RBI Circular Notification Press Release and Instructions issued by Reserve bank of India. News and Article on provisions, Rate changes, Policy changes and FAQ
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The Committee reviewed the global and domestic macroeconomic developments. It felt that the global macroeconomic situation had worsened with the uncertainty clouding the increase in the US debt ceiling issue and continuing problem in the euro area. If the US debt crisis was not resolved satisfactorily, it would have serious ramifications for the global economy. They were also concerned that if the euro area sovereign debt problem spilled over to Spain and Italy, the consequences could be serious. While the international commodity prices had softened, the outlook was still uncertain. Members also expressed concerns over rising incipient inflationary pressures in advanced economies, even as the emerging market economies (EMEs) were still battling with high inflation.
The guiding objectives of foreign exchange reserves management in India are similar to those of many central banks in the world. The demands placed on the foreign exchange reserves may vary widely depending upon a variety of factors including the exchange rate regime adopted by the country, the extent of openness of the economy, the size of the external sector in a country’s GDP and the nature of markets operating in the country. While liquidity and safety constitute the twin objectives of reserve management in India, return optimisation becomes an embedded strategy within this framework.
The headline wholesale price index (WPI) inflation averaged 9.6 per cent in 2010-11 as compared with 5.3 per cent per annum in the previous decade. Similarly, the average consumer price inflation, measured by the consumer price index for industrial workers (CPI-IW), was even higher at 10.5 per cent in 2010-11 as compared with 5.9 per cent per annum in the previous decade. Moreover, this elevated level of inflation also persisted through the first quarter of 2011-12. In response to inflationary pressures, the Reserve Bank has raised the policy repo rate 11 times bringing it up from a low of 4.75 per cent in March 2010 to 8.00 per cent by July 2011. It is expected that inflation should come down towards the later part of this year.
Monetary policy as an arm of public policy has set objectives and priorities. These objectives are derived from the respective mandates of central banks. It ranges from a single objective of price stability, considered to be the dominant objective of monetary policy, to multiple objectives that include growth and financial stability as well. Central banks strive to achieve these objectives indirectly through instruments under their direct control and on the basis of the empirical relationship these instruments have with the final objectives. This requires articulation of a consistent monetary policy framework that enables transmission of policy signals in such a way that monetary and financial conditions are influenced to the desired extent to attain the objectives. Monetary policy framework, however, is a continuously evolving process contingent upon the level of development of financial markets and institutions, and the degree of global integration.
Technology adoption has changed the face of banking in India. What started as a mere automation of some routine work processes in banks in the mid 80’s has moved on to become business process re-engineering which has resulted in making banking services branchless, anytime and anywhere; facilitated new product development and, enabled near real time service delivery. Technology has helped banks to reach the doorsteps of the customer by overcoming the limitations on geographical/ physical reach in branch banking and easing the resource and volume constraints posed by the brick and mortar model.
I am delighted to be in your midst after a long gap of a decade. The occasion brings back reminiscences of late 1990s and the early years of this century when the forex market in India was quite different from what exists today. A nascent market that it was, needed a lot of hand-holding from RBI. The Rupee was always moving down a one-way street and every bout of volatility ( plenty those days, for example, the South East Asian crisis, Nuclear sanctions, Kargil flare up, 9/11 attack, attack on Indian Parliament, etc) hogged the headlines in the newspapers.
Please refer to our circular RPCD.No.NB.BC.124/RRB.16/90-91 dated May 29, 1991 in terms of which demand drafts, mail transfers, telegraphic transfers and travellers cheques for Rs.50,000/- and above should be issued by banks only by debit to the customer’s account or against cheques or other instruments tendered by the purchaser and not against cash payment.
The upheaval in domestic markets that followed the US economic downgrade notwithstanding, RBI on Friday said the liquidity in the Indian banking system was not under stress and the central bank was monitoring the situation closely.
The Reserve Bank today said the option of going for another round of rate hike at its next mid-quarterly policy review in September do exist as inflationary pressure continues in the economy.
In order to ensure availability of sufficient credit to MSE Sector, Banks have been advised by RBI to achieve the following targets: i) 60% of MSE advances for Micro Enterprises by 2012-13, to be achieved in three stages: i.e. 50% by 2011, 55% in 2012 & 60% in 2013. ii) Banks are advised to achieve a 20% year-on-year growth in credit to micro and small enterprises. iii) Banks are advised to achieve 10% annual growth in the number of micro enterprises accounts.
