Monetary and Credit Information Review - આરબીઆઈ - Reserve Bank of India
Monetary and Credit Information Review
Volume XIV MONETARY AND CREDIT INFORMATION REVIEW CODs Second Bi-monthly Monetary Policy Statement, 2018-19 Resolution of the MPC On the basis of an assessment of the current and evolving macroeconomic situation at its meeting held on June 6, 2018, the Monetary Policy Committee (MPC) decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25 per cent. Consequently, the reverse repo rate under the LAF stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent. The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. Developmental and Regulatory Policy Measures Regulation and Supervision
Shri Mahesh Kumar Jain appointed as RBI Deputy Governor Shri Mahesh Kumar Jain took charge as the Deputy Governor of Reserve Bank of India on June 22, 2018. The Government of India, on June 4, 2018 appointed him as the Deputy Governor of Reserve Bank of India for a period of three years from the date of assumption of charge or until further orders, whichever is earlier. Shri Jain was the MD & CEO of IDBI Bank before being appointed as Deputy Governor. ![]() As Deputy Governor, Shri Jain will look after the Department of Banking Supervision, Department of Co-operative Banking Supervision, Department of Non-Banking Supervision, Central Security Cell, Department of Corporate Services including Document Management System, Rajbhasha Department, Consumer Education and Protection Department, Financial Inclusion and Development Department and Premises Department. Financial Markets
Debt Management
Payment and Settlement
Currency Management
Other Measures
Banking Regulation Encouraging Formalisation of MSME Sector The Reserve Bank on June 6, 2018 decided to temporarily allow banks and NBFCs to classify their aggregate exposure up to ₹250 million as on May 31, 2018, as per the 180 days past due criterion, to all Micro Small and Medium Enterprises (MSMEs), including those not registered under Goods and Services Tax (GST), as a ‘standard’ asset, subject to certain conditions.
(/en/web/rbi/-/notifications/encouraging-formalisation-of-msme-sector-11289) Spreading of MTM Losses and Creation of IFR In view of the continuing rise in the yields on government securities, as also the inadequacy of time to build Investment Fluctuation Reserve (IFR) for many banks, the Reserve Bank on June 15, 2018 granted banks the option to spread provisioning for their mark to market (MTM) losses on all investments held in available-for-sale (AFS) and held-for-trading (HFT) for the quarter ending June 30, 2018 as well. The provisioning required may be spread equally over up to four quarters, commencing with the quarter ending June 30, 2018. Banks that utilise the above option shall make suitable disclosures in their notes to accounts/ quarterly results providing details of (i) the provisions made for depreciation of the investment portfolio for the quarter ending June 2018 and (ii) the balance required to be made in the remaining quarters. Payment of Interest - Operational Guidelines The Reserve Bank decided that the rate of interest payable by banks to the depositors/claimants on the unclaimed interest bearing deposit amount transferred to the Depositor Education and Awareness Fund shall be 3.5 per cent simple interest per annum with effect from July 1, 2018. The settlement of all claims received by the banks on or after July 1, 2018 will be at this rate, until further notice. Basel III Framework on Liquidity Standards The Reserve Bank on June 15, 2018 permitted banks, to reckon government securities held by them up to another 2 per cent of their NDTL, under Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) within the mandatory SLR requirement, as Level 1 High Quality Liquid Assets (HQLAs) for the purpose of computing their LCR. Hence, the carve-out from SLR, under FALLCR will now be 11 per cent, taking the total carve out from SLR available to banks to 13 per cent of their NDTL. For the purpose of LCR, banks shall continue to value such government securities reckoned as HQLA at an amount not greater than their current market value (irrespective of the category under which the security is held, i.e., HTM, AFS or HFT). Banking Supervision Control Measures for ATMs In order to address the issues regarding ATMs operating on unsupported version of operating system and non-implementation of other security measures in a time-bound manner, the Reserve Bank on June 21, 2018, advised banks and white label ATM operators to initiate immediate action in this regard and implement certain control measures as per the prescribed timelines indicated. A copy of above mentioned RBI circular may be placed before the Board of Directors of respective banks at their ensuing meeting, along with the proposed action plan for implementation of these measures. A copy of the Board-approved compliance/action plan in respect of aforesaid control measures may be sent to the Reserve Bank latest by July 31, 2018. The progress made in implementation of these measures should be closely monitored to ensure meeting the prescribed timelines. As the implementation of the foregoing control measures would also require field visit(s) to ATMs, banks should plan and implement these measures in an optimal manner. It may be noted that any deficiency in timely and effective compliance may invite appropriate supervisory enforcement action under applicable provisions of the Banking Regulation Act, 1949 and/or Payment and Settlement Systems Act, 2007. Financial Inclusion and Development Continuation of Interest Subvention Scheme The Reserve Bank in consultation with the Government of India (GoI) on June 7, 2018 has informed that they have initiated the process for continuation of the Interest Subvention Scheme (ISS) 2018-19. As advised by GoI, as an interim measure, the Interest Subvention Scheme will be implemented in 2018-19 till further instructions are received, on the terms and conditions approved for the Scheme for 2017-18. All banks are, therefore, advised to take note and implement the Interest Subvention Scheme for 2018-19 accordingly. Further, as advised by GoI, from 2018-19 the ISS is being put on Direct Benefit Transfer (DBT) mode on ‘In kind/services’ basis and not on ‘In cash’ basis and all loans processed in 2018-19 are required to be brought on ISS portal/DBT platform, once it is launched. Although the Plan/Non-plan categorisation of ISS has been dispensed with from the current financial year (2017-18), banks are required to capture category-wise data (General, Scheduled Caste (SC), Scheduled Tribes (ST), North Eastern Region (NER)-General, North Eastern Region (NER)-SC, North Eastern Region (NER)-ST) of beneficiaries under the Scheme for reporting of the same on ISS portal individual farmer wise to settle the claims arising from 2018-19 onwards. Till such time the DBT portal becomes functional, banks are requested to submit their claims, category-wise as indicated above. The Reserve Bank in consultation with the Government is working on the detailed modalities regarding categorisation of loans. Till such time the modalities are finalised, banks may obtain the category-wise data on self-declaration basis. There should, however, be no cap on the loans given under each category. Priority Sector Lending – Targets and Classification With a view to bring in convergence of the ‘Priority Sector Lending’ guidelines for housing loans with the Affordable Housing Scheme, and to give a fillip to low-cost housing for the economically weaker sections (EWS) and low income groups, the Reserve Bank on June 19, 2018 revised the housing loan limits for eligibility under priority sector lending to ₹35 lakh in metropolitan centres (with population of ten lakh and above), and ₹25 lakh in other centres, provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed ₹45 lakh and ₹30 lakh, respectively. Furthermore, the existing family income limit of ₹2 lakh per annum, prescribed for loans to housing projects exclusively for the purpose of construction of houses for EWS and low income groups (LIG), is revised to ₹3 lakh per annum for EWS and ₹6 lakh per annum for LIG, in alignment with the income criteria specified under the Pradhan Mantri Awas Yojana. Financial Markets Operation Margin Requirements under LAF and MSF reviewed The Reserve Bank on June 6, 2018 decided to assign margin requirement on the basis of residual maturity of the collateral, namely, treasury bills, central government dated securities (including oil bonds) and state development loans (SDLs). Further, it has also been decided that the margin requirement for rated SDLs shall be 1 per cent lower than that of unrated SDLs for the same maturity bucket. The revised margin requirements would come into force with effect from August 1, 2018. All other terms and conditions of the current LAF (Repo) and MSF schemes will remain unchanged. Financial Markets Regulation Interest Rate Options in India The Reserve Bank on June 14, 2018 permitted Interest Rate Swaptions in Rupees so as to enable better timing flexibility for the market participants seeking to hedge their interest rate risk. Foreign Exchange Management Monthly Reporting of ECBs The Reserve Bank on June 7, 2018 decided to capture the details of the hedges for External Commercial Borrowings (ECBs) through a simplified format of ECB 2 Return. Further, for reporting in respect of natural hedge, provisions should be followed. Revised monthly reporting format of ECB 2 Return is applicable from month-end June 2018. It is reiterated that any lapse at the time of reporting through this return and / or failure to adhere to the time line of its submission and/or any lapse at the time of reporting is a contravention of the provisions of Foreign Exchange Management Act, 1999. Harmonisation of Data and Definition under LRS In the context of remittances allowed under Liberalised Remittance Scheme (LRS) for maintenance of close relatives, the Reserve Bank on June 19, 2018 in consultation with Government, decided to align the definition of ‘relative’ with the definition given in Companies Act, 2013 instead of Companies Act, 1956. Under extant guidelines Permanent Account Number (PAN), which hitherto was not to be insisted upon while putting through permissible current account transactions of up to USD 25000, shall now be mandatory for making all remittances under LRS. Non-Banking Regulation Investment in Units of an InvIT by Sponsor CIC-NDSI In order to enable systemically important core investment companies (CIC-ND-SI) to act as a sponsor of Infrastructure Investment Trust (InvIT), the Reserve Bank on June 7, 2018 permitted CIC-ND-SIs to hold InvIT units only as sponsors. Exposure of such CICs towards InvITs shall be limited to their holdings as sponsors and shall not, at any point in time, exceed the minimum holding of units and tenor prescribed in this regard by Securities and Exchange Board of India (SEBI) (Infrastructure Investment Trusts) Regulations, 2014. The above holdings of InvIT units shall be reckoned as investments in equity shares in group companies, for the purpose of compliance with the norms. (/en/web/rbi/-/notifications/investment-in-the-units-of-an-infrastructure-investment-trust-invit-by-sponsor-cic-ndsi-11292) Government and Bank Accounts Customer Service provided by Agency Banks The Reserve Bank on June 21, 2018, advised all agency banks disbursing pension to provide considerate and sympathetic customer service to the pensioners, especially to those pensioners who are of old age. The Reserve Bank has been receiving complaints from various quarters that pensioners are not being treated with due consideration by bank officials, specifically the aged pensioners, when they come to the branches for pension related transactions. (/en/web/rbi/-/notifications/customer-service-provided-by-agency-banks-11310) RBI Kehta Hai ![]() Edited and published by Jose J. Kattoor for the Reserve Bank of India, Department of Communication, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001. MCIR can be accessed at /en/web/rbi/publications/articles?category=24928098 |