning by the RBI comes after the government gave it the power to direct lenders to initiate the insolvency and resolution process in the event of default. According to experts, the RBI got power to initiate actions on NPA front as per the new

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Monetary Policy 15 Jun 2017 by Tojo Jose

Insolvency regime for financial Sector: RBI’s power to come down

Insolvency regime for financial Sector: RBI’s power to come down

The Cabinet has ratified an insolvency regime for the delicate financial sector. As per the Financial Resolution and Deposit Insurance Bill 2017, financial sector entities including banks, insurance companies and other entities related to the sector will come under the regime. The proposed Resolution Corporation under the regime interestingly gets the authority over Deposit Insurance. Besides it will get power to implement decisions related to financial stability which now comes under the RBI.  After the global financial crisis, major regulators in the West have enacted resolution regime that aims to rehabilitate financial sector entities that have a potential for failure. T

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Monetary Policy 13 Jun 2017 by Tojo Jose

CPI inflation registers its lowest since 2012

CPI inflation registers its lowest since 2012

Retail inflation measured by the CPI has recorded its lowest since 2012 when the index was launched. The new low was caused by contraction of food prices. According to the CSO’s inflation statistics published on Monday, inflation during May was 2.18%. inflation figure was 2.99% during the previous month (April). The current nationwide CPI unifies was launched by the CSO in 2012. Since then, the index has become the anchor index measuring inflation surpassing the significance of the WPI. According to the CSO data, decline in food prices has brought down the price rise. The Food and Beverages category recorded a price contraction of 0.2%. In another data published along wit

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Monetary Policy 08 Jun 2017 by Tojo Jose

RBI brings advanced regulations for rupee denominated bonds

RBI brings advanced regulations for rupee denominated bonds

The Reserve Bank of India has made changes in Rupee denominated bond issue guidelines, enhancing the utility of RDBs from the Indian angle. RBI’s new regulations for RDBs - which are now a hit in the international market, aims at ensuring longer maturity period, lowering interest cost and to ensure that there is no malpractice in utilization of the proceeds among end users. Ever since the launch of the hit rupee denominated bonds by the IFC (International Finance Corporation) by the name ‘Masala bonds’, the RDBs are becoming attractive tool for both Indian issuers and for foreign investors. Most of the funds procured through RDBs are used to finance infrastructur

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Monetary Policy 11 Jan 2017 by Tojo Jose

RBI to Parliament on demonetisation: acted on government instructions

RBI to Parliament on demonetisation: acted on government instructions

The RBI’s first and most authenticate response about its role in the demonetisation response indicate that the central bank has acted as per government instructions. In a reply to the Parliamentary Committee on Finance led by Congresses’ M Veerappa Moily, the RBI submitted answers to several tactical questions on the subject. The RBI reply indicate that the government on November 7, 2016 ‘advised’ “the RBI to mitigate the problems of counterfeiting, terrorist financing and black money, the Central Board of the RBI may consider withdrawal of legal tender status on of the notes in high denominations of Rs 500 and Rs 1000” The CBD has met on Nove

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Monetary Policy 29 Dec 2016 by Tojo Jose

Financial Sector Scholar, Acharya appointed as RBI Deputy Governor

Financial Sector Scholar, Acharya appointed as RBI Deputy Governor

Continuing the induction of non-monetary experts into the monetary policy operations of RBI, the government has inducted financial sector expert Shankar S Acharya as the fourth Deputy Governor of the RBI. In the notification showing the appointment, Sri. Acharya has entrusted with the Monetary Policy and Research cluster, a relatively academic body rather than having any policy development content. Mr Acharya was serving as Professor, at the Department of Finance, New York University and is a PhD holder in Finance. Interestingly he was a member of the Financial Sector Legislative Reforms Committee that recommended government control over of the RBI’s Monetary Policy Operatio

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Monetary Policy 28 Dec 2016 by Tojo Jose

Most of the banned notes are back; black income estimation will take time

Most of the banned notes are back; black income estimation will take time

Around 90 per cent of the scrapped Rs 500 and Rs 1000 are now returned back to the RBI. According to sources, the RBI has received nearly Rs 13.2 lakh crore of these notes out of the Rs 14.5 lakh crores. Next expected step from the government is to track the black income kept in bank accounts. But according to tax and legal persons, this will take time. A smart guess by experts estimate that the black income may be between Rs 1 to 2.5 lakh crores.   To tap the black money stored in banks during demonetisation, government has provided an option for the income holders to pay 50% taxes and come clean. Response for this scheme is yet to known. First estimate about the black inc

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Monetary Policy 24 Dec 2016 by Tojo Jose

Modi warns the ‘dishonest’ and offers more reforms to raise taxes

Modi warns the ‘dishonest’ and offers more reforms to raise taxes

Prime Minister Modi hinted more reforms especially those aimed at raising tax revenues. Speaking at a inaugural function of several infrastructure projects near Mumabai’s Bandra Kurla Complex (BKC), he renewed war against black money. “Dishonest people, you should not underestimate the mood of 125 crore people. You will have to be afraid of it… Time has come for ruin of dishonest people. This is a cleanliness campaign,” Just few days to the end of time line that the Prime Minister set for the eliminating cash trouble, he indicated more policies soon. “Let me make one thing very clear: This government will continue to follow sound and prudent econom

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Monetary Policy 23 Dec 2016 by Tojo Jose

NITI Ayog meeting called to discuss economic recovery measures post demonetisation

NITI Ayog meeting called to discuss economic recovery measures post demonetisation

Prime Minister Modi has called a meeting of NITI Ayog officials along with that of Ministry of Finance to design economic rebuilding after demonetisation. The meeting is scheduled to be held on Tuesday and is expected to bring the thoughts of all the available resource persons associated with the government. Government is reinforcing quickly as the note ban impact is not going to be settled by December 30- the promised deadline by the Prime Minister. Indications are that continuing cash crunch may develop distrust about demonetisation among people. Similarly, the momentum and popular mood may shift away from attack on black money to cash crunch created hardships. The meeting will

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