February 2021 – Page 29

Reserve Bank of India – Press Releases

February 19, 2021 root Press Releases

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It is hereby notified for information of the public that in exercise of powers vested in it under sub section (1) of Section 35 A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) vide Directive Ref. No. DoS.CO.UCBs.South/Dir.1/1849/10.01.023./2020-21 dated February 18, 2021 has issued certain Directions to Deccan Urban Co-operative Bank Ltd., Vijayapur, Karnataka, whereby, as from the close of business on February 19, 2021, the Chief Executive Officer of the aforesaid bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated February 18, 2021 a copy of which is displayed on the bank’s premises for perusal by interested members of the public. Considering the bank’s present liquidity position, a sum not exceeding ₹1000/- (Rs. One thousand only) of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. However, 99.58% of the depositors are fully covered by the DICGC insurance scheme.

The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.

These Directions shall remain in force for a period of six months from the close of business on February 19, 2021 and are subject to review.

(Yogesh Dayal)
Chief General Manager

Press Release: 2020-2021/1130

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PDs suffer in yield war between RBI and bidders

February 19, 2021 root Banking & Finance

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Government Securities (G-Sec) auctions are caught in a tug-of-war between bidders demanding higher yields and the Reserve Bank of India’s reluctance to concede that, leading to devolvement on primary dealers (PDs).

Of the four G-Sec auctions conducted since the Budget, only one (on February 11) was fully subscribed without PD support.

In the G-Sec auctions conducted since the Budget announcement, the RBI devolved G-Secs aggregating about ₹37,000 crore on PDs.

Borrowing target

Finance Minister Nirmala Sitharaman had announced in her Budget speech that the government would need to borrow another ₹80,000 crore in February-March and the gross borrowing from the market for FY22 would be around ₹12-lakh crore.

The market wants higher yields, but the central bank, which is the banker and debt manager to the government, wants to the keep the yields from rising as they have implications for the cost of government’s borrowing.

Rising G-Sec yields will have a ripple effect as the cost of borrowing of States and India Inc too will rise in sync.

Since January-end, the yield on the widely traded 10-year G-Sec (maturing in 2030 and carrying 5.77 per cent coupon rate) has increased by about 23 basis points to 6.1792 per cent, with its price declining by ₹1.59 to ₹97.1.

Referring to the devolvement of two G-Secs aggregating about ₹21,594 crore on PDs at Thursday’s auction, Marzban Irani, Chief Investment Officer – Fixed Income, LIC Mutual Fund, said: “The bids were on the higher side and the RBI wanted to give a signal that it was not comfortable at those yields. Hence, the auction got devolved.”

Market wants correction

Irani observed that the market wants the yields to correct. The yield curve across maturities such as 6 years, 7 years, 8 years, and 15 years has corrected but not the 10-year yield. Hence, the market wants the 10-year G-Sec yield to inch up, he added.

“The borrowing programme this year as well as next is on the higher side. Unless the yield curve gets corrected, there won’t be aggressive bidding at the auctions. The RBI will have to support via open market operations (OMOs) at regular intervals,” he said.

Hardening yields

Edelweiss Mutual Fund, in its latest bond market update, noted that G-Sec yields have hardened in anticipation of a mismatch in the demand-supply dynamics.

“The bond market was hoping that the RBI would guide the market with some sort of calendar for OMO bond purchase programme for the next year. However, the RBI has refrained from doing that.

“Perhaps they don’t want to pre-commit themselves at this point. However, the RBI said that the government’s borrowing programme will be concluded without any disruption. This is quite reassuring. However, the bond market is not convinced on this yet,” the report said.

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General insurance sector may revive in Q4

February 19, 2021 root Banking & Finance

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The general insurance industry, which had witnessed a significant degrowth in business across various segments, including motor and health during the first quarter of FY21, is likely to turnaround and register positive growth in the fourth quarter of this fiscal.

Massive degrowth

According to Subramanyam Brahmajosyula, Head Underwriting & Reinsurance, SBI General Insurance, the industry had witnessed a massive degrowth in business during the first two to three months of the current fiscal, and most business segments other than fire, had registered a drop in growth.

However, from Q2 there was a gradual uptick in demand and the industry is hopeful of ending the year in a “good shape”.

The general insurance industry has registered a growth of around 2.76 per cent year-to-date up to January 2021 (10-month period from April 2020) compared to the same period last year. The non-life industry has been growing by around 13-15 per cent on a year-on-year basis for the last couple of years.

“While the growth rate is lower than the previous performance of the industry as a whole, considering what we saw in the initial stages, this is a good turnaround.

“We were initially worried that it may take two years or longer to bounce back to the kind of growth rate we were experiencing earlier, but now I am almost confident that we should be close to business as usual by next year in terms of growth rates,” said Brahmajosyula at an InsureInd event organised by the CII here on Friday.

While fire insurance has seen a growth of around 30 per cent, health and liability witnessed a growth of around 15 per cent each.

There has been a lot of interest and enquiries from customers about the various new lines of business, particularly on the liability side, and the industry should look to capitalise on it. Moving forward, the industry should focus on product innovation and enhancement.

“The pandemic has focussed our attention on the need to innovate and some of these learnings have become permanent part of the way we work,” he said.

While it is difficult to predict and price a pandemic like Covid, as an industry, insurers should be better prepared for a risk like this. There is also likely to be a higher demand for business interruption covers and the industry, either on its own or through reinsurance solution providers, should come up with something to address this demand.

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Leave a comment general insurance sector, Head Underwriting & Reinsurance, Q4 growth, SBI General Insurance, Subramanyam Brahmajosyula

Reserve Bank of India – Tenders

February 19, 2021 root Tenders

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The Pre-bid meeting for the captioned tender was held on February 17, 2021 from 11:30 AM to 12:30 PM at Conference Room, First Floor, RBI, Jammu under social distancing norms. The meeting was chaired by Sh. Sandeep Mittal, General Manager, HRMD, RBI, Jammu. Officials from HRMD and Protocol and Security Cell, Reserve Bank of India, Jammu and representatives of three prospective bidders participated in the meeting.

2. GM (SM) welcomed all participants (list attached – Annex I) and discussed the agenda points (as per Table). Thereafter, queries were invited from the prospective bidders regarding the captioned tender. The queries raised by the prospective bidders during the meeting along with our clarifications and comments are mentioned in Table.

Sl. No.	Agenda Points / Query	Comments / Clarification
1.	Who will provide the cleaning equipment and cleaning material?	It was clarified that the cleaning material will be provided by the Bank, however, the cleaning equipment like wipers, broomsticks, mop etc. will be provided by the contractor.
2.	The wages to be calculated on which skills for Supervisor & Cleaning Staff and on which category of worker?	It was clarified that the wages to be calculated as per the Order dated October 12, 2020 issued by Office of Chief Labour Commissioner (C), Ministry of Labour and Employment, New Delhi. As per the notification, the current wages per day for supervisor (semi-skilled) is Rs. 603/- (Wage Rs. 494 + VDA Rs. 109) and that of cleaning staff is Rs. 534/- (Wage Rs. 437 + VDA Rs. 97/-).
3.	Changes in the minimum wages, VDA and other statutory requirements	It was clarified that as and when the minimum wages are revised by the Government of India, the agency has to notify the Bank and the same will be reimbursed by the Bank.
4.	Whether MSME certificate holders are eligible for any relaxation / exemption for Earnest Money Deposit (EMD) and Security Deposit (SD)?	The bidder is required to remit EMD and the successful bidder is required to remit the required amount of Security Deposit as mentioned in the tender document irrespective of their category.
5.	Is there any minimum value laid down/ decided by the Bank for the Service Charge to be quoted by the firms while bidding?	Bidders must keep in mind that while quoting Service Charges they should include all expenditure on providing managerial supervisory/ administrative services to get the work done through deployed Housekeeping Staff. Bidders offering “zero” or irrational quotes shall be liable for disqualifications. Further, in case of abnormally low bids, the Bank may seek written clarifications from the Bidder, including detailed price analysis of its Bid price in relation to scope, schedule, resource mobilization, allocation of risks and responsibilities, and any other requirements as per the Tender document.
6.	Format of Experience / Client Certificate.	It was clarified that the Experience / Client certificate has to be submitted in the format prescribed at the Annexure III of the tender document.
7.	Clarification was sought regarding Tender Fees if any.	It was clarified that RBI will not charge any tender fee, however, the bidder will have to submit the transaction fee at MSTC portal.
8.	Whether the solvency certificate be submitted for Rs. 40 Lakh only or the solvency certificate for higher amount will be acceptable.	The solvency certificate for Rs. 40 lakh or more will be acceptable.
9.	Is it mandatory to have an office in Jammu?	Yes

Annex-I

Details of Participants: Pre-bid meeting held on February 17, 2021

The following Bank’s officials and representative of prospective bidder were present during the pre-bid meeting:

Sr No.	Name and Designation of RBI Officials
1.	Sh. Sandeep Mittal, General Manager
2.	Sh. Debojit Barua, Manager
3.	Sh. Kamal Kumar, Assistant Manager
4.	Sh. Kapil Kant Saini, Assistant Manager
5.	Sh. Gaurav Randhawa, Assistant Manager (P&S)

Prospective Bidders’ Representatives present during the pre-bid meeting:

Sr No.	Prospective Bidder firm	Representative Name
1.	M/S ABN Personnel Network	Sh. Mohan Lal
2.	M/S BD Securities. Pvt. Ltd.	Sh. Puneet Kumar
3.	M/S Mattoo Clean House	Sh. Akbar Mattoo

Note: This document shall form part of the tender. Hence, it shall be signed and submitted along with the tender by the tenderers. All other terms & conditions will be as per the tender document.

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Transporters to join Bharat Bandh on Feb 26

February 19, 2021 root Banking & Finance

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The All-India Transporters’ Welfare Association, the an apex body of the organised road transportation companies, has urged the government to abolish E-Way Bill and track vehicles by using Fast Tag connectivity to E-Invoice.

It has also appealed the government to scrap the penalty on transporters for any time-based compliance target of transit and make diesel prices uniform across the country.

With no proper response from the government on issues raised by the transporters’ association, AITWA has joined the one-day Bharat Bandh on February 26 called by the Confederation of All India Trade Associations.

The transporters body has urged members to reject bookings and asked to park their vehicles between 10 am to 6 pm as a symbolic protest.

Mahendra Arya, National President, AITWA, said without any discussion with the industry, the government has decided the time limit for transport of goods from booking station to delivery point.

Last month, the GST department doubled the distance to be covered in a day by truck drivers again without any consultation with transporters.

Arya said the transport model involves hub and spoke method, trans-shipment of Goods at various locations, effects of climate and, most of all, the driver’s liberty as per his health condition.

The movement of vehicle and consignment becomes illegal once e-pass expires and both the vehicle and consignment loaded are confiscated.

The vehicle and goods can be released only on payment of penalties prescribed by GST Laws, which amounts to 200 per cent of GST involved, he said.

Transportation rates cannot be flexible as per daily changing diesel rates. The non-uniformity of prices across nation also makes it difficult to compete fairly.

Ever since diesel prices started increasing it has become impossible for the transporters to honour their contracts with customers, he added.

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Fino Payments Bank to onboard 10,000 women as business correspondents in U.P.

February 19, 2021 root Banking & Finance

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Fino Payments Bank is working with the Uttar Pradesh State Rural Livelihood Mission (UPSRLM) to train and onboard 10,000 women from Self Help Groups (SHG) as business correspondent (BC) Sakhis in the State.

“The agreement in this regard was signed on Friday at an event organised by the UP government in the presence of State Chief Minister Yogi Adityanath,” the bank said in a statement.

The project, implemented over the next three months, is part of UPSRLM’s mission to onboard around 58,000 women as BC Sakhis ,or banking agents, across all the 75 districts of the State, it further said.

Better banking access

Fino is one of banking partners and facilitators engaged for the project to appoint BC Sakhis, it said, adding that the project is aimed at improving banking access in rural UP and enhancing the household income of the SHG members.

Ashish Ahuja, Chief Operating Officer, Fino Payments Bank, said: “It is an opportunity for women in rural areas to showcase their entrepreneurial spirit and improve income. As banking agents in the villages they play a critical role in helping people adopt banking services.”

The 10,000 BC Sakhis are in addition to the already existing over 50,000 Fino merchants in Uttar Pradesh.

As part of the broader National Rural Livelihood Mission (NRLM) initiative, each BC Sakhi will also receive financial support for the first six months of Rs 24,000 to help her in the initial phase.

Each BC Sakhi will also be provided with an integrated POS device, cash box, and fake currency identifier to enable her to undertake all basic banking services, except credit, the bank said.

Further, to ensure safe transactions in the current pandemic, a contactless iris scanner for customer authentication will also be provided.

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Reserve Bank of India – Press Releases

February 19, 2021 root Press Releases

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1. Reserve Bank of India – Liabilities and Assets*
(₹ Crore)
Item	2020	2021		Variation
	Feb. 14	Feb. 5	Feb. 12	Week	Year
	1	2	3	4	5
4 Loans and Advances
4.1 Central Government	6817	–	–	–	-6817
4.2 State Governments	8401	9230	10918	1688	2517
* Data are provisional.

2. Foreign Exchange Reserves
Item	As on February 12, 2021		Variation over
	As on February 12, 2021		Week		End–March 2020		Year
	₹ Cr.	US$ Mn.	₹ Cr.	US$ Mn.	₹ Cr.	US$ Mn.	₹ Cr.	US$ Mn.
	1	2	3	4	5	6	7	8
1 Total Reserves	4246990	583697	-11735	-249	644834	105890	848778	107604
1.1 Foreign Currency Assets	3935956	540951	-19341	-1387	602141	98739	781453	99002
1.2 Gold	263585	36227	8571	1260	33058	5648	55713	7104
1.3 SDRs	11005	1513	45	10	205	80	798	83
1.4 Reserve Position in the IMF	36444	5006	-1010	-132	9431	1423	10814	1416
* Difference, if any, is due to rounding off

4. Scheduled Commercial Banks – Business in India
(₹ Crore)
Item	Outstanding as on Jan. 29, 2021	Variation over
		Fortnight	Financial year so far		Year-on-year
		Fortnight	2019-20	2020-21	2020	2021
	1	2	3	4	5	6
2 Liabilities to Others
2.1 Aggregate Deposits	14797709	172319	750229	1230217	1201301	1473708
2.1a Growth (Per cent)		1.2	6.0	9.1	9.9	11.1
2.1.1 Demand	1691529	117711	-80276	74526	187103	260518
2.1.2 Time	13106180	54609	830506	1155691	1014199	1213190
2.2 Borrowings	243117	-593	-66951	-66322	-48249	-68185
2.3 Other Demand and Time Liabilities	615608	46673	84	11932	35171	71878
7 Bank Credit	10704669	61776	333454	333808	675648	599493
7.1a Growth (Per cent)		0.6	3.4	3.2	7.2	5.9
7a.1 Food Credit	87110	159	37289	35346	11170	8211
7a.2 Non-food credit	10617559	61617	296165	298463	664478	591283

6. Money Stock: Components and Sources
(₹ Crore)
Item	Outstanding as on		Variation over
	2020	2021	Fortnight		Financial Year so far				Year-on-Year
	2020	2021	Fortnight		2019-20		2020-21		2020		2021
	Mar. 31	Jan. 29	Amount	%	Amount	%	Amount	%	Amount	%	Amount	%
	1	2	3	4	5	6	7	8	9	10	11	12
M3	16799963	18401481	161813	0.9	986558	6.4	1601518	9.5	1524090	10.2	1982857	12.1
1 Components (1.1.+1.2+1.3+1.4)
1.1 Currency with the Public	2349748	2707084	-9876	-0.4	166567	8.1	357336	15.2	234663	11.8	488308	22.0
1.2 Demand Deposits with Banks	1737692	1814239	118055	7.0	-77329	-4.8	76547	4.4	191873	14.1	265056	17.1
1.3 Time Deposits with Banks	12674016	13836935	53003	0.4	895206	7.6	1162920	9.2	1090235	9.5	1220126	9.7
1.4 ‘Other’ Deposits with Reserve Bank	38507	43222	631	1.5	2114	6.7	4715	12.2	7319	27.6	9366	27.7
2 Sources (2.1+2.2+2.3+2.4-2.5)
2.1 Net Bank Credit to Government	4960362	5735483	17317	0.3	626105	14.3	775121	15.6	552215	12.4	720888	14.4
2.1.1 Reserve Bank	992192	1058048	6383		255086		65856		158208		1011
2.1.2 Other Banks	3968170	4677435	10934	0.2	371019	10.3	709265	17.9	394007	11.1	719878	18.2
2.2 Bank Credit to Commercial Sector	11038644	11362407	61425	0.5	373905	3.6	323762	2.9	728367	7.3	605783	5.6
2.2.1 Reserve Bank	13166	8601	-740		-8983		-4565		-1898		2221
2.2.2 Other Banks	11025478	11353806	62165	0.6	382888	3.7	328327	3.0	730265	7.3	603562	5.6

8. Liquidity Operations by RBI
(₹ Crore)
Date	Liquidity Adjustment Facility				MSF*	Standing Liquidity Facilities	Market Stabili sation Sche me	OMO (Outright)		Long Term Repo Opera tions &	Targeted Long Term Repo Operat ions#	Special Liquidity Facility for Mutual Funds	Special Liquidity Scheme for NBFCs/ HFCs**	Net Injection (+)/ Absorption (-) (1+3+5+6+9+ 10+11+12+13- 2-4-7-8)
	Repo	Reverse Repo*	Variable Rate Repo	Variable Rate Reverse Repo	MSF*	Standing Liquidity Facilities	Market Stabili sation Sche me	Sale	Purchase	Long Term Repo Opera tions &	Targeted Long Term Repo Operat ions#	Special Liquidity Facility for Mutual Funds	Special Liquidity Scheme for NBFCs/ HFCs**
	1	2	3	4	5	6	7	8	9	10	11	12	13	14
Feb. 8, 2021	–	486594	–	–	0	–	–	–	2025	–	–	–	–	-484569
Feb. 9, 2021	–	505265	–	–	38	–	–	–	1150	–	–	–	–	-504077
Feb. 10, 2021	–	499903	–	–	9	–	–	–	1020	–	–	–	–	-498874
Feb. 11, 2021	–	528043	–	–	30	220	–	–	20000	–	–	–	–	-507793
Feb. 12, 2021	–	524304	–	–	12	–	–	–	25974	–	–	–	–	-498318
Feb. 13, 2021	–	6198	–	–	1781	–	–	–	–	–	–	–	–	-4417
Feb. 14, 2021	–	10070	–	–	52	–	–	–	–	–	–	–	–	-10018
Includes additional Reverse Repo and additional MSF operations (for the period December 16, 2019 to February 13, 2020) #Includes Targeted Long Term Repo Operations (TLTRO) and Targeted Long Term Repo Operations 2.0 (TLTRO 2.0). Negative (-) sign indicates repayments done by Banks. *As per RBI Notification No. 2020-21/01 dated July 01, 2020. Negative (-) sign indicates maturity proceeds received for RBI’s investment in the Special Liquidity Scheme. & Negative (-) sign indicates repayments done by Banks.

The above information can be accessed on Internet at https://wss.rbi.org.in/

The concepts and methodologies for WSS are available in Handbook on WSS (https://rbi.org.in/scripts/PublicationsView.aspx?id=15762).

Time series data are available at https://dbie.rbi.org.in

Rupambara
Director

Press Release: 2020-2021/1129