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<ul><li><keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> has said that 25% of the amount of I-CRR maintained by banks will be released on Saturday and another 25% on September 23. </li><li>Releasing money in tranches helps to smoothen out liquidity and avoid sudden gush of funds, says Madan Fadnavis of Bank of Baroda.</li><li></li></ul> The Reserve Bank on Friday decided to discontinue the <keyword id="18349664" type="General" weightage="50" keywordseo="incremental-cash-reserve-ratio" source="Orion">Incremental Cash Reserve Ratio</keyword> (I-CRR), which was put in place to absorb surplus liquidity following the withdrawal of Rs 2,000 currency notes, in a phased manner beginning Saturday. On August 10, the RBI mandated banks to maintain an incremental cash reserve ratio (I-CRR) of 10% on the increase in their net demand and time liabilities (<keyword id="312584" type="General" weightage="20" keywordseo="NDTL" source="Orion">NDTL</keyword>) between May 19, 2023 and July 28, 2023. The measure was intended to absorb the surplus liquidity generated by various factors, including the return of Rs 2,000 notes to the banking system. "On a review, it has been decided to discontinue the I-CRR in a phased manner," the central bank said in a statement. There is surplus liquidity in system of around Rs 75,000 cr of late, according to Madan Sabnavis, chief economist at Bank of Baroda. He adds, "Releasing money in tranches helps to smoothen out liquidity and avoid sudden gush of funds." Based on an assessment of current and evolving liquidity conditions, it has been decided that the amounts impounded under the I-CRR would be released in stages so that system liquidity is not subjected to sudden shocks and money markets function in an orderly manner, it added. The RBI said 25% of the amount of I-CRR maintained by banks will be released on Saturday and another 25% on September 23. The rest will be released on October 7. While announcing the I-CRR, RBI Governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> had indicated that the provision was a temporary measure for managing the liquidity overhang. The RBI had announced that the I-CRR would be reviewed on September 8, 2023, or earlier with a view to returning the impounded funds to the banking system ahead of the festival season. Following the withdrawal of the Rs 2,000 notes, the liquidity with the banks had surged significantly, the I-CRR was aimed to absorb the excess cash. As much as 93% of Rs 2000 currency notes that were in circulation on May 19 -- the day when the currency was withdrawn from circulation -- have been returned to banks. The advance tax payments are due next week which will put pressure on liquidity further. The total value of Rs 2000 banknotes received back from circulation is Rs 3.32 lakh crore up to August 31, 2023. Fadnavis adds, "The question is whether this will be adequate next week when there are tax outflow. This is because the amount coming in of around Rs 25-27,000 cr will cover the outflow through the V3R today and will not leave much surplus." (With text inputs from PTI)

RBI decides to withdraw incremental CRR in phased manner and release it by Oct 7

New Delhi, Indian-Canadian billionaire Prem Watsa-backed <keyword id="20847043" type="General" weightage="20" keywordseo="fairfax-india" source="keywords">Fairfax India</keyword> on Wednesday announced its commitment to provide up to USD 200 million (about Rs 1,650 crore) liquidity support to IIFL Finance after the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> barred the non-bank lender to disburse gold loans. The RBI's embargo has raised liquidity concerns among the company's investors and lenders, Fairfax India Holdings Corporation said in a statement. In response to these concerns, Fairfax India has agreed to extend up to USD 200 million of liquidity support on terms to be mutually agreed and subject to applicable laws, including regulatory approvals (if any), it added. "We have been long-term investors in the IIFL group of companies and have full trust and confidence in the company's strong management team led by Nirmal Jain and R Venkataraman. We are confident that Nirmal and Venkat will take corrective actions to meet and exceed RBI's compliance standards," said Fairfax India chairman <keyword id="20146567" type="General" weightage="20" keywordseo="prem-watsa" source="keywords">Prem Watsa</keyword>. Commenting on the development, IIFL Finance Managing Director Nirmal Jain said at this crucial juncture, Fairfax India's and Prem's generous offer to provide liquidity support is very timely and motivating. "We are committed to complying fully with RBI's directives and growing the business under the regulator's guidance on the strong foundation of compliance, risk management, and fair practices," Jain said. Earlier this week, the <keyword id="19922074" type="General" weightage="20" keywordseo="reserve-bank" source="keywords">Reserve Bank</keyword> barred <keyword id="20849308" type="General" weightage="20" keywordseo="iifl-finance-ltd" source="keywords">IIFL Finance Ltd</keyword> from disbursing gold loans, with immediate effect following multiple supervisory concerns, including serious deviations in assaying and certifying the purity of the yellow metal. IIFL Finance offers a range of loans and mortgages. The latest directions from the RBI pertain to only the gold loan business. The RBI in a statement had said certain material supervisory concerns were observed in the gold loan portfolio of the company. The concerns include serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans and at the time of auction upon default; breaches in loan-to-value ratio; significant disbursal and collection of the loan amount in cash far in excess of the statutory limit; non-adherence to the standard auction process; and lack of transparency in charges being levied to customer accounts.

Prem Watsa-backed Fairfax India commits up to $200 mn to IIFL Finance

Mumbai, The <keyword id="6355302" type="General" weightage="20" keywordseo="rupee" source="Orion">rupee</keyword> depreciated by 8 paise to 82.74 against the US dollar in early trade on Friday, tracking a firm dollar against major rivals overseas. Analysts said, weak sentiment in the domestic equity market and elevated level of crude prices nearing USD 87 per barrel also weighed on the domestic unit. On Thursday, the <keyword id="6354335" type="General" weightage="80" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> in its bi-monthly monetary policy review decided to keep key interest rate unchanged, but hinted at tighter policy if food prices drive inflation higher. The American currency regained after US consumer price inflation showed moderation in July, raising hopes that the <keyword id="6356435" type="General" weightage="80" keywordseo="us-federal-reserve" source="Orion">US Federal Reserve</keyword> would pause rate hike. At the interbank foreign exchange market, the local unit opened at 82.75 against the US dollar and moved in a narrow range of 82.73 to 82.76. It later traded at 82.74 against the greenback, registering a fall of 8 paise from its previous close. On Thursday, the rupee rebounded 19 paise to close at 82.66 against the US dollar after the RBI asked banks to set aside a larger part of incremental deposits under the cash reserve ratio (CRR) as part of measures to take out excess liquidity from the banking system. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.05 per cent to 102.57. Global oil benchmark Brent crude was trading 0.02 per cent lower at USD 86.38 per barrel. In the domestic equity market, the 30-share BSE Sensex was trading 229.33 points or 0.35 per cent lower at 65,458.85. The broader NSE Nifty declined 76.05 points or 0.39 per cent to 19,467.05. Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday as they purchased shares worth Rs 331.22 crore, according to exchange data.

Rupee falls 8 paise to 82.74 against US dollar

<ul class="summary-list"><li>Warren Buffett's letter to shareholders on Saturday included plenty of tasty tidbits.</li><li>It pegged Berkshire Hathaway's return under Buffett at 4,400,000% versus the S&amp;P 500's 31,000%.</li></ul><a target="_blank" href="https://markets.businessinsider.com/news/stocks/who-is-warren-buffett-berkshire-hathaway-stocks-investing-wealth-philanthropy-2023-5">Warren Buffett</a> published his <a target="_blank" href="https://www.businessinsider.com/warren-buffett-letter-munger-berkshire-annual-shareholder-stock-speculation-ai-2024-2">annual letter</a> to Berkshire Hathaway shareholders on Saturday, a tradition that stretches back nearly six decades.The famed investor's latest missive and <a target="_blank" href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-cash-mountain-stock-portfolio-buybacks-deals-2024-2">full-year report</a> were full of juicy nuggets for close readers. Here are six of the best.<h2>1. Crushing the market</h2>As of December 31, Berkshire stock was up nearly 4,400,000% since Buffett took control in 1965. That's about 140 times the S&amp;P 500's 31,000% gain over the same period and represents a compounded gain of 19.8% a year versus the index's 10.2% annual gain.Berkshire has jumped a further 16% this year, surpassing the S&amp;P's 7% advance and extending its lead over the index. If you'd invested $100 with Buffett at the start of his Berkshire tenure, you'd now be worth well over $400 million.<h2>2. Assets aplenty</h2>Berkshire held $561 billion of net assets at the end of December, a 19% increase from a year earlier.Buffett said that was the largest net-asset figure recorded for any American business, and it was equivalent to 6% of the total worth of the S&amp;P 500 in 2022, $9.5 trillion.Berkshire's $1 trillion-plus of assets included $354 billion in stocks, $178 billion in property and equipment, $130 billion in Treasury bills, and $24 billion in inventories.The company's nearly $500 billion in liabilities included unpaid losses, unearned premiums, and healthcare benefits in its insurance and other businesses.<h2>3. Money to burn</h2>Berkshire's mountain of cash and short-term investments swelled to a record $168 billion by December 31, about a $60 billion increase in only 15 months.That figure is larger than the value of General Electric ($167 billion), Comcast ($166 billion), Uber ($162 billion), Nike ($160 billion), Walmart ($159 billion), American Express ($156 billion), or Pfizer ($155 billion).<h2>4. Cash-positive</h2>Buffett and his colleagues have <a target="_blank" href="https://www.businessinsider.com/warren-buffett-80-billion-headache-dilemma-expensive-stocks-businesses-deals-2021-5">struggled to find bargains</a> in recent years as stocks have marched to record highs, fierce competition from private-equity firms has made acquisitions more costly, and Berkshire's rising stock price has made buybacks less attractive.The upshot is that on December 31, Berkshire held $354 billion in stocks, and $168 billion in cash and other short-term investments — a ratio of nearly 2-to-1.Buffett has <a target="_blank" href="https://www.businessinsider.com/warren-buffett-berkshire-hathaway-snowflake-barrick-gold-shareholder-brian-gongol-2020-10">long said</a> he vastly prefers to own productive assets such as stocks and businesses over dollars or bonds, so the fact that cash and Treasurys made up nearly one-third of Berkshire's portfolio is striking.<h2>5. Renewed interest</h2>Berkshire raked in about $6.1 billion in interest and other investment income last year — some 10 times the $589 million it collected in 2021 and more than the $5.5 billion worth of dividends in 2023.Buffett and his team primarily attributed the massive surge to higher interest rates. In response to historic inflation, the Federal Reserve raised its benchmark rate from virtually zero to more than 5% between spring 2022 and last summer, which boosted the yields on government bonds.Berkshire previously made a negligible amount of interest on its cash and bonds, but now that that's changed, it can earn a solid return on them while Buffett continues the hunt for great businesses to own.<h2>6. Tiny headquarters</h2>Berkshire's total workforce grew to nearly 400,000 employees last year, but only 26 of them worked in the company's Omaha, Nebraska, headquarters.That's because Charlie Munger, who Buffett hailed as the "architect" to his "general contractor," structured Berkshire as a decentralized, autonomous web of subsidiaries.Berkshire-owned businesses from Geico (30,584 employees) to Pampered Chef (309) effectively operate independently and simply send their profits to HQ.The system allows the investor to focus on what he does best: allocating capital within and outside his company and leaving day-to-day management to others.

A 4,400,000% return and a $168 billion cash pile. Here are 6 juicy nuggets from Warren Buffett's new letter.

<ul class="summary-list"><li>The <keyword id="45672" type="ORGANIZATION" weightage="60" keywordseo="Fed">Fed</keyword> will end a pandemic-era rule that eased banks' capital requirements on March 31.</li><li>The policy allowed major banks to hold less cash against Treasurys and was meant to spur lending.</li><li>The announcement fueled a short jump in Treasury yields and dragged bank stocks lower.</li></ul>A rule change that eased capital requirements for major banks will expire as planned on March 31, the <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210319a.htm">Federal Reserve</a> said on Friday.The pandemic-era policy to give banks relief from what is formally called the <keyword id="10959393" type="UNKNOWN" weightage="60" keywordseo="supplementary-leverage-ratio">supplementary leverage ratio</keyword> allowed Wall Street firms to keep less cash on hand against Treasurys than usual. The rule aimed to free up banks' abilities to lend during the downturn, as well as cut down on bond-market froth. By no longer counting Treasurys and <keyword id="6358156" type="ORGANIZATION" weightage="60" keywordseo="central-bank">central bank</keyword> deposits when calculating the amount of reserves needed, banks would have more cash to lend out to struggling businesses and households.The <keyword id="46197" type="ORGANIZATION" weightage="60" keywordseo="SLR">SLR</keyword> relief was slated to expire at the end of the month, yet investors had been looking to the Fed to clarify whether it would extend the rule. While banks' quarterly reports showed a robust recovery through 2020, some had expected the relief would continue as part of the Fed's ultra-easy policy stance.That group's reaction to the Friday announcement was captured in knee-jerk reactions across <keyword id="31671" type="CITY" weightage="60" keywordseo="markets">markets</keyword>. The 10-year Treasury yield temporarily shot higher before paring most of the sudden gains. Bank stocks faced more permanent losses, with JPMorgan, Goldman Sachs, and Morgan Stanley all tumbling immediately after the open.The central bank said it will soon seek public comment on adjustments to the SLR. New dynamics in the bond market and the broad economic recovery could warrant additional rule changes, according to the Fed."Because of recent growth in the supply of central bank reserves and the issuance of Treasury securities, the Board may need to address the current design and calibration of the SLR over time to prevent strains from developing that could both constrain economic growth and undermine financial stability," the Fed added in a statement.Still, such adjustments won't erode the strength of banks' capital requirements, the central bank noted.The SLR was formed in 2014 out of a broader set of capital requirements put in place after the global financial crisis. The international regulations, known as Basel III, seek to mitigate financial-system risk by mandating that banks maintain certain ratios of cash in accordance with their leverage.Implementation of the new rules in 2009 gave the Fed a new tool with which to ease monetary conditions during the coronavirus recession.

The Fed will end a pandemic-era capital break it gave to Wall Street banks

<ul><li>Over the years, India has changed from a cash-led economy to a smartphone-led payment economy, says SBI Ecowrap. </li><li>Lower currency in circulation results in less leakage of deposits and it will impact monetary transmission positively, it adds. </li><li>In FY16, the share of currency in circulation (CIC) in payment systems was at 88%. This has come down to 20% in FY22. </li></ul> For the first time since 2002 – that’s 20 years – currency in circulation has declined during the Diwali week, says a report by SBI Ecowrap. This is, however, barring a marginal decline seen in the same period in 2009 because of economic slowdown. “Indian economy is undergoing a structural transformation. The innovations in technology have changed the Indian payment system. Over the years, the Indian cash-led economy now has changed to (a) smartphone-led payment economy,” the report said, calling it a remarkable development. This coincides with a record high in terms of value of UPI transactions in October 2022 – 7.3 billion transactions to the tune of ₹12.11 trillion – growing by 73% year-on-year <a href="https://www.business-standard.com/article/finance/upi-processes-over-7-bn-transactions-in-oct-record-high-since-inception-122110100569_1.html"> in volume terms</a>. Digital transactions turn faster, cheaper and easier Over the years, digital payments have become cheaper and easier and even brought those without bank accounts into the system. Moreover, the interoperable payment systems like UPI, wallets and prepaid payment instruments or PPIs have made the process simpler. As per the report, small retail payments done through UPI/e-wallets account for around 11-12% of the payment industry. Moreover, the share of cash in payment systems has reduced drastically in the last six years. In FY16, the share of currency in circulation (CIC) or cash transactions in payment systems was at 88% - this was prior to the launch of UPI in 2016. This share has come down to 20% in FY22. Moreso, it’s estimated to go down to 11.5% by FY27. Subsequently, the share of digital transactions that have been defined as IMPS, UPI and PPI by the report – have increased substantially. These transactions were at 11.26% in FY16 - and went up to 80.4% in FY22. It is expected to touch 88% in FY27. Clearly, digital transactions are taking the place that cash once held. “The success of the digital journey is primarily due to the relentless push by the Government to formalise and digitalise the economy. Over the years, the system has expanded rapidly with new innovations like QR code, NFC etc and has also seen the swift entry of big tech firms in this industry,” the report said. Less cash to print India has always been an economy with high cash in circulation. It comes next only to Japan and Hong Kong in terms of currency <a href="https://timesofindia.indiatimes.com/business/india-business/high-cash-in-circulation-aids-current-rbi-policy/articleshow/92641909.cms">in circulation (CIC) as a percentage </a>of GDP, which was at 14.2% in FY22, as per RBI data. As this percentage reduces and the economy is formalised, it can aid the banking system. “In simple terms, it implies that the RBI has to print less of currency given that UPI transactions impact currency in circulation with a lag. This is a win-win for both RBI and government, as it results in saving of seigniorage costs and also a less cash economy,” the report said. Currently, liquidity estimation of the country is impacted by a high amount of cash in the system, which is not easy to account for. Without a currency leakage, this estimation can now see a fundamental reorientation, the report says. “A lower currency in circulation also is akin to a CRR cut for the banking system, as it results in less leakage of deposits and it will impact monetary transmission positively,” the report said. CRR or cash reserve ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. Apart from encouraging digital payments via UPI, the RBI is also currently working on piloting a Central Bank Digital Currency (CBDC) or the digital rupee. The RBI governor Shaktikanta Das said that it can transform the way the business is done. “It was indeed a landmark moment in the history of money, in the history of currency in our country. Going forward, it will be a landmark achievement so far as the functioning of the entire economy is concerned,” Das said on November 2.

Diwali week cash circulation declines for the first time in 20 years: SBI Ecowrap

<ul><li>Analysts believe that a potential acquisition will improve lending capability and expand branch footprint <keyword id="46013" type="General" weightage="80" keywordseo="kotak-mahindra-bank" source="Orion">Kotak Mahindra Bank</keyword>.</li><li>Market unclear on such a large acquisition would play out if it leads to a merger eventually.</li><li>The end game should be full acquisition and amalgamation of <keyword id="6357560" type="General" weightage="80" keywordseo="idbi-bank" source="Orion">IDBI Bank</keyword>.</li></ul> <keyword id="6368369" type="General" weightage="50" keywordseo="life-insurance-corporation-of-india" source="Orion">Life Insurance Corporation of India</keyword> along with the government are looking to divest 60.72% in <keyword id="67881" type="General" weightage="100" keywordseo="idbi" source="Orion">IDBI</keyword> Bank. The process has already been kicked off and this will be a test case for the government as it will give it a blueprint for future divestments. So far media reports have speculated that Kotak Mahindra Bank was in the fray, but now <keyword id="3313307" type="General" weightage="40" keywordseo="nomura-global-markets-research" source="Orion">Nomura Global Markets Research</keyword>, a Japanese investment bank, has come out with a report that projects various scenarios of the potential acquisition and also explains how Kotak Mahindra Bank stands to gain if it acquires the bank. For starters, a possible IDBI acquisition could take KMB’s loan book to Rs 5 trillion plus along with a CASA ratio of 50%, which would be ahead of industry’s. The acquisition would also result in a sharp expansion in its branch footprint. Analysts at <keyword id="6354527" type="General" weightage="80" keywordseo="nomura" source="Orion">Nomura</keyword> believe that the acquisition would enhance its lending capability as the loan to deposit ratio will fall to 78% from 85% in Q1FY24. Analysts at Nomura have painted different scenarios of any potential transaction which will entail acquisition of a 61% stake in IDBI Bank. The first scenario could be a full cash-based transaction while the second would be stock-based and the third could be a hybrid one – entailing cash plus stock. According to the report, “While a cash-based acquisition is strongly EPS and RoE accretive, a stock-based acquisition is BVPS (book value per share) accretive (while being RoE dilutive). In all scenarios, the end-game for KMB should be the full acquisition and amalgamation of IDBI Bank, in our view.” The Japanese investment bank is of the view that scenarios which involve cash are preferable as they would bump-up to RoEs, which are currently depressed due to KMB’s low leverage of ~6x vs 8-9x for large private banks. But this deal may not be without its share of complications, says Nomura. The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> has incrementally not been forthcoming in terms of allowing banks to pick-up stakes in other BFSI businesses, says the report. Therefore, it is unclear how such a transaction would be allowed. The central bank could make an exception Kotak Mahindra Bank is to be eventually merged with IDBI Bank. A merger also is not without its share of complication, even if it is allowed. There is no certainty on how this can impact the share price of Kotak Mahindra Bank even if the merger leads to better financial ratios.

What if Kotak Mahindra Bank acquires IDBI Bank, asks Nomura

Economists are of the view that the measures taken by 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>) have controlled inflation and add that inflation will come down. A senior economist also said the headline inflation could be 7.5 per cent in December putting a spanner in the inflation projections of the central bank. The RBI's Monetary Policy Committee (MPC) will meet on November 3 to discuss what it would tell the Centre as to why it was not able to restrain the inflation within four per cent + or - two per cent for three consecutive quarters. The RBI may also sound out to the Central government as to the course of inflation as well as the reasons why it may be at elevated levels. India's central bank has been trying to contain inflation by increasing the repo rate -- the rate at which it lends to the banks. The central bank has increased the repo rate by 190 basis points in recent times and the last one was by 50 basis points. In India, the retail inflation rose to 7.41 per cent in September. "The measures taken by the government and RBI have been able to control inflation from the high of 7.8 per cent we had seen in April. The fall in global commodity prices has also been supported in containing inflation. Inflationary expectations have also come down," Rajani Sinha, Chief Economist, CARE Ratings Ltd told IANS. "However, the concern is the stickiness of core inflation above six per cent and the renewed surge in domestic food inflation in the last few months. The measures taken by RBI to control inflation will show further impact with a lag of a few quarters," she added. "There is a strong case for the RBI arguing that (a) inflation has primarily been caused by supply-side shocks with global commodity prices having an impact (b) rupee depreciation has added to imported inflation (c) the RBI on its part was proactive in raising rates even between two policies as it did in May when it saw things were going out of hand post-Ukraine war and (d) there have been some measures like increase in goods and services tax (GST) which has added to inflation that was happening in parallel," Madan Sabnavis, Chief Economist, Bank of Baroda, told IANS. "Therefore, there is an explanation as to why inflation was high. But the central bank has been acting to bring it down through its instruments, like repo and CRR (cash reserve ratio). It has succeeded in lowering surplus liquidity too which can be proved," Sabnavis added. "There was a huge sale of forex almost Rs 3 lakh crore to maintain the exchange rate. Inflation which was more than the target continuously for three quarters is estimated to come to around 6 per cent by three more quarters. Interest rates (repo rate) have increased by almost 1.9 per cent. As such the MPC may only be constrained to say that the present steps taken need some more time for having a positive impact to reduce inflation. This is subject to the time inconsistency impact," K. Ramasubramanian, retired General Manager, RBI, and a forex advisor told IANS. According to Sinha, the CPI inflation is estimated to inch below seven per cent in the next few months due to the base effect and below six per cent by the end of the fiscal year. Looking ahead, Sinha said the RBI could hike the repo rate further by 25-50 bps in the current fiscal year. "As we approach closer to the neutral policy rate, RBI will get more cautious in its rate decision," she added. Citing the unseasonal rain affecting the Kharif crops and the September food inflation at 8.4 per cent Dr Soumya Kanti <keyword id="4757" type="General" weightage="50" keywordseo="ghosh" source="Orion">Ghosh</keyword>, Group Chief Economic Adviser, <keyword id="6354731" type="General" weightage="50" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> said in 2019 when such rains happened, the average food prices more than doubled from 4.9 per cent to 10.9 per cent. Similarly, the headline inflation in December could be 7.5 per cent and could put a spanner to the inflation projections of RBI and market consensus, Ghosh said in a research report. "This could also mean that the terminal repo rate could still be difficult to comprehend at this time, though consensus puts it at 6.5 per cent," Ghosh said. According to Sinha, the <keyword id="6356435" type="General" weightage="50" keywordseo="us-federal-reserve" source="Orion">US Federal Reserve</keyword>'s policy decisions and the consequences on the currency market will also have a bearing on RBI's future policy decisions. Economists said the MPC will not be deciding on the policy rate at their November 3 meeting. "With global commodity prices falling and the likely support of base effect in containing India's CPI inflation in the next few months, RBI is unlikely to be in a tearing hurry," Sinha added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/no-scientific-basis-to-two-finger-test-on-rape-survivors-causes-trauma-sc/articleshow/95198492.cms">No scientific basis to two-finger test on rape survivors, causes trauma: SC</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/iit-madras-generates-rs-1081-cr-from-funding-and-revenue/articleshow/95200293.cms">IIT Madras generates Rs 1,081 cr from funding and revenue</a>

RBI measures controlled inflation, but challenges remain say economists

<ul class="summary-list"><li>Bank reserves could fall between $900 billion to $2.5 trillion by year's end, Fitch Ratings said.</li><li>That's as the Fed's quantitative tightening dries up liquidity in the banking system.</li></ul>The Federal Reserve's quantitative tightening measures could take trillions of dollars from the banking system and intensify a credit squeeze, Fitch Ratings said Friday. "System-wide banking liquidity indicators are still robust, but our baseline projection is for reserves to fall significantly by USD900 billion to USD2.5 trillion by year-end," the ratings agency said.Fitch added that this process could be sped up if usage rises for the <a href="https://www.businessinsider.com/personal-finance/what-is-reverse-repo">Fed's reverse repo facilities</a> — in which the Fed sells securities to later repurchase them at a higher price, temporarily absorbing cash from financial institutions.In addition to raising interest rates, <a href="https://markets.businessinsider.com/news/bonds/federal-reserve-balance-sheet-inflation-rate-hike-monetary-policy-crash-2022-11#:~:text=Quantitative%20tightening%20is%20meant%20to,fighting%20inflation%20and%20deflating%20bubbles.">QT is another means</a> by which the Fed can slow the economy to rein in inflation. It aims to soak up excess liquidity in the economy by reducing the central bank's balance sheet.This is done by allowing matured government bonds to "run off," rather than reinvesting them. When it began trimming its balance sheet in June, the Fed held almost <a href="https://www.usbank.com/investing/financial-perspectives/market-news/federal-reserve-tapering-asset-purchases.html" target="_blank" rel="noopener">$9 trillion</a> in such assets.But paired with March's banking rupture, QT risks fueling a credit crunch. For now, liquidity in the banking system is strong, Fitch said, as lenders benefited from prior <a href="https://www.businessinsider.com/personal-finance/quantitative-easing#:~:text=Quantitative%20Easing%20(QE)%20is%20a,securities%20to%20stimulate%20the%20economy.">quantitative easing</a> policies, during which the Fed bought massive amounts of securities to fuel the economy. Reserves hit $4.2 trillion in 2021 after QE for Covid-19 response.But concerns of a credit crunch have been on a steady rise since the <a href="https://www.businessinsider.com/svb-failure-what-the-hell-happened-2023-3">Silicon Valley Bank collapse</a> in March, which exposed vulnerabilities in the banking system and caused many depositors to withdraw their money.While many took their funds out of smaller lenders and into <a href="https://markets.businessinsider.com/news/stocks/bank-of-america-deposits-svb-too-big-to-fail-jpmorgan-2023-3">"too big to fail" banks</a>, money markets also saw an ample increase in funds. "QT will also put downward pressure on bank deposits, boosting the system-wide loans-to-deposits ratio," Fitch said. "Tighter liquidity could exacerbate the ongoing shift to more restrictive credit conditions, weighing on US growth."

Bank reserves could fall by $2.5 trillion as the Fed reduces its balance sheet, Fitch Ratings says

<ul class="summary-list"><li>Jeffrey Epstein frequently withdrew tens of thousands of dollars in cash from his JPMorgan accounts.</li><li>At the time, there were reports that he paid cash to girls for "massages" — a code word for sex.</li></ul>Jeffrey Epstein needed an excuse.He was withdrawing a lot of cash from his bank accounts with JPMorgan Chase.Starting from August 2006, he withdrew tens of thousands of dollars at a time, usually multiple times per month.He usually withdrew the money in $40,000 increments. In one November 2013 transaction, tied to an account related to his private jet, Epstein withdrew $97,152. Between September 2003 through the end of 2013, Epstein withdrew more than $5 million in cash from his JP Morgan accounts overall.The trouble was, Epstein banked with JPMorgan's Private Bank division, reserved for ultrawealthy clients.JPMorgan's private bank has a policy to "discourage" large cash deposits and spending. Bankers, according to an excerpt of the guidelines filed in court Tuesday morning, are responsible for getting clients to explain their large cash withdrawals."It is the primary responsibility of the Banker to obtain explanations on the source of the cash and acceptability of the intended use of the case, and to assess the plausibility of these explanations for large cash transactions," the guidelines say.The other problem was, Epstein was known for using cash to pay off the teenage girls he raped.<h2>Epstein's large cash withdrawals raised red flags</h2>Epstein, whose estate was valued at $630 million after he died in 2019, kept tens of millions of dollars of his assets <a href="https://www.businessinsider.com/jpmorgan-chase-drawn-out-breakup-with-jeffrey-epstein-2023-6">parked with JPMorgan between 1998 and 2013</a>. A chunk of those funds was <a href="https://www.insider.com/inside-jeffrey-epstein-victims-compensation-program-fund-2022-1">used to pay over 100 women who he sexually abused before his death</a>.<a href="https://www.businessinsider.com/jp-morgan-jeffrey-epstein-sex-trafficking-lawsuit-virgin-islands-ag-2022-12">In an ongoing lawsuit, the government of the US Virgin Islands accuses</a> JPMorgan of being aware of Epstein's sex-trafficking operation and did nothing to stop it, ignoring numerous red flags for years.The US Virgin Islands government offered more insight into Epstein's relationship with JPMorgan in a series of court filings Tuesday morning.It filed <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.591653/gov.uscourts.nysd.591653.220.0.pdf">a 45-page summary judgment motion</a>, <a href="https://www.documentcloud.org/documents/23886584-jpm-usvi-statement-fact-no-genuine-dispute">a 148-page "statement of fact" that was agreed upon by the government and the bank</a>, and more than 300 exhibits — most of which were filed under seal or remain highly redacted.The documents illustrate how JPMorgan employees <a href="https://www.businessinsider.com/jpmorgan-exec-joked-about-jeffrey-epsteins-nymphettes-court-docs-2023-7">joked about how Epstein surrounded himself with young women</a>, had due diligence reports that noted criminal investigations related to his abuse of girls, and internally expressed concern about his enormous frequent cash withdrawals — but kept him as a client for years anyway.<div type="image" title="A palatial home is seen on an island surrounded by blue water." height="1649" width="2200" msid="102117257" hostid="261"></div>Much of Epstein's sex trafficking, the US Virgin Islands said, consisted of paying cash to teenage girls for "massages" — a code word for sex. <a href="https://www.insider.com/ghislaine-maxwell-accuser-says-18-was-too-old-for-epstein-2021-12">Victims who testified in the trial of Ghislaine Maxwell</a>, who was convicted in 2021 for trafficking girls to Epstein for sex, said they were paid between $200 and $300 for giving "massages" to Epstein.Details of Epstein's payments for massages were also reported in a 2006 Palm Beach Post article, which turned up in JPMorgan's internal due diligence reports. The article cited an affidavit from Palm Beach County police, which described how a girl recruited six other girls to Epstein for sexualized massages, each of whom was paid $200 per session. One 14-year-old girl was given $300 after giving Epstein a massage where he told her to strip naked.In another memo dated that year, JPMorgan employees raised their eyebrows at Epstein's enormous cash withdrawals."Cash withdrawals are routinely made in amounts for $40,000 to $80,000 several times a month, which total over $750,000 year to date," <a href="https://www.documentcloud.org/documents/23886583-jp-morgan-rapid-response-team-meeting-2006-for-jeffrey-epstein">employees wrote in a 2006 memo discussing how to handle him as a client</a>.While these withdrawals rang alarm bells, Epstein was one of the Private Bank's most important clients.Partly because of his connections to other powerful and wealthy people, JPMorgan's private banking executives used him as a recruiter.In 2003, <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.591653/gov.uscourts.nysd.591653.220.0.pdf">according to Tuesday's motion</a>, Epstein was "by double, the top revenue generator in the Private Bank." He made connections between bankers and potential clients like <a href="https://www.businessinsider.com/glenn-dubin-leaves-hedge-fund-distances-himself-from-epstein-reports-2020-1">billionaire hedge fund manager Glenn Dubin</a>, Google cofounder Sergey Brin, Bill Gates, Leon Black, Larry Summers, Sultan Ahmed bin Sulayem, Prince Andrew, Ehud Barak, Thomas Pritzker, and Benjamin Netanyahu, some of whom ended up banking with JP Morgan, the filing says.Epstein died in jail in 2019 while awaiting trial on sex-trafficking charges.In a statement to Insider, a JPMorgan representative said the bank had no knowledge of his sex-trafficking operation."Any association with Epstein was a mistake and in hindsight we regret it, but we did not help him commit his heinous crimes," a representative for JPMorgan Chase told Insider in a statement. "We would never have continued to do business with him if we believed he was engaged in an ongoing sex trafficking operation."<h2>JPMorgan finally asked Epstein about the cash in 2011</h2>In 2007, Epstein arrived at a plea deal with prosecutors in Florida. Law enforcement identified about 40 women and girls who said he sexually abused them. Alexander Acosta, a US Attorney at the time, came to an agreement with Epstein that allowed him to plead guilty to a couple of charges related to soliciting sex work in exchange for a quick stint in jail, where he'd mostly be on work release.JPMorgan's employees remained uneasy about the bank's relationship with Epstein, documents obtained by the US Virgin Islands show. But Epstein kept withdrawing enormous amounts of cash, despite the private banking division's guidelines. He continued to take out hundreds of thousands of dollars in cash each year from his JPMorgan accounts, records show.In <a href="https://www.documentcloud.org/documents/23886592-2011-rapid-response-team-jp-morgan-jeffrey-epstein">a 2011 memo</a> cited in the 148-page "statement of fact" document, JPMorgan employees wrote that a banker had another conversation with Epstein "with regard to large cash withdrawals."Epstein had an excuse ready. He told them he needed the money to pay for fuel when he traveled. JPMorgan made an internal note to reflect that."Mr. Epstein withdraws anywhere from $20K to $40K in cash to pay for fuel expenses when he travels to foreign countries," the memo said.The next page of the "statement of fact" document is entirely redacted.<div type="image" title="Ghislaine Maxwell Jeffrey Epstein" height="1025" width="1366" msid="102117259" hostid="261"></div>By July 18, 2013, the continued cash withdrawals rang bells at JPMorgan's internal anti-money laundering department, which <a href="https://www.businessinsider.com/jpmorgan-execs-rejected-internal-request-sever-ties-with-scum-epstein-2023-7">the US Virgin Islands described as "JPMorgan's in-house human trafficking experts."</a>One compliance officer wrote in an email that Jeffrey Epstein had kept up massive cash withdrawals, simply switching from his personal account to a different account linked to his private jet."Issue is he really never stopped the large cash withdrawals," a compliance officer wrote then.The next day, John Duffy, who was then the CEO of JPMorgan's private banking division, <a href="https://www.documentcloud.org/documents/23886721-mary-erdoes-john-duffy-emails-cut-off-jp-morgan-ties-jeffrey-epstein">emailed Mary Erdoes</a>, the CEO of the wealth management division, about cutting ties with Epstein. Erdoes had been in frequent communication with Epstein over the years, and he wanted her advice.Duffy raised a few talking points with her about what to tell Epstein."1. The repetitive nature of your cash transactions is a problem for us and our relationship with you[;] 2. The regulatory standards in the banking industry continue to evolve with a very low tolerance for cash activity when combined with your personal history[;] 3. So, given the intersection of these circumstances we are in a uniquely challenged situation," Duffy wrote. "Remediation is required and we need to ask you - in an orderly manner - to find another bank for your needs.""I think that is fine," Erdoes responded, about the proposed language of the bank's anticipated break-up with their billionaire client.JPMorgan officially dropped Epstein as a client later that year.Last month, the bank <a href="https://www.businessinsider.com/jpmorgan-settles-class-action-lawsuit-with-jeffrey-epstein-victims-2023-6">agreed to pay $290 million to settle a class-action lawsuit</a> brought by Epstein's victims over his sexual abuse.Correction: July 26, 2023 — An earlier version of this story overstated which of Jeffrey Epstein's acquaintances made accounts with JPMorgan Chase. They didn't all make accounts with the bank after Epstein connected them with the bank's employees.

Jeffrey Epstein withdrew up to $80,000 in cash 'several times a month' while he paid girls for 'massages,' court filings say

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>

You Searched For "incremental cash reserve ratio" and got 11 results

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RBI measures controlled inflation, but challenges remain say economists

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