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Just a few months after relaxing the <keyword id="446542" type="UNKNOWN" weightage="100" keywordseo="gold-import">gold import</keyword> rules, the government is now planning to re-impose the curbs as the country's fascination for gold has led to a surge in the import of gold. 
 The revenue department of the <keyword id="47209" type="ORGANIZATION" weightage="80" keywordseo="Finance-Ministry">Finance Ministry</keyword> has asked the <keyword id="144110" type="ORGANIZATION" weightage="100" keywordseo="Department-of-Economic-Affairs">Department of Economic Affairs</keyword> (DEA) and the <keyword id="6354335" type="CITY" weightage="80" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) to reconsider the May 21 relaxation in the import rules. 
 
The RBI had relaxed the 80:20 rule, as it is called, in May at the behest of the Finance Ministry. Under this rule, nominated agencies were allowed to import gold provided they agreed to export 20% of the import. 
 
In September, the trade deficit increased to an 18-month high of $14 billion following a 450% increase in gold imports as importers were in a hurry to take advantage of the relaxation. "Gold imports have risen since the norms were relaxed...There is a concern. We have written to the DEA and the RBI," said a finance ministry official." 
 
Experts welcomed the move. "Given the country's dependence on imported commodities and fluctuation in currency, government will take all steps to address any factor that seeks to threaten macroeconomic stability of the country," said DK Pant, chief economist, India Ratings.

Government Mulls Re-imposing Gold Import Curbs To Control Trade Deficit

The <keyword id="6354335" type="CITY" weightage="100" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> has relaxed the ceiling of Rs one lakh on loans for non-agricultural purposes against pledged gold and has left it to the banks concerned to decide on it. 
 "Banks, as per their board-approved policy, may decide upon the ceiling with regard to the quantum of loans that may be granted against the pledge of gold jewellery and ornaments for non-agricultural end uses," the <keyword id="30067" type="ORGANIZATION" weightage="100" keywordseo="RBI">RBI</keyword> said in a circular. 
It retained the loan-to-value ratio at 75% of the value of gold and the tenor of the loan to one year. 
 
The RBI had limited lending against pledged gold to Rs one lakh in December 2013 and after a month limited the loan-to-value ratio at 75%. It clarified that interest will be charged to the account at monthly rates and may be recognised on accrual basis, provided the account is classified as 'standard.' 
 
The step is likely to help commercial banks increase their retail secured lending portfolio. Many large commercial banks, including leading public sector lenders, had actively used this channel, popularised by a few south-based non-banking finance companies.

RBI Relaxes Cap On Loans Against Pledged Gold

New Delhi, Apr 7 () The Reserve Bank on Tuesday relaxed norms for state governments to avail overdraft facilities for a longer period until September 30 as they are facing cashflow mismatches amid coronavirus outbreak leading to countrywide lockdown. In a circular, the central bank said it has permitted "greater space" to state governments/ Union Territories for availing overdraft facilities. In order to provide greater flexibility to the state governments to tide over their cashflow mismatches, the RBI has increased the number of days for which a state can be in overdraft. The number of days for which a State/ UT can be in overdraft continuously has been increased to 21 working days from the current stipulation of 14 working days. Similarly, the number of days for which a State/ UT can be in overdraft in a quarter has been increased to 50 working days from the current 36 working days. All other stipulations remain unchanged. The new arrangement will come into force with immediate effect and will remain valid till September 30, 2020, the circular added. With an aim to check the spread of coronavirus both the central as well as the state governments have taken a slew of measures, including enforcing social distancing among the public. A nationwide lockdown has been implemented till April 14 which has adversely impacted economic activities and governments have started diverting their resources to deal with the pandemic. NKD SHW MRMR

RBI relaxes overdraft facility norms for states, UTs

Mumbai, May 22 () In a bid to provide more resources to states, the Reserve Bank of India (RBI) on Friday eased the rules governing withdrawal from the Consolidated Sinking Fund resulting in release of additional Rs 13,300 crore to them. State governments maintain a Consolidated Sinking Fund (CSF) with RBI as a buffer for repayment of their liabilities. "In the light of the COVID-19 pandemic and the consequent stress on state government finances, the RBI has reviewed the scheme and has decided to relax the rules governing withdrawal from CSF, while at the same time ensuring that depletion of the Fund balance is done prudently" RBI Governor Shaktikanta Das said. This will enable states to meet a larger proportion of their redemption of market borrowings due in the current financial year from CSF and these relaxations to states will release an additional amount of about Rs 13,300 crore, he said. "Together with the normally permissible withdrawal, this measure will enable states to meet about 45 per cent of their redemptions due in 2020-21 through withdrawal from CSF. This change in withdrawal norms will come into force with immediate effect and will remain valid till March 31, 2021," he said. In response to COVID-19, the Governor said, the requirement of fiscal resources has increased with likely implications for market conditions going forward. "The RBI shall remain watchful and support the smooth completion of the borrowing programme of the Centre and states in the least disruptive manner," he noted. Last month, the RBI increased Ways and Means Advance (WMA) limit of states by 60 per cent. This was estimated to create a space for Rs 12,000 crore for state governments looking to raise money. "It has now been decided to increase the WMA limit of states by 60 per cent over and above the level as on March 31, 2020 to provide greater comfort to the states for undertaking COVID-19 containment and mitigation efforts, and to plan their market borrowing programmes better," RBI had said. The central bank had also increased the number of days states can be in continuous overdraft to 21 days from 14, and the number of days states can be in overdraft in a quarter was raised from 32 to 50 days. DP ANU ANU

RBI relaxes rules for withdrawal from CSF; States may get extra Rs 13,300 cr

In a new step, the central banking institution of India, <keyword id="6354335" type="CITY" weightage="100" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (<keyword id="30067" type="ORGANIZATION" weightage="100" keywordseo="RBI">RBI</keyword>), will be relaxing its regulations that would enable banks to adhere to higher provisioning in the coming quarters. This move will also help them shore up capital and win confidence of existing and potential investors. 
 
These regulations include the Basel norms that are more strictly followed here, and also allowing banks to revalue the real estate that they own. 
 These comments by <keyword id="64190" type="POSITION" weightage="100" keywordseo="RBI-Governor">RBI governor</keyword> Raghuram Rajan have come at a time when several government-owned banks are expected to either show losses or report lower earnings in the third and fourth quarters of this fiscal year. These banks are directed by RBI to make proactive provisions. 
 
As per the results that are already out, ICICI Bank has showed a marginal growth in profit, but its provisions for bad loans has tripled. Syndicate Bank, on the other hand, has reported a loss of Rs 120 crore in the third quarter on higher provisions. 
 
"On a number of dimensions, we have been stricter than Basel norms... We are looking if there is a possibility that while still remaining conservative, we can allow banks a little more room to use these. For example, you may have real estate assets that we allow only as a fraction of their value to count as capital," the governor said. 
 
As opposed to other countries, most branches, guest houses and residential apartments provided to employees are owned by public sector banks of India. Most of were acquired in the 1950s and 60s, and are still valued at nominal rates in the books of these banks. 
 
However, RBI has not yet stated how much of the revaluation can be included as capital for calculation of Basel III. 
 
<a href="http://i.huffpost.com/gen/2393270/images/o-RESERVE-BANK-OF-INDIA-facebook.jpg">Image source</a>

RBI relaxes regulations on bad loans for banks to attract investors

New Delhi, Apr 17 () The Reserve Bank needs to further relax the income recognition and asset classification (IRAC) norms to protect the economy and the financial sector currently facing the heat of the coronavirus outbreak, said an SBI report.The deadly coronavirus or COVID-19 has infected more than 20 lakh persons around the globe and so far taken lives of over 1.47 lakh people. The decision of various countries to opt for lockdown to prevent the spread of deadly virus has severely impacted the economy.Amid such a situation, an IRAC will take a heavy toll not only on the economy but also on requirement of core capital by the banking system, said the SBI Ecowrap.Although the decision of the RBI to exclude the accounts availing moratorium from the 90-day NPA norm will provide a breather to banks as well as customers, given the working capital challenges it is advisable for the RBI now to relook at the 90-day norm, the report said.Observing that once an account is classified as NPA, the borrower won't be able to raise funds from any other lender, the report said. In the current circumstances the only way to save the economy and the financial system seems to be a relaxation of the IRAC norms i.e. extending the 90-day schedule to 180 days.This relaxation, it added, should be given along with a well laid out calendar of returning to the current norm of 90 days in the next two years by which time, hopefully, the current pandemic crisis would have subsided completely.Commenting on the Reserve Bank's decision to reduced the reverse repo rate by 25 bps to 3.75 per cent while keeping the repo rate unchanged, the SBI Ecowrap said, the move has widened the LAF corridor to 90 bps."The widening of the LAF corridor and a surplus liquidity regime effectively implies reverse repo rate could be the effective policy rate," the report said.Meanwhile, Avinash Bagdi, Head of Finance, Covestro India, said "the bold" steps taken by the RBI to ensure smooth functioning of banks and financial institutions will help the country to prevent the economic slowdown curve from steepening."The announcement of excluding moratorium period from 90-day NPA period will prove to be a relaxation of asset classification norms. In view of tightening the financial conditions, the decision to provide special refinance facilities of Rs 50,000 crore to NHB, SIDBI and NABARD is commendable," he added.While thanking RBI for announcing slew of measures including liquidity injection of Rs 50,000 crore to tackle Covid-19 crisis, the Apparel Export Promotion Council (AEPC) also requested the central bank to protect the exporters from penalty on forward covers due to exchange rate fluctuations."It is requested that the charges for exchange rate fluctuations and cancellations are waived for the period for which export orders have been cancelled due to COVID-19," AEPC Chairman A Sakthivel said in a letter to the RBI Governor.Earlier in the day, the Reserve Bank of India on cut the reverse repo rate and announced a slew of measures including re-finance window of Rs 50,000 crore and targetted long term repo auction of similar amount to deal with the impact of the Covid-19 pandemic.Governor Shaktikanta Das also assured that RBI will use all instruments at its disposal to deal with the challenges posed by the outbreak of the novel coronavirus, depending on evolving situations. NKD CS MKJ

RBI needs to further relax IRAC norms to protect financial system

The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>) on Wednesday announced a series of measures to boost foreign exchange inflows. The central bank said that it has taken the steps in order to further diversify and expand the sources of <keyword id="6358355" type="General" weightage="20" keywordseo="forex" source="Orion">forex</keyword> funding so as to mitigate volatility and dampen global spillovers. India's foreign exchange reserves stood at $593.3 billion as on June 24, 2022, supplemented by a substantial stock of net forward assets, it said. The RBI has exempted incremental Foreign Currency Non-Resident Bank (FCNR-B) and Non-Resident (External) Rupee (NRE) deposit <keyword id="127684" type="General" weightage="20" keywordseo="Liabilities" source="Orion">liabilities</keyword> for computation of Net Demand and Time Liabilities (NDTL) for maintenance of cash reserve ratio (<keyword id="35038" type="General" weightage="20" keywordseo="crr" source="Orion">CRR</keyword>) and statutory liquidity ratio (<keyword id="46197" type="General" weightage="20" keywordseo="SLR" source="Orion">SLR</keyword>) by the banks. This will be effective from the reporting fortnight beginning July 30, 2022 with reference base date of July 1. "This relaxation will be available for deposits mobilised up to November 4, 2022. Transfers from Non-Resident (Ordinary) (NRO) accounts to NRE accounts shall not qualify for the relaxation," the RBI said. It also decided to temporarily permit banks to raise fresh FCNR(B) and NRE deposits without reference to the extant regulations on interest rates, with effect from July 7, 2022. This relaxation will be available for the period up to October 31, 2022. The RBI also relaxed rules relating to foreign portfolio investment in debt by allowing all new issuances of government securities (G-Secs) of 7-year and 14-year tenors, including the current issuances of 7.10 per cent GS 2029 and 7.54 per cent GS 2036, under the Fully Accessible Route (FAR). It also decided that <keyword id="6362476" type="General" weightage="20" keywordseo="investments" source="Orion">investments</keyword> by FPIs in government securities and corporate debt made till October 31, 2022 will be exempted from the macroprudential short term limit - not more than 30 per cent of investments each in government securities and corporate bonds can have a residual maturity of less than one year. These investments will not be reckoned for the short term limit till maturity or sale of such investments. As part of the macroprudential framework under the medium term framework (MTF), foreign portfolio investors (FPI) can invest only in corporate debt instruments with a residual maturity of at least one year. The central bank has decided that FPIs will be provided with a limited window till October 31, 2022 during which they can invest in corporate money market instruments viz., commercial paper and non-convertible debentures with an original maturity of up to one year. The FPIs can continue to stay invested in these instruments till their maturity/sale. These investments will not be included for reckoning the short term limit for investments in corporate securities. According to the RBI, Authorised Dealer Category-1 (AD Cat-I) banks can utilise overseas foreign currency borrowings (OFCB) for lending in foreign currency to entities for a wider set of end-use purposes, subject to the negative list set out for external commercial borrowings (ECBs). The measure is expected to facilitate foreign currency borrowing by a larger set of borrowers who may find it difficult to directly access overseas markets. This dispensation for raising such borrowings is available till October 31, 2022. As regards the external commercial borrowings (ECB) the RBI has temporarily increased the limit under the automatic route from $750 million or its equivalent per financial year to $1.5 billion. The all-in cost ceiling under the ECB framework is also being raised by 100 basis points, subject to the borrower being of investment grade rating. The above dispensations are available up to December 31, 2022. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/environment/news/monsoon-rain-wreaks-havoc-in-himachal-and-karnataka-orange-alert-in-gujarat/articleshow/92704563.cms">Monsoon rain wreaks havoc in Himachal and Karnataka, orange alert in Gujarat</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/macbook-air-with-m2-chip-will-go-on-sale-from-july-15/articleshow/92704253.cms">Apple’s MacBook Air with M2 chip will go on sale from July 15, pre-orders starting July 8</a>

RBI tries to boost forex reserves by easing NRI deposit norms

<ul><li>The central government has asked the <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> to dilute its Prompt Corrective Action (<keyword id="6383105" type="UNKNOWN" weightage="20" keywordseo="pca">PCA</keyword>) framework to increase the flow of credit to small-and-medium-sized enterprises. </li><li>The RBI is reportedly mulling a plan to allow some state-run banks to leave the PCA programme ahead of time if they demonstrate a turnaround in their <keyword id="463915" type="PERSON" weightage="20" keywordseo="non-performing-asset">non-performing asset</keyword> ratios and profitability. </li><li>The <keyword id="6358156" type="ORGANIZATION" weightage="20" keywordseo="central-bank">central bank</keyword> is also expected to relax certain requirements imposed on all banks with regards to secured and unsecured loans to SMEs.</li></ul>The current <a href="https://www.businessinsider.in/the-spat-between-indias-central-bank-and-the-government-gets-more-heated-as-the-finance-minister-blames-it-for-not-doing-enough-to-prevent-the-countrys-bad-loan-problem/articleshow/66442846.cms">clash</a> between India’s central bank and the BJP-ruled government has roiled markets and stoked fears among investors. Thankfully, the two parties may reach a compromise as the board of the Reserve Bank of India (RBI) prepares to sit down on 19 November. In the wake of the recent IL&amp;FS crisis and the drying up of funds at the nation’s non-banking financial companies, the central government has asked the RBI <a href="https://www.businessinsider.in/indias-government-wants-to-dilute-an-important-corrective-programme-for-the-nations-struggling-lenders-and-the-central-bank-is-having-none-of-it/articleshow/66411552.cms">to dilute its Prompt Corrective Action (PCA) framework</a> so as to increase the flow of credit to small-and-medium-sized enterprises (SME). This framework is aimed at putting certain lending and operational restrictions on banks with high rates of non-performing assets. After initially refusing to loosen restrictions under the framework, it appears that the RBI might be open to meeting the central government halfway in this regard. BI is reportedly mulling a plan to allow some state-run banks to leave the PCA programme ahead of time in the event that they demonstrate a turnaround in their non-performing asset ratios and profitability, sources told <a href="https://indianexpress.com/article/india/restrictions-on-banks-rbi-and-govt-work-to-narrow-their-gap-5445145/">the Indian Express</a>. As per the RBI’s current norms, struggling banks are only taken off the watchlist after reporting a net profit for two consecutive years. The central government has not presented its proposal as a dilution, however. It has maintained that is asking the RBI to bring the PCA programme in line with the intervention programmes of global central banks and the international <keyword id="142572" type="PERSON" weightage="20" keywordseo="Basel-III">Basel III</keyword> risk framework. It has also argued that the PCA framework needs to be revised because a restriction on lending, a core operation, prevents a bank from increasing its profits. Around 11 of India’s 21 state-run banks are on the PCA watchlist, which places limits on the extension of loans, branch expansion and issue of dividends. As a result of restrictions on these banks, SMEs have suffered from <a href="https://www.businessinsider.in/indias-small-businesses-are-suffering-from-a-shortage-of-credit-options/articleshow/63683278.cms">a slowdown in financing.</a> In addition, the central government is also pushing for the RBI to reduce the capital-to-risk-weighted assets ratio, a key indicator of financial stability, that it imposes on the nation’s banks from 9% to the 8% prescribed by the Basel III framework. The move could give state-run banks an additional ₹550 billion of funds for lending purposes, Anil Gupta, the head of credit ratings agency ICRA, <a href="https://www.bloombergquint.com/business/government-pushing-to-relax-capital-requirement-norms-for-banks#gs.IM5s1ns">told BloombergQuint</a>. Finally, the RBI is also expected to relax certain requirements imposed on all banks with regards to secured and unsecured loans to SMEs. In line with international standards, India’s central bank could lower the risk weightage, which influences the amount of capital set aside, for SME loans to 75% from a current level of 150%. SME loans are considered more risky than loans to larger companies and hence require higher risk provisioning. While the RBI could accede the government’s requests keeping in view the dire <keyword id="6355375" type="DEFINITION" weightage="20" keywordseo="Liquidity">liquidity</keyword> situation in the short term, it will be wary of precipitating a further build-up in bad loans. The current risk requirements are a preventive measure that were implemented in response to the burgeoning bad loan problem in India’s banking sector. It’s a classic case of the conflict between a short term boost to the economy and long term stability. Given that we’re headed for general elections, it isn’t difficult to ascertain which one will win out. SEE ALSO: <a href="https://www.businessinsider.in/the-spat-between-indias-central-bank-and-the-government-gets-more-heated-as-the-finance-minister-blames-it-for-not-doing-enough-to-prevent-the-countrys-bad-loan-problem/articleshow/66442846.cms">The spat between India’s central bank and the government gets more heated as the finance minister blames the RBI for not doing enough to prevent the country’s bad loan problem</a> <a href="https://www.businessinsider.in/indias-government-wants-to-dilute-an-important-corrective-programme-for-the-nations-struggling-lenders-and-the-central-bank-is-having-none-of-it/articleshow/66411552.cms">India’s government wants to dilute an important corrective programme for the nation’s struggling lenders — and the central bank is having none of it</a> <a href="https://www.businessinsider.in/the-reserve-bank-of-india-is-trying-to-prevent-a-liquidity-crisis-at-banks-by-relaxing-an-important-risk-requirement/articleshow/65978953.cms">The Reserve Bank of India is trying to prevent a liquidity crisis at banks by relaxing an important risk requirement</a>

An end to the spat between the RBI and the government could be in sight as the board of the central bank prepares to meet next week

The <keyword id="50847" type="General" weightage="20" keywordseo="Reserve-Bank" source="Orion">Reserve Bank</keyword> of India (<keyword id="30067" type="General" weightage="20" keywordseo="RBI" source="Orion">RBI</keyword>) has extended the last date for periodic KYC update till March 31, amid Omicron uncertainties and has advised banks and other regulated entities not to take restrictive action against customers till the fiscal end. Earlier in May, the RBI had extended the last date for updation of KYC by regulated entities till December-end because of the second wave of the coronavirus pandemic. "In view of the prevalent uncertainty due to new variant of COVID-19, the relaxation provided in the ... circular (relating to Periodic Updation of KYC - Restrictions on Account Operations for Non-compliance issued in May) is hereby extended till March 31, 2022," the RBI said on Thursday. In May, the RBI had advised the regulated entities not to impose punitive restriction on operations of accounts of customers for their failure to comply with the KYC updation norms till December-end. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/list-of-nse-and-bse-stock-market-holidays-in-2022/articleshow/88585352.cms">NSE and BSE in 2022 — List of stock market holidays in the new year</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/rbl-banks-stock-slumped-nearly-10-even-as-rbi-approves-interim-head-for-the-bank/articleshow/88584214.cms">RBL Bank slides back to its lowest in a year despite a new chief and RBI's assurances</a>

RBI extends deadline for periodic KYC update by three months till March 31, 2022

In view of cash crunch being faced by borrowers, the <keyword id="30067" type="ORGANIZATION" weightage="100" keywordseo="RBI">RBI</keyword> today provided additional 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore. 
 
This is applicable to loans payable between November 1 and December 31, the RBI said in a notification. 
 
"... it has been decided to provide an additional 60 days beyond what is applicable for the concerned regulated entity for recognition of a loan account as substandard," it said. 
 
The above relaxation is available to entities running working capital accounts with any bank with the sanctioned limit of Rs 1 crore or less. 
 
Term loans, whether business or personal, secured or otherwise, the original sanctioned amount of Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI) would also get benefit of this relaxation. 
 This will also include <keyword id="6395113" type="UNKNOWN" weightage="100" keywordseo="housing-loans">housing loans</keyword> and agriculture loans, it said. 
 
he apex bank further said that all regulated financial institutions should note that this is a short-term deferment of classification as substandard due to delay in payment of dues arising during the period specified above and does not result in restructuring of the loans. 
 
"Dues payable before November 1 and after December 31, 2016, will be covered by the extant instruction for the respective regulated entity with regard to recognition of NPAs," it said. 
 he <keyword id="3315394" type="UNKNOWN" weightage="100" keywordseo="demonetisation">demonetisation</keyword> of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 per week, limiting their options to repay their dues. 
 
DHFL Chief Executive Officer Harshil Mehta said, "It is a welcome move by the RBI as many customers have expressed their inability to repay dues in time because because of ongoing demonetisation drive." 
 
For many of them, EMIs are due in the first half of the month, so the relaxation will help keep account standard even when the payment is not received, he said. 
 
Neither borrowers' credit score is impacted negatively due to non-payment nor financial institutions have to make additional provisions for sub-standard account, he added.

Demonetisation: RBI gives borrowers 60 more days to repay car and house loans worth upto Rs 1 crore

Mumbai, Jun 27 () Amid the ongoing economic woes created by the coronavirus pandemic, the Reserve Bank has decided to extend the enhanced borrowing facility provided to the banks to meet their liquidity shortages till September 30. The RBI, as a temporary measure, had increased the borrowing limit of scheduled banks under the marginal standing facility (MSF) scheme from 2 per cent to 3 per cent of their Net Demand and Time Liabilities (NDTL) with effect from March 27, 2020. Under the MSF, banks can borrow overnight funds at their discretion by dipping into the Statutory Liquidity Ratio (SLR). This relaxation, which was granted till June 30, 2020, has now been extended till September 30. "On a review, it has now been decided to extend this enhanced limit till September 30, 2020," the Reserve Bank of India (RBI) said in a circular. Banks may continue to access overnight funds under the MSF against their excess SLR holding, it added. The marginal standing facility rate currently stands at 4.25 per cent. The RBI has also extended the relaxation on the minimum daily maintenance of the Cash Reserve Ratio (CRR) at 80 per cent for a further period of three months till September 25, 2020. On March 27, the minimum daily maintenance of the CRR was reduced from 90 per cent of the prescribed CRR to 80 per cent till June 26, 2020. This was done in view of the continuing of hardships faced by banks in terms of social distancing of staff and consequent strains on reporting requirements. NKD ABM ABM

RBI extends enhanced borrowing limit under MSF till Sep 30

<ul><li>On 27 September, India’s central bank eased a liquidity coverage requirement imposed on banks and said it would provide all necessary funding support to the banking sector. </li><li>The <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> has raised the facility to avail funds for liquidity coverage ratio (LCR), which measures the amount of liquid assets held by banks against short-term <keyword id="44647" type="ORGANIZATION" weightage="20" keywordseo="debt">debt</keyword>, from 11% to 13%. </li><li>This will allow banks to increase the weightage given to government securities when calculating their <keyword id="6493444" type="DEFINITION" weightage="20" keywordseo="Statutory-Liquidity-Ratio">statutory liquidity ratio</keyword> and free up deposits for their short-term funding needs. </li></ul>Following <a href="https://www.businessinsider.in/indias-main-financial-regulators-and-its-largest-bank-are-trying-to-calm-investors-amid-fears-of-a-liquidity-crisis/articleshow/65929921.cms">a promise </a>to investors that it would step in to prevent a liquidity crisis amongst Indian lenders as well as a subsequent <a href="https://in.reuters.com/article/india-shadowlenders/finance-ministry-urges-rbi-to-take-steps-to-ease-liquidity-tackle-credit-crunch-idINKCN1M609Y">push</a> from India’s finance ministry, the Reserve Bank of India (RBI) looks like its making good on its word, albeit at the cost of its mandate to manage risk. On 27 September, India’s central bank eased a requirement imposed on banks related to liquidity coverage and said it would provide all necessary funding support to the banking sector. The RBI raised the facility to avail funds for liquidity coverage ratio (LCR), which measures the amount of liquid assets held by banks against short-term debt, from 11% to 13%. This will allow banks to increase the weightage given to government securities, which is a liquid asset, when calculating their statutory liquidity ratio, which measures the amount of deposits invested in liquid assets. Hence, this will free up banks’ deposits so they can meet their funding needs in the short-term. And their funding needs are dire. Earlier this week, the liquidity deficit was estimated to be ₹1.4 trillion. However, In doing so, the RBI is effectively trading short-term benefits for longer-term pain. The current liquidity crisis stems from the aversion of institutional investors to buy the debt instruments of non-banking financial companies like IL&amp;FS, which is on the brink of default. By relaxing liquidity coverage requirements for banks, the RBI is allowing banks greater freedom in how they use their deposits and also letting them take on riskier short-term debt so a lot more money will enter the system, which will have an inflationary effect. In essence, domestic lenders are being allowed to use a greater percentage of their deposit-holders’ money to pay down their short-term debt obligations and extend credit to borrowers. In the event of a market downturn or a loss of faith in these banks, they could face a run on their deposits, which will be fatal given their lower risk buffer. The finance ministry has insisted that the RBI also relax reserve requirements for banks, under which banks set aside a certain portion of funds with the central bank. Earlier this week, the RBI took a page out of the European Central Bank’s playbook on <a href="https://www.ecb.europa.eu/explainers/show-me/html/app_infographic.en.html">“quantitative easing”</a> and said it would buy around <a href="https://www.thehindubusinessline.com/money-and-banking/rbi-to-conduct-omo-to-infuse-liquidity/article25029705.ece">₹100 billion</a> worth of <keyword id="6370709" type="UNKNOWN" weightage="20" keywordseo="Government-bonds">government bonds</keyword> from the open market to inject funds into the economy.

The Reserve Bank of India is trying to prevent a liquidity crisis at banks by relaxing an important risk requirement

For the first time, the <keyword id="6354335" type="CITY" weightage="100" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (<keyword id="30067" type="ORGANIZATION" weightage="100" keywordseo="RBI">RBI</keyword>), country’s apex bank, is looking for a deputy governor from the private sector. The RBI has issued an advertisement for the post, which is open for all. Present deputy governor <keyword id="816322" type="UNKNOWN" weightage="100" keywordseo="ss-mundra">SS Mundra</keyword>'s term ends in July this year, after which the post would be vacant. The advertisement has been published in newspapers as well as on the RBI website. To apply, a candidate needs to be less than 60 years of age (can be relaxed in certain cases), with over 15 years of experience in banking and financial market operations. (S)he must also have held the positions of whole-time director or board member. Fixed for three years, the role would offer a pay scale of Rs 2,25,000 per month. Traditionally, RBI has been appointing four deputy governors; two from within the central bank, one economist generally from the government, and the other from the public banking sector. The ad however doesn’t specify whether the candidate has to be from public sector or can be from private sector as well.

You Searched For "RBI relaxation" and got 13 results

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BI India Bureau

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RBI relaxes overdraft facility norms for states, UTs

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RBI relaxes rules for withdrawal from CSF; States may get extra Rs 13,300 cr

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RBI relaxes regulations on bad loans for banks to attract investors

BI India Bureau

RBI needs to further relax IRAC norms to protect financial system

PTI

RBI tries to boost forex reserves by easing NRI deposit norms

IANS

An end to the spat between the RBI and the government could be in sight as the board of the central bank prepares to meet next week

Dilsher Dhillon

RBI extends deadline for periodic KYC update by three months till March 31, 2022

PTI

Demonetisation: RBI gives borrowers 60 more days to repay car and house loans worth upto Rs 1 crore

BI India Bureau

RBI extends enhanced borrowing limit under MSF till Sep 30

PTI

The Reserve Bank of India is trying to prevent a liquidity crisis at banks by relaxing an important risk requirement

Dilsher Dhillon

This could be your chance to assist Urjit Patel

BI India Bureau

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