Rupee plunges to record low as current account deficit widens to 5-yr high

The Indian rupee and bonds sunk after the current-account deficit widened to the most in five years, as an emerging-market rout raises investor scrutiny of countries with worsening balance of payments.

The rupee tumbled as much as 1.2 per cent Monday, the most in a month, to a record low of 72.5587, leading declines among Asia’s emerging-market currencies. The benchmark 10-year bond yield gained 11 basis points to 8.14 per cent, while stocks also declined.

Emerging markets have been roughed up in the past month as contagion fears start to spread following a meltdown in the currencies of Argentina and Turkey. India’s current-account gap widened in the June quarter to $15.8 billion, hurt by higher payments for oil, data released after market hours on Friday show.

“Apart from the dollar strength that’s weighing on the EM currencies, concerns about financing a wider current-account deficit are also hurting the rupee,” said Paresh Nayar, the Mumbai-based head of currency and money markets at FirstRand Ltd. At these levels, it remains to be seen if the RBI would support the currency in a big way, he said.

No proposal to withdraw pink Rs 2,000 notes, says govt in Lok Sabha

The government on Friday said that there is no proposal to withdraw the Rs 2,000 denomination note.

The Reserve Bank of India (RBI) introduced Rs 2,000 notes following the demonetisation of high-value Rs 500 and Rs 1,000 notes in November 2016.

Replying to a question on whether the government was considering the withdrawal of Rs 2,000 notes shortly, Minister of State for Finance Pon Radhakrishnan in the Lok Sabha said, "There is no such proposal."

Specified Bank Notes (SBNs) were received by the RBI either directly or from bank branches or post offices through the currency chest mechanism and were subjected to verification for authentication and numeral accuracy, he said.

"The process has since been completed. The notes processed online in Currency Verification and Processing System (CVPS) have been destroyed," he said.

Rana Kapoor reappointed as MD and CEO of Yes Bank for 3 more years

According to the bank, the general body of its shareholders have approved all 13 resolutions at the 14th Annual General Meeting (AGM) of the company held on Tuesday. The company said that Kapoor's re-appointment is subject to final approval by the Reserve Bank of India (RBI). 

"The shareholders have approved through special resolution to raise capital aggregating up to $1 billion by way of issue of shares," the company said in a statement. "The shareholders also approved through special resolution the proposal to borrow/raise funds in Indian/foreign currency by issue of Debt Securities including but not limited to Non-Convertible Debentures, Medium Term Notes and Bonds up to a total amount of Rs 300 billion."

RBI monetary policy: Four charts show markets are preparing for a rate hike

The interest-rate cycle in India is turning. The central bank may be set to tighten policy next week to keep inflation in check and stem the declines in the rupee if the rate-market moves are any indication.

The Reserve Bank of India hasn’t tinkered with rates since August, and even cut inflation projections last month, raising expectations that borrowing costs would remain on hold. But a surprising hawkish tilt revealed in its April policy minutes and the recent spike in oil has boosted speculation the authority may lift rates at its June 6 meeting.

“Front-end bonds are fully pricing in a 25-basis point hike in June,” said Suyash Choudhary, head of fixed income at IDFC Asset Management Co. in Mumbai. “Even accounting for some higher supply absorption premium, one can say that a 75-basis point increase seems to be comfortably discounted over the next year.”

As Inflation gets 'ugly' in April, RBI may be pushed to hike rates

India’s inflation accelerated more than estimated in April, providing ammunition to hawks in the central bank to tighten monetary policy and fueling a selloff in bonds.

Consumer prices rose 4.6 percent in April from a year earlier, the statistics ministry said in a statement in New Delhi on Monday, higher than the 4.4 percent median estimate in a Bloomberg survey of economists. It was the first pick-up in inflation in four months.

The data -- the final price print before the Reserve Bank of India’s next rate decision on June 6 -- highlights the risks from surging oil prices in Asia’s third-largest economy. The central bank expects oil prices averaging around $78 a barrel to stoke inflation by 30 basis points.

RBI cancels bids for Rs 11,000-cr bonds

The Reserve Bank of India (RBI) on Friday refused to accept bids for Rs 11,000 crore worth of bonds in the final auction of this calendar year.

In all, four bonds for Rs 15,000 crore were on offer. Bids for two bonds--one maturing in 2022 (Rs 3,000 crore on offer) and another in 2031 (Rs 8,000 crore)—were rejected by the central bank. It sold the remaining two bonds worth Rs 2,000 crore each and maturing in 2033 and 2046.

The signal from the RBI has been that high yields would not be acceptable to the central bank or the government. Also,  and that the yield movement have been over the top in a short span.

The decision not to accept bids for two bonds addressed some of the market concerns related to liquidity after the government announcement  on Thursday that it was going for additional borrowing of Rs 50,000 crore. 

"The partial cancellation of the auction means that the government has a comfortable cash position and is unwilling to pay high coupons," said Piyush Wadhwa, head of trading at IDFC Bank. Following the auction results, bond yields fell 15 basis points to 7.25 per cent in the intraday, before climbing back to close at 7.33 per cent, from its previous close at 7.40 per cent.

This is a marginal relief for banks as they will now have to provide lower nominal losses on their bond portfolio. Nevertheless, considering the 10-year bond yield was at 6.648 per cent at the start of the quarter, the yield movement is still at 68 basis points in the quarter. The bank treasury, therefore, will have to take a hit on their books.

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Demonetisation: Unusual cash deposits of Rs 1.7 lakh cr detected, says RBI

‘Unusual’ cash deposits totalling Rs1.6-1.7 trillion were made during the demonetisation period, says a research paper posted on the Reserve Bank of India (RBI) website.

In nominal terms, it said, the excess deposits accrued to the banking system due to demonetisation are estimated in the range of Rs2.8-4.3 trillion.

“The ‘unusual’ cash deposit in specific accounts, which are usually less active, is estimated to be in the range of Rs1.6-1.7 trillion,” according to the paper, ‘Demonetisation and Bank Deposit Growth’.

Prime Minister Narendra Modi on 8 November had announced demonetisation of Rs1,000 and Rs 500 notes valued at Rs 15.4 trillion and constituting 86.9% of the value of total notes in circulation in a major assault on black money, fake currency and corruption.

The paper is authored by Bhupal Singh and Indrajit Roy who are directors in the monetary policy department and department of statistics and information management, respectively.
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Is there cash in the ATM? 6 months later, India shakes off note-ban blues

‘Is there cash at the ATM?’ is a question many still ask Bir Singh, posted outside an automated teller machine on Lodhi Road in the Capital. After weeks of going through the tedium of standing in queues for cash, and often coming away disappointed, many have got used to asking this question before entering an ATM.

“People still think there is a shortage. However, we have refills twice a day on weekdays and once on Sundays,” says Singh. Cash is back in full force in the National Capital Region and lining up to take out a little cash is a thing of the past. If an ATM is empty, it is mostly because of technical glitches, not due to no cash being available.

The situation in other parts of the country is very similar. Prime Minister Narendra Modi shocked the nation on November 8, 2016, by freezing 86 per cent of the cash in the system. He declared the existing Rs 500 and Rs 1,000 notes paper, albeit preserving their economic value if deposited in banks. The entire nation queued up outside ATMs. Bank branches worked overtime and on holidays as people stood in line to deposit the scrapped notes. Some even died while standing in the queue. Banks had parked Rs 6 lakh crore of their excess money with the central bank, at which point the Reserve Bank (RBI) resorted to extraordinary measures for absorbing the deluge. Neither the government nor the RBI has yet stated how much of money was deposited with banks till the window closed on December 30 for banks and by March with designated branches of the central bank, for no clear reason.

“Cash is available a lot more freely at ATMs now and the queues at banks have come down drastically. The situation has returned to normal but there’s still some odd days when there’s a shortage, especially on weekends,” said Nikhil Infant, who works at Garden City College in Bengaluru as head of social media and digital content.
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RBI cracks whip on banks not game for asset recast

On a day when the government vested more powers in the Reserve Bank of India (RBI) in the war against bad debt, the central bank imposed a corrective action plan (CAP) on a wide range of restructurings exercised by banks.

Such a CAP was till now applicable for only the Joint Lenders’ Forum (JLF) mechanism. It is enforced to preserve the economic value of stressed assets. A specified timeline is framed by banks, with disincentives in the form of asset classification and accelerated provisioning where lenders fail to adhere to the JLF Framework.

Now, the CAP will be applicable for such schemes as a flexible structuring of project loans, change in ownership under Strategic Debt Restructuring and the Scheme for Sustainable Structuring of Stressed Assets (‘S4A’), etc.

“In this context, it is reiterated that lenders must scrupulously adhere to the timelines prescribed in the framework for finalising and implementing the CAP. To facilitate timely decision making, it has been decided that, henceforth, the decisions agreed upon by a minimum of 60 per cent of creditors by value and 50 per cent of creditors by number in the JLF would be considered as the basis for deciding the CAP, and will be binding on all lenders,” went the RBI notification on its website.

“Lenders shall ensure that their representatives in the JLF are equipped with appropriate mandates, and that decisions taken at the JLF are implemented by the lenders within the timelines.”

Also, the central bank put strict criteria for all participating banks in the process. “The stand of participating banks while voting on the final proposal before the JLF shall be unambiguous and unconditional,” RBI directed. “Any bank which does not support the majority decision on the CAP may exit, subject to substitution within the stipulated time line, failing which it shall abide by the decision of the JLF.”

Banks should implement the JLF decision without any additional conditionalities. And, bank boards “shall empower their executives to implement the JLF decision without requiring further approval from the board”.

Any non-adherence to the instructions and timelines specified under JLF will attract monetary penalties, RBI cautioned.

Earlier in the day, ICICI Bank's managing director, Chanda Kochhar, had complained that not all banks in a JLF adhered to decisions taken by consensus, and that they don’t stick to timelines on a resolution process, derailing the latter.

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RBI cracks whip on banks not game for asset recast

On a day when the government vested more power to the Reserve Bank of India (RBI) in the war against bad debt, the central bank imposed a corrective action plan (CAP) on a wide range of restructurings exercised by banks.

Such a CAP was till now applicable for only the Joint Lenders' Forum (JLF) mechanism. It is enforced to preserve the economic value of stressed assets. A specified timeline is framed by banks, with disincentives in the form of asset classification and accelerated provisioning where lenders fail to adhere to the JLF Framework.

Now, the CAP will be applicable for such schemes as a flexible structuring of project loans, change in ownership under Strategic Debt Restructuring and the Scheme for Sustainable Structuring of Stressed Assets ('S4A').

"In this context, it is reiterated that lenders must scrupulously adhere to the timelines prescribed in the framework for finalising and implementing the CAP. To facilitate timely decision making, it has been decided that, henceforth, the decisions agreed upon by a minimum of 60 per cent of creditors by value and 50 per cent of creditors by number in the JLF would be considered as the basis for deciding the CAP, and will be binding on all lenders," went the RBI notification on its website.

"Lenders shall ensure that their representatives in the JLF are equipped with appropriate mandates, and that decisions taken at the JLF are implemented by the lenders within the timelines."
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With Rs 6 lakh cr NPAs, PSBs may be asked to auction stressed assets

BREAKING NEWS - State-owned banks reeling under the burden of stressed assets may be asked to put defaulter companies' assets on the block.

On Wednesday, the Cabinet approved an ordinance to empower the central bank by amending the Banking Regulation law to give it more teeth and set up oversight committees to intervene on behalf of banks while deciding on non-performing assets (NPAs).

There will also be fresh guidelines for the public auction of assets by public sector banks.

"The large, cash-rich public sector undertaking will be encouraged to buy the auctioned assets in their sector by the state-owned banks," said an official.

The amendment of section 35A of the Banking Regulation Act, 1949, will give the Reserve Bank of India (RBI) the right to issue directives in the interest of banks.

President Pranab Mukherjee is expected to give his assent to the ordinance shortly.

The stressed banks may also be encouraged to take a haircut in case of genuine business failure.

Currently, public sector banks (PSBs) are saddled with NPAs or bad loans to the tune of a staggering Rs 6 lakh crore.

Finance Minister Arun Jaitley on Wednesday said that the Cabinet has taken some important decisions with respect to the banking sector which have been referred to the President for assent.
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Delhi High Court gives RBI one more day to finalise stand on Tata-DoCoMo arbitration award

LATEST NEWS - The Delhi High Court on Tuesday allowed the Reserve Bank of India (RBI) a further day to finalise its stand on the enforcement of the $ 1.18 billion Tata Sons-NTT DoCoMo arbitration award, now sought to be realised in favour of the Japanese telecom major through a settlement agreement arrived at by the two companies.

On March 8, Justice Muralidhar had directed the RBI to inform the court by March 14, of its stand on an intervention application filed by the central bank against the enforcement of the international arbitral award. The court's order had come on the backdrop of lengthy arguments made by the RBI on grounds of violations to Indian law and the disregard of regulatory considerations, which in the opinion of the banking regulator, were attempting to do something that was not permitted directly in an indirect manner. After hearing the arguments raised, the court had on that date, asked the RBI to take a final call on the matter and to inform the bench on all applicable laws in favour of its position, in case the regulator still chose to object to the settlement of the issue in line with the understanding arrived at by the companies.

In Tuesday's hearing, instead of clarifying its stance as directed, senior advocate Soli Sorabjee appeared on behalf of the RBI and sought the court's allowance for the central bank to again look into the matter "afresh", before clarifying its final position. On protests made by the DoCoMo and Tata and after highlighting the volume of arguments already made by the RBI, Justice Muralidhar denied the senior counsel's request and instead remarked, "This must be decided here and now. The RBI still hasn't told the court under what law, circular or regulation it may have an issue (against the enforcement)."(READ MORE)

Weekly roundup: Sensex, Nifty flat; Nifty Midcap index at all-time high

Latest News - Another instance of consensus falling short on predicting actual outcome! Surprising the market participants, the Reserve Bank of India (RBI) unexpectedly kept the interest rates on hold with the benchmark indices settling the week barely higher even as foreign investors poured in over Rs 700 crore, while global markets found succour in US President Donald Trump’s announcement of unveiling soon some "phenomenal" tax reforms.

During the week ended February 10, the S&P BSE Sensex added 0.3% or 94 points to settle at 28240, while Nifty50 gained 0.6% or 52 points to close at 8793.

Midcap and Smallcap stocks outperformed. Nifty Midcap 100 index hit its all-time high of 16227, up 1.2% for the week, while the BSE Midcap index rose 1.3%. The BSE Smallcap index surged 1.4%, ending above its nine-year high.

“Contrary to the expectation of a 25bps rate cut, RBI held the rate steady. Cautiousness crept-in due to uncertainty over Fed rate hike, US policies and rising crude price which could impact inflation and (Read More)

RBI Governor Urjit Patel nudges banks to reduce lending rates

Latest News - Reserve Bank of India (RBI) Governor Urjit Patel on Saturday exhorted banks to reduce their lending rates to push credit demand in laggard segments, saying banks have benefited from influx of low-cost deposits and its previous repo rate cuts.

"One the amount of reduction in the repo rate that we have undertaken combined with the fact that banks have benefited immensely from the influx of deposits which are CASA deposits, that has come into the system. And the weighted average lending rate reduction has been considerably less, given that we feel that there is some scope for further reduction in lending rates and if you see that for sectors like housing, personal etc the reduction has been much more than for other sectors by the same bank," he said.

He expressed hope that there could be a cut in lending rates in some sectors where reduction has been relatively lower so far.

Earlier this week, RBI retained the repo rate, at which it lends to the (Read More)

Sensex fall over 100 points, Nifty below 8,750; Tata Steel falls 2%

Latest News - Benchmark indices opened on higher note with Nifty reclaiming its 8,800 mark but later pared gaind to trade in red as Asian markets stayed cautious following growing political risks in Europe and mixed overnight trade on Wall Street.

Street also watched out for some major companies to declare their Q3 earnings during the day. A total of 268 firms are supposed to report their third quarter results during the day including SAIL, BPCL, Power Grid, Lupin, Cairn India and Aurobindo Pharma.

Also, RBI, yesterday held repo rates at 6.25% for the second time in a row, changing its stance to "neutral" from "accommodative".

At 11:33 am, the S&P BSE Sensex was trading at 28,169, down 120 points, while the broader Nifty50 was ruling at (Read More)

RBI should move towards a lower rate regime: Mayuresh Joshi

Latest News - As transmission of the 175 bps rate cuts done by the RBIRBI so far, is beginning to pick up steam, key data-points are expected to be on RBI's side, says Mayuresh Joshi, Fund Manager, Angel Broking in an interview with Pranati Deva. He also adds that benchmark indices can witness a growth of around 12% in the next 15-18 months. Edited excerpts

Do you believe this budget has created enough space for the RBI to move into a low interest rate regime domain?

The government’s borrowing program seems be suggest that the RBI should have ample room to move on the liquidity front. With Inflation - especially core CPI inflation - expected to remain in the (Read More)

Demonetisation was a 'hoax', it won't kill black money: Chidambaram

Latest News - Dubbing the government's claim that demonetisation would weed out black money and corruption as "hoax", former union finance minister P Chidambaram has said that such issues are likely to persist since the November 8 decision was not "notebandi", rather it was a "notebadli."

"Demonetisation will not kill black money and corruption. Earlier, they asked and took bribes in old notes. Now they will take in new notes. The change of notes will not make any difference to these things. It is a complete hoax to say that demonetisation will kill corruption," Chidambaram said while delivering a lecture on demonetisation at Srimanta Sankardev Research Centre in Guwahati.

Throwing a challenge to Prime Minister Narendra Modi, the Congress leader said, "Let me throw a simple challenge to the government, please guarantee to me that next time I go to a Tehsildar he will not ask bribe from me. Let the Prime Minister give the guarantee to (Read More)

Financial sector reforms in FY17: Road map in the works for state-run banks

Latest News - As the finance minister gears up to present the Union Budget for the new financial year, Business Standard scans the 2016-17 Budget speech for a status check on key announcements made by Finance Minister Arun Jaitley last year regarding financial sector reforms and assesses how much has been achieved.

Passage of the Insolvency and Bankruptcy law

Status: In May last year, Parliament passed the Insolvency and Bankruptcy law code 2016. 

Code on Resolution of Financial Firms to be introduced as a Bill in the Parliament during 2016-17

Status: A draft Bill has been finalised by the finance ministry and put in the public domain for comments. The government is in the process of (Read More)

Good news! RBI may lift cash withdrawal limit by Feb-end

Latest News - With the cash crunch situation easing, the Reserve Bank might do away with the weekly withdrawal limits from banks as well as ATMs by the end of next month, bankers said.

The RBI had recently raised the ATM withdrawal limit to Rs 10,000 a day but maintained the weekly cap at Rs 24,000 for saving account and Rs 1 lakh for current account holders.

"I think the restrictions on withdrawal by RBI should be completely lifted by February-end or by first half of March as cash situation is easing gradually," Bank of Maharashtra executive director R K Gupta told PTI.

It is entirely RBI's decision and the (Read More)

Job alert: RBI hiring cyber security experts, applications close on Feb 7

Latest News - The Reserve Bank of India (RBI) is strengthening its information technology (IT) and cyber security cell. It is in the process of hiring specialists for the four divisions of its new unit- cyber security, systems audit, research & innovation, project management and administration.

On Wednesday, it offered the jobs through an advertisement on its website. Reserve Bank Information Technology Pvt Ltd (ReBIT) was set up in May last year as a separate subsidiary of the central bank. 

This is the first time a mass hiring drive is being initiated. The final date for applying is February 7.

Headed by Nandkumar Sarvade- a retired officer of the Indian Police Service with expertise on(Read More)