Posts Tagged ‘Reserve Bank of India’

Indian Banking System Witnesses Slowdown in Deposit Growth

Despite deposit rates being revised by various commercial banks, the Indian banking system is witnessing a lull in deposit growth, according to data released by the Reserve Bank of India (RBI). On a year-on-year (YOY) basis, the deposit growth in the banking system rose 14.79% (34 bps higher over the previous fortnight) to Rs 46,90,703.28 crore during the fortnight ended September 10. Further, during the previous fortnight ended August 27, 2010; the deposits mobilized by banks grew by 14.45% to Rs 46,70,237 crore. Hence, the deposits collected by banks went up by Rs 20,465 crore, against an increase of around Rs 38,658 crore in the previous fortnight.

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People from the top management of various banks are citing their reasons for this lull. B A Prabhakar, ED, Bank of India (BoI) said, “Like credit growth, deposit growth is looking sticky. It is because people may be holding a lot of cash in hand.” Further, HSU Kamath, ED, Canara Bank, said, “People are putting their money in other schemes like post office savings schemes, mutual funds and stock market investment. With the sensex touching 20,000 mark, equity market investments look attractive to the people. It should be one of the causes of slower deposit growth. Now rate of deposits have gone up by 100-200 basis points across the banking industry, that situation will be corrected soon and deposit growth is expected to pick up by the end of September,” he added.

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Industry experts also believe the current rally in equity markets to be the major reason for this slowdown and argue that this jump has lured people’s attention to equity market instruments from the traditional banks’ term deposits. In this backdrop, Reserve Bank of India (RBI) raised repo and reverse repo rates by 25 and 50 basis points (bps), respectively, on September 16, though most banks are yet to follow suit. Worried over this development, RBI is prodding banks to increase their deposit rates.

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Going further, though the central bank had projected 18% growth in deposits for 2010-11, it has not exceeded 15% in this financial year so far.

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Jet Airways Touches 52 Week High

Jet Airways is currently trading at Rs 810.00, up by 30.60 points or 3.93% from its previous closing of Rs 779.40 on the BSE.
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The scrip opened at Rs 778.00 and has touched a fresh 52 week high of Rs 831.30 and low of Rs 765.00 respectively. So far 1214825 shares were traded on the counter.

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The BSE group ‘A’ stock of face value Rs 10 has touched a 52 week high of Rs. 831.30 on 20-Aug-2010 and a 52 week low of Rs 221.80 on 08-Sep-2009.

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Last one week high and low of the scrip stood at Rs 831.30 and Rs 659.80 respectively. The current market cap of the company is Rs 7077.23 crore.

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The promoters holding in the company stood at 80.00% while Institutions and Non-Institutions held 15.60% and 4.40% respectively.

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Jet Airways, India’s premier international airline, has sought Reserve Bank of India’s (RBI) nod to raise foreign currency loans worth Rs 3,450 crore for the purpose of repayment of higher-cost domestic debt.

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The country’s largest private-sector carrier is planning to discharge the loans taken from local banks through the amount raised, though under current regulations, foreign currency loans, also known as external commercial borrowings (ECBs), cannot be used to refinance domestic loans. In this backdrop, recently, only those telecom firms which had bid for 3G licences have been allowed repayment of rupee loans with the ECB proceeds.

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Further, the company wants RBI’s support to ensure uninterrupted services and continued employment to over 13,000 employees..

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INDIAN RUPEE “SOUL TO A NATION”

We can start exploring this world’s history, present & future by several understanding & discovering symbols. On this eve of Independence, where the whole country is celebrating the Sixty four year of Independence, let’s take a look of how the country’s pride “The Indian Rupee” was designed & came into existence. The Indian rupee (sign: `, code: INR) is the official currency of India. The issuance of the currency is controlled by the Reserve Bank of India.

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The Walkthrough

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On March 5, 2009 the Indian government announced a contest to create a symbol for the rupee. During the Union Budget 2010 Finance Minister Pranab Mukherjee mentioned that proposed symbol would reflect and capture the Indian ethos and culture. Five symbols had been short listed, and the Cabinet selected the definitive symbol created by D Udaya Kumar on 15 July 2010. Kumar’s entry was chosen from 3,000 designs competing for the currency symbol.

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What does it depict?

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The symbol is a taken from the Devanagari ‘j’. It is a perfect blend of Indian and Roman letters — capital ‘R’ and Devanagri ‘Ra’. The parallel lines at the top (with white space between them) make an allusion to the tricolor Indian flag.

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Equality sign symbolizes the relativity of economy and balanced economy.

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Marked Existence

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With approval of new Indian rupee symbol, India has finally joined the privileged club of currencies, which currently has the US dollar, British pound sterling, Euro and Japanese yen. This makes India rupee the 5th currency in the world to have a clear distinguishing identity. The symbol will also be included in the Indian standard – Indian script Code for Information Interchange (ISCII).

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Adaptability

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Shiro Rekha (Uniqueness), Indian flag (Tri color), Harmonious with other currency symbols, Global and local appeal, Simplicity (High recall value), Familiar and easy to read, Easy to write & design, Easy to recollect and adapt , Blends with numerals, Balanced and Stable form, Unique & Dynamic design, Easy to implement.

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Meaning to a symbol is like Soul to a body. Psychologically, a symbol is an element of communication intended to represent repressed thoughts, feelings, or impulses & by which ideas are transmitted between people sharing a common culture. The symbol of Indian Rupee depicts one heart, one mind, one spirit, in tune with all elements. This symbol truly symbolizes our country, our tradition, our nation’s economy and its currency.

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Five designs that were short-listed by the jury and sent to the Cabinet for its approval. JAI HIND

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RBI hikes policy rates by 25 bps, surprises on timing

The Reserve Bank of India (RBI) in the post market hours on Friday evening hiked its benchmark policy rates repo and reverse repo by 25 basis points (bps) in order to check the surging pace of price hike and cushion inflationary expectations which have been threatening to move out of central bank’s control.

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The hike while was well anticipated, the timing of the announcement was an absolute surprise. Analysts have been anticipating a mid-cycle hike right from the release of central bank’s annual monetary policy statement in April. However, the euro zone sovereign debt crisis and the recent liquidity crunch have been weighing on the side of keeping status quo on policy stance.

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The expectations of a mid-cycle action increased after the inflation data released in middle of May showed wholesale prices index (WPI) reaching double digit levels. The RBI however remained silent. Again when the empowered group of ministers (EGoM) hiked fuel prices on June 25, analysts expected RBI to act immediately to counter the inflationary impact of partial deregulation of auto fuels and hike cocking fuels. No action however came at that time.

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Now that the scheduled review is just around four weeks away (July 27), most economists were expecting that the RBI will wait for the policy review. However, surprising the markets in a classical way, the central bank increased the rates when no one was anticipating.

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Notwithstanding the surprise though, the policy action is a welcome move as inflationary tendencies have been increasing sharply over last few months. The central bank, according to many observers, is already behind the curve, and may have to pick up the pace of policy tightening going forward if the pace of prices hike in the non-food manufacturing space continues.

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The timing and extent of hike also suggests that the central bank will further raise policy rates in the scheduled review. In fact, by hiking by 25 bps now, the RBI has given itself more flexibility for the forthcoming review where it can now choose among a number of permutations and combinations of policy and reserve rate mix. It may choose to hike everything (repo, reverse repo and CRR) by 25 bps or may leave CRR alone and hike policy rates by 50 bps. A few other combinations are also plausible.

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Justifying the initial delay in policy action and the actual timing of the move, the RBI stated, “This mid-cycle policy action has been warranted by the evolving macroeconomic situation. Even as data for real GDP growth and WPI inflation became available by mid-June 2010, it was considered inadvisable to raise the policy rates as the financial system was dealing with liquidity pressures…Through the month of June, liquidity under LAF operations remained in deficit mode. Consequently, the call rate moved up significantly, resulting in an effective tightening at the short end of the yield curve. The liquidity situation has since begun to ease”.

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Since the RBI expects that liquidity may continue to remain tight for some time, it has also extended the additional liquidity support to scheduled commercial banks under the LAF to the extent of up to 0.5% of their net demand and time liabilities (NDTL) up to July 16, 2010. The measure was first put in place on May 26 after liquidity scenario tightened following the advance tax outgo and huge payments for the 3G spectrum by telecom operators and was earlier set to expire on July 2, 2010.

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While the two moves may seem contradictory, the RBI didn’t leave the matter to be explained by analysts and added in its statement, “It should be noted in this context that the liquidity easing measures have become necessary to manage what is essentially a temporary and unanticipated development. In no way should they be viewed as inconsistent with the monetary policy stance of calibrated exit, which remains focused on containing inflation and anchoring inflationary expectations without hurting growth”.

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RBI in Favour of Deregulating Savings Rate

Mr. K C Chakrabarty, Deputy Governor of Reserve Bank of India (RBI) has said that RBI is also in support of deregulating savings bank deposit rates of banks.

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Mr. Chakrabarty said already a debate in this regard was held, but the decision will be taken after having adequate debate on the issue.

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He said that the savings bank rates are not likely to move in a wide range after the deregulation.

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He added at this highly competitive market scenario. Prices do not vary much, but what will be the rate, what customers will get, will depend on market conditions.

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Currently, the savings bank rate is at 3.5 % and is the only administered rate in the banking system as of now.

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The banks offer this rate to the savings bank customers, which form a major part of their low-cost deposit base.

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He said further that the RBI has started to deregulate administered interest rate from 1991 as a part of financial reforms.

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NEWS ROUND UP 22nd – 26th March

Hello Friends here we come up with the News Round Up from various categories.

Economy

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·The Reserve Bank of India (RBI) unexpectedly raised interest rates from record-low levels for the first time since it began cutting in 2008, citing intensifying inflationary pressures and a steady economic recovery. The central bank raised the repo rate, the rate at which it lends to banks to 5.00 percent from 4.75 percent and reverse repo rate, the rate which it absorbs funds from the system to 3.50 percent from 3.25 percent with immediate effect.

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·India’s Wholesale price inflation accelerated to 9.89 percent in February from a year ago, above the Reserve Bank of India’s end March projection of 8.5 percent and higher than the 8.56 percent level recorded in January this year.

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·India’s food price index rose 16.30 percent in the 12 months to March 6, while the fuel index was up 12.68 percent. The rise in the food price index was lower than an annual rise of 17.81 percent in the previous week.

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Pharmaceutical

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·Elder Pharmaceuticals had increased its stake in Bulgarian subsidiary Elder Biomeda AD to 61 per cent from the present 51 per cent, as part of its strategy to strengthen its presence in the European market. The Rs 600- crore turnover Elder Pharma did not disclose the deal size. In April 2008, Elder had formed Biomeda AD in Bulgaria, to acquire three Bulgarian healthcare companies belonging to the local Biomeda group.

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Metal

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·Welspun Gujarat Stahl Rohren unit will acquire a 75 per cent stake in MSK Projects, marking its foray into infrastructure. Welspun will invest a total of Rs 400 crore, of which Rs 200 crore will be infused directly into MSK.

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Realty/ Construction.

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·Punj Lloyd has bagged a project worth $40 million (nearly Rs 181 crore) from Abu Dhabi Gas Industries (GASCO) for infrastructure related works.

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The company has secured a letter of award for engineering, procurement and construction works in UAE from GASCO.

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·Subhash Projects & Marketing has bagged two orders worth Rs 475.34 crore for infrastructure related works. The company, along with Kirloskar Brothers Ltd, has bagged a contract worth Rs 439.35 crore from Bangalore Water supply Sewerage Board for civil and electromechanical works.

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·· Hindustan Construction Company (HCC) acquired a controlling stake in Swiss real estate firm Karl Steiner AG in an all-cash deal for around Rs 150 crore (Swiss Francs 35 million), a move that will pave way for the company to enter the European and Gulf markets.

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·PT Madhucon Indonesia, a subsidiary of the Hyderabad-based infrastructure company Madhucon Projects Ltd, has been granted a new coal mining business permit for exploration of 30,970 hectares at Mauraduwa in south Sumatra, Indonesia.

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Oil & Gas

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·GAIL India plans to transit 21 per cent more natural gas through its pipelines at 114.8 million cubic meters per day in 2010-11 fiscal. The company in a press statement that it has set a target of transmitting 114.8 mmscmd of natural gas from domestic fields and imported LNG in 2010-11 fiscal as opposed to moving 94.8 mmscmd during current fiscal.

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Capital Goods

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·McNally Bharat Engineering Company has bagged an order worth Rs 173.2 crore for works at Mahanadi Coalfields in Sambalpur, Orissa. This is the third order that the company has bagged within a week, the first two being from NPCC and SAIL.

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·Larsen & Toubro (L&T) has bagged a project worth Rs 2,035 crore from ONGC Mangalore Petrochemicals Ltd to set up an aromatics complex at Mangalore special economic zone.

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Automobile.

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·Mahindra & Mahindra has joined the long list of corporate houses looking to obtain a banking licence after the finance minister’s budget speech revealed that banking regulator RBI was planning to allow more players in the sector. A top executive of the $6.3-billion group that it was planning to seek a banking licence for its non-banking finance company Mahindra & Mahindra Financial Services (MMFSL).

India World”s 10th Largest Gold-Holding Country :)

The Economic Survey, which was tabled in the Parliament by the Finance Minister today noted that the year 2009-10 witnessed India becoming the world”s 10th largest gold-holding country, from a nation that pledged its bullion two decades ago to pay for imports.

The gold purchase by the government of 200 tonnes from the International Monetary Fund (IMF) took its total reserves to 557.7 tonnes, or about 6 per cent of the total foreign exchange reserves.

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India in 1991 had to pledge its gold to the Bank of England in order to pay for its imports.

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The survey said “Post-purchase, India has become the 10th largest official gold-holding country in the world,”.

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The Reserve Bank of India (RBI) in November last year concluded 200 tonnes of gold purchase from IMF as part of the country”s foreign exchange reserve management operation.

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The purchase, which was executed over two weeks during October, was an official-sector off-market transaction.

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Earlier, Finance Minister Pranab Mukherjee had said that the purchase of gold provided a healing touch to the pride of the nation, which was dented about two decades earlier when the country sold its gold for a few hundred million dollars.

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Meanwhile, the survey sates that IMF”s Executive Board, on September 18, 2009 announced its decision to sell 403.3 metric tonnes of gold as a central element of its New Income Model and in order to increase its resources for lending to low-income countries.

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The IMF also decided that the initial offer of the sale would be directly to official holders, including the central banks. Consequent of this, the RBI concluded the purchase of 200 metric tonnes of gold from IMF, under the IMF”s limited gold sales programme, at the cost of US$ 6.7 billion, in November 2009, as part of its foreign exchange reserves management operation.

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The purchase was an official- sector off-market transaction and was executed over a two-week period during October 19-30, 2009 at market-based prices.

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With this purchase, gold holdings in the country”s foreign exchange reserves have increased to 557.7 tonnes from 357.7 tonnes, which is about 6 per cent of the reserves. Post-purchase, India has become the 10th largest official gold-holding country in the world.

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Stay Tuned for More updates.

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