Every political party loves to use the bait of loan waiver to woo the electorate. If their hearts bleed for the poor, they can always use the party funds to pay off the lenders, suggests Tamal Bandyopadhyay.
A crucial meet of the Reserve Bank's central board is underway amid a rift between the central bank and the government over future course of policies. Expectations of a positive outcome boosted market mood after the meeting began.
The windfall from RBI may be used to trim borrowing, help fund Rs 3.3 lakh crore capex plan, capitalise banks and provide fiscal stimulus to some stressed sectors, experts and economists said.
Among sectoral indices, telecom led the chart, spurting 3.08 per cent, followed by oil and gas.
RBI had received 72 applications for small finance bank licences.
"I think, this is something that all Indians should be concerned about because strength of our institutions is really important for our growth, sustainable growth and equity in the economy," said Rajan.
A 10-hour RBI central board meeting, on November 19, decides to set up a panel on the economic capital framework for the central bank and directs it to give forbearances to small businesses.
The committee had eminent people on it and making any allegations like this is 'outlandish', Sitharaman said.
There is as yet no clarity on how the process of consulting with the RBI Governor, initiated under Section 7 of the RBI Act, would unfold in the coming days. The government is keen that its suggestions made in the public interest should be heeded by the central bank, says A K Bhattacharya.
"We firmly hold that undermining the central bank is a recipe for disaster and government must desist," All India Reserve Bank Association said in a letter. The association said Acharya's comments about the government's interventionist role vis-a-vis the RBI has created a flutter across the nation. "This is, however, not a sudden outburst, but was waiting to happen due to long simmering discontent," the association said.
He will be the first bureaucrat to head the central bank in almost five years.
Highly-placed sources in the government say that none of the senior ministers had any inkling of Patel's resignation
Economic Affairs Secretary Subhash Garg is the finance ministry's primary liaison with the RBI.
With the introduction of new notes, India will have denominations of Rs 1, 2, 5, 10, 20, 50, 100, 200, 500 and 2000.
This amount will include Rs 13,100 crore that Economic Affairs Secretary Subhash Garg has been publicly seeking from the central bank's contingency reserve fund since 2017-18 (FY18).
"Lot of misinformed speculation is going around in media. Government's fiscal math is completely on track. There is no proposal to ask RBI to transfer Rs 3.6 or 1 lakh crore, as speculated," Economic Affairs Secretary Subhash Chandra Garg tweeted.
'The RBI is something like a seat belt. As a driver, the driver being the government, it has the possibility of not putting on a seat belt but of course if you do not put on your seat belt you get into an accident and the accident can be quite severe,' Raghuram Rajan told CNBC TV18. 'The aim of the board is to be Rahul Dravid -- sensible, thoughtful and not, with due respect, Navjot Sidhu,' he added.
The Reserve Bank has given an in-principle nod to invest $5 billion of foreign exchange reserves annually in infrastructure projects through two subsidiaries of India Infrastructure Finance Company.India's forex reserves stood at $266.52 billion as on November 2 and experts believe that they should be utilised at least for financing infrastructure projects.
If the new governor can think out of the box even as he signals that he can bat for the RBI cadre and respect its institutional memory, that will go a long way in getting out of the current impasse.
Opposition leaders plan to go to the people to create awareness, as well as protest the "erosion of RBI's credibility" in Parliament, in the coming days and weeks to build public opinion against the Modi government's move to take away the RBI reserves, reports Archis Mohan.
The interim dividend will help Narendra Modi-led government partly bridge the deficit its budget had developed after the announcement of a Rs 75,000 crore a year cash dole scheme for small farmers.
Only Rs 10,720 crore of the junked currency notes did not return to the banking system, rest 99.9 per cent was deposited raising question mark over the government's effort of curbing black money through the demonetisation.
Officials said Sebi first proposed to the FinMin to amend the relevant provisions in the Sebi Act to discontinue RBI's representation on its board, as it already has adequate presence of government nominees and in its over 25 years of existence the regulator has evolved as an "effective and one of the best in the world".
Reflecting the bearish mood, all sectoral indices, led by metal, teck and healthcare, ended in the negative zone.
Reserve Bank of India Deputy Governor Viral Acharya is the eighth economist to quit since the Modi government took office.
Finance Minister Arun Jaitley on Sunday said there is no 'disconnect' between the two.
RBI conducts interviews for first lateral hire for CGM post; deputy governors to head four distinct verticals.
'Four weeks have passed after the scam was exposed, yet no big guy has been arrested.' 'This gives the impression that he wants to be soft on the biggies.'
The decision to increase the quantum of capital infusion was taken at a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram in New Delhi.
RBI may also be open to injecting liquidity through open market purchases of bonds but is resisting relaxing capital buffers for banks.
'If the RBI board forces the management's hand on all the key issues, it should be prepared for resignations by the governor and the key deputy governor, Viral Acharya,' warns T N Ninan.
Given Indian corporates's high indebtedness, new credit will be used for servicing loans rather than building factories. This is setting us up for more companies on life support and more zombie banks, warns Rahul Jacob.
The Reserve Bank of India on Thursday said that the economy had enough resilience to absorb rise in global oil prices and said it is keeping a close watch on inflation.
Subdued exports remain an area of concern.
'It is likely the government may opt for an IAS officer.' 'For the government, an IAS officer will be more easy to deal with,' notes A K Bhattacharya.
Reserve Bank of India is to introduce a voluntary early retirement scheme for its employees.
When did Urjit Patel really resign? When did Shaktikanta Das get the mandate to take over as RBI governor?
Standing committee on finance to also focus on RBI autonomy and citizen's rights.
For banks, the package will limit the burden of provisioning for stressed loans. Besides, the proposed restructuring package for MSMEs with a credit of up to Rs 25 crore is expected to provide a breather to units from this sector.
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