For the first time in 21 years, the Reserve Bank of India (RBI) will revise norms for investment portfolios of commercial banks to reflect changes in global standards on valuation and measurement, and progress in the domestic market. This could pave the way for banks to transition to the new accounting standards (Ind-AS). The outstanding investment portfolio of commercial banks was at Rs 45.84 trillion as of November 19 this year.
The 30-share Sensex closed at 19,230 mark up 283 points whereas the 50-share Nifty ended higher by 87 points at 5,699 levels.
M&M, Bajaj Auto, Tata Motors and Hero Moto and Maruti Suzuki from Auto sector surged between 1-4%.
The Reserve Bank of India (RBI) clarification on the final norms for new bank licences has much to mull on for the many entities interested. It has clearly ruled out any benefit to the new entrants in terms of more time to meet the cash reserve ratio/statutory liquidity ratio (CRR/SLR) requirements.
The recent run on the US-based Silicon Valley Bank (SVB) and the subsequent seizure of its assets by the regulators may have sparked a global wave of risk aversion, particularly for start-ups. However, the Indian banking sector is unlikely to be a victim of any contagion effects, said analysts. he bank, which played a big role in financing start-ups and technology players, faced stress after incurring huge losses on its holdings of US bonds, following the most-aggressive monetary tightening cycle by the Federal Reserve in around four decades.
State Bank of India hinted at lowering lending rates to retail customers.
The central bank cut SLR to 23 per cent from 24 per cent.
ICICI Bank Chairman K V Kamath on Thursday disagreed with the suggestion of SBI chief Pratip Chaudhuri that RBI should scrap CRR, saying it is part of the monetary policy and no issue can be made of it.
The Reserve Bank of India, in its first-quarter review of monetary policy, kept the benchmark policy rate constant at 8 per cent.
Short-term lending (Repo) rate is unchanged at 8 per cent.
Based on the current momentum, the funds likely to be raised through the RBI's relaxed window would be $3.5 billion-$4 billion.
The Reserve Bank of India on Tuesday said it was starting to unwind some of the extraordinary policy easing and liquidity support measures taken to shore the economy up against the global credit crisis and economic slump.
RBI is also considering a proposal to re-introduce inflation-indexed bonds.
The central bank kept cash reserve ratio unchanged at 4 per cent.
The Reserve Bank on Friday took steps towards normalisation of liquidity management to pre-pandemic levels, with the introduction of the standing deposit facility (SDF) as the basic tool to absorb excess liquidity, and narrowing the liquidity adjustment facility (LAF) to 0.50 per cent from the 0.90 per cent. Governor Shaktikanta Das said the SDF will be at 3.75 per cent, 0.25 per cent below the repo rate and 0.50 per cent lower than the marginal standing facility (MSF) which helps the banks with funds when required. The SDF has its origins in a 2018 amendment to the RBI Act and is an additional tool for absorbing liquidity without any collateral.
The RBI, however, kept other key rates and ratios like repo, reverse repo and cash reserve ratio unchanged.
Talks of a merger between HDFC Bank and parent HDFC Ltd had gained steam nearly eight years ago, when the Reserve Bank of India allowed banks to issue long-term bonds to fund infrastructure and affordable housing. At that time, key executives at both entities denied any such proposal. And today, the merger has been officially announced by the two players.
The Reserve Bank of India will provide foreign exchange liquidity to foreign branches and subsidiaries of Indian banks through currency swaps.
NBFCs seek level playing field with banks in terms of treatment of NPAs, TDS on deposits, removal of service tax on HP and lease transactions, refinance mechanism akin to NHB etc
In short, if India Inc lives up to the expectations in the required measure of resilience, innovation, initiative, imagination and leadership, it can help harmonise the imperatives of growth with control of inflation.
Banks are parking funds not just in securities qualifying for maintenance of statutory liquidity ratio (SLR), but also in mutual funds (MFs).
The Reserve Bank on Tuesday increased a key statutory deposit ratio for banks to 25 per cent but the move is not expected to push interest rates up. RBI left other key policy rates and ratios unchanged. Due to this, it is unlikely that banks will banks hike their auto, home and education loan rates in the near term.
The central bank raised statutory liquidity ratio, the portion of deposits that banks are required to keep in government securities, by 100 basis points to 25 per cent. Other key rates were unchanged.
The inflation target has been hiked to to 6.5 per cent from 5 per cent. The FY10 GDP target is unchanged at 6 per cent.
Retail depositors are earning negative returns on their bank deposits and hence, there is a need for reviewing taxes on interest earned, economists at the country's largest lender SBI have said. If not for all the depositors, the taxation review should be carried out for at least the deposits made by senior citizens who depend on the interest for their daily needs, the economists led by Soumya Kanti Ghosh said in a note, which pegged the overall retail deposits in the system at Rs 102 lakh crore. At present, banks deduct tax at source at the time of crediting interest income of over Rs 40,000 for all the depositors, while for senior citizens the taxes set-in if the income exceeds Rs 50,000 per year.
Bankers have suggested that the Reserve Bank of India lower the statutory liquidity ratio and the cash reserve ratio as the present liquidity crunch is affecting their business. During the mid-term resource management discussion with the RBI team led by Deputy Governor Rakesh Mohan, the country's top bankers said the tight liquidity condition was pushing up the cost of funds and putting further pressure on margins.
Banks have asked for an exemption of statutory requirements such as the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR) for lending to the infrastructure sector. While the CRR is a tool where banks have to set aside liquidity with RBI in proportion of the deposits mobilised by them, the SLR requires banks to invest 25 per cent of their liabilities in government securities to generate instant liquidity.
A Bill seeking to give more operational flexibility to the Reserve Bank of India in the conduct of monetary policy was passed in Lok Sabha on Friday.
Finance Minister P Chidambaram on Tuesday said the Rs 14,150 crore (Rs 141.50 billion) worth of oil bonds meant for oil marketing companies will be issued within this month.
Ahead of the slack season Credit Policy, Reserve Bank Governor Y V Reddy on Monday met Finance Minister P Chidambaram amidst expectation of monetary measures to contain prices and keep interest rates stable to sustain high economic growth.
A massive liquidity outflow of over Rs 40,000 crore (Rs 400 billion) in the coming weeks is expected to pull back the overnight call rates from the near sub-zero levels to the central bank-desired 6-7.75 per cent range.
The government on Wednesday said the ordinance seeking to empower Reserve Bank to cut Statutory Liquidity Ratio below 25 per cent is expected to be brought in by this month-end or early February.
HDFC Bank, the country's largest private-sector lender, lost to competition wholesale loans of around Rs 50,000 crore after it increased interest rates in May, said Chief Financial Officer Srinivasan Vaidyanathan in an analyst call. "There were some customers who were offered lower rates by other market participants. "But we decided not to cut back on our rates," he said while addressing analysts after the announcement of the bank's Q1 earnings.
The goverment has found serious irregularities in the functioning of the National Bank for Agriculture and Rural Development (Nabard), Finance Minister Jaswant Singh said in the Rajya Sabha Tuesday.
Short-term lending rate unchanged at 7.75 pc.
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