News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
ę Latest Circulars »
 Edited Transcript of Reserve Bank of India‚Äôs Fifth Bi-Monthly Monetary Policy Press Conference
 Edited Transcript of Reserve Bank of India‚Äôs Fifth Bi-Monthly Monetary Policy Tele Conference with Researchers and Analysts
 Auction of Government of India Dated Securities December 09, 2019
  Acquisition of financial assets by Asset Reconstruction Companies from sponsors and lenders
 Availability of National Electronic Funds Transfer (NEFT) System on 24x7 basis
 Acquisition of financial assets by Asset Reconstruction Companies from sponsors and lenders
 RBI releases ‚ÄúGuidelines for ‚Äėon tap‚Äô Licensing of Small Finance Banks in the Private Sector‚ÄĚ
 Exim Bank's Government of India supported Line of Credit (LOC) of USD 500 million to the Government of Bangladesh
 Prohibition of Benami Property Transactions (1st Amendment), Rules, 2019
  Application for initiation of corporate insolvency resolution process against Dewan Housing Finance Corporation Limited filed under the Insolvency and Bankruptcy Code, 2016
 RBI-Auction of Government of India Dated Securities December 02, 2019

RBI-Second Bi-monthly Monetary Policy, 2016-17: Governors Opening Remarks at the Press Conference
June, 08th 2016

In our monetary policy statement of April 2016, we stated that we would watch macroeconomic and financial developments in the months ahead with a view to responding as space opens up. Incoming data since then show a sharper-than-anticipated upsurge in inflationary pressures emanating from a number of food items (beyond seasonal effects), as well as a reversal in commodity prices. A strong monsoon, continued astute food management, as well as steady expansion in supply capacity, especially in services, could help offset these upward pressures. Given the uncertainties, the Reserve Bank will stay on hold, but the stance of monetary policy remains accommodative. The Reserve Bank will monitor macroeconomic and financial developments for any further scope for policy action.

Transmission of policy into bank lending rates still remains work in progress. We will shortly review the operation of the Marginal Cost Lending Rate framework to iron out any issues. Timely capital infusions into constrained public sector banks will also aid credit flow.

On liquidity, there have been two concerns. First on the maturing of FCNR(B) deposits, our sense is that the leveraged portions of those deposits will not be renewed. Therefore, there could possibly be outflows of the order of $ 20 billion. The RBI has covered those requirements in the forward markets, and will take some advance deliveries in the lead up to the maturation of the deposits. Of course, some counterparties are apprehensive that they will not be able to deliver easily on the dollars we are owed, and hence there may be some dollar shortage in the market. This is something that we will monitor. We may supply dollars in case of extreme volatility, but no one should take this for granted. We are, however, committed to supply short term rupee liquidity to the extent needed, to support our monetary stance.

The second concern on liquidity has been how long we propose to take to move from a situation of systemic liquidity deficit to one of close to neutrality. This is something that depends on market and external conditions. As you know, a fair amount of durable liquidity has already been supplied. In addition, we are seeing outstanding cash balances come down somewhat. We will not commit to a timeframe, but will be opportunistic in moving the system towards the goal.

Finally, on the bank clean up, we are working together with the government on facilitating the process. There are discussions on mechanisms that will leave projects with appropriate capital structures and access to credit, as well as some incentive for promoters to earn their way out of difficulty. SEBI is also being consulted. There is also a discussion of various funds to invest in stressed situations. However, there is no intent to go back to the days of forbearance or reverse the move towards transparent bank balance sheets.

Alpana Killawala
Principal Adviser

Press Release : 2015-2016/2837

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting