Month: March 2021

The Reserve Bank of India vide directive DCBS.CO.BSD-1/D-4/12.22.141/2016-17 dated August 31, 2016 had placed the Maratha Sahakari Bank Ltd., Mumbai, Maharashtra under directions from the close of business on August 31, 2016 for a period of six months. The validity of the directions was extended from time-to-time, the last being up to March 31, 2021.

2. It is hereby notified for the information of the public that the Reserve Bank of India, in exercise of powers vested in it under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949, hereby directs that the aforesaid directions shall continue to apply to the bank till June 30, 2021 as per the directive DOR.MON/ D-68/12.22.140/2020-21 dated March 31, 2021, subject to review.

3. All other terms and conditions of the directive under reference shall remain unchanged. A copy of the directive dated March 31, 2021 notifying the above extension is displayed at the bank’s premises for the perusal of public.

4. The aforesaid extension and /or modification by the Reserve Bank of India should not per-se be construed to imply that Reserve Bank of India is satisfied with the financial position of the bank.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1338

It has been decided, in consultation with the Government of India, that the limits for Ways and Means Advances (WMA) for the first half of the financial year 2021-22 (April 2021 to September 2021) will be ₹1,20,000 crore.

The Reserve Bank may trigger fresh floatation of market loans when the Government of India utilises 75 per cent of the WMA limit.

The Reserve Bank retains the flexibility to revise the limit at any time, in consultation with the Government of India, taking into consideration the prevailing circumstances.

The interest rate on WMA/overdraft will be:

1. WMA: Repo Rate

2. Overdraft: Two percent above the Repo Rate

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1337

(For the Quarter ending June 2021)

The Government of India, in consultation with the Reserve Bank of India, has decided to notify the amounts for the issuance of Treasury Bills for the quarter ending June 2021 as under:

2. The Government of India, in consultation with Reserve Bank of India, will have the flexibility to modify the notified amount and timing for auction of Treasury Bills, depending upon the requirements of the Government of India, evolving market conditions and other relevant factors, after giving due notice to the market. Thus, the calendar is subject to change, if circumstances so warrant, including for reasons such as intervening holidays. Such changes, if any, will be communicated through regular Press Releases.

3. The auction of Treasury Bills will be subject to the terms and conditions specified in the General Notification No. F.4(2)-W&M/2018 dated March 27, 2018 issued by the Government of India, as amended from time to time.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1336

The Reserve Bank of India (RBI) has imposed, by an order dated March 26, 2021, a monetary penalty of ₹1.00 lakh (Rupees one lakh only) on The Citizens Co-operative Bank Ltd., Rajkot (Gujarat) (the bank) for contravention of directions issued by RBI on ‘Loans and advances to directors, relatives and firms /concerns in which they are interested’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The statutory inspection of the bank based on its financial position as on March 31, 2018, revealed, inter alia, contravention of/ non-compliance with the directions issued by RBI on (i) ‘Board of Directors of Urban Co-operative Banks – Professionalisation and their Role – Do’s and Don’ts’, (ii) ‘Loans and advances to directors, relatives and firms /concerns in which they are interested’ and (iii) Reporting of ‘Advances Granted to Directors and their Relatives by the Primary (Urban) Co-operative Banks’. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.

After considering the bank’s reply, oral submissions made during the personal hearing, RBI came to the conclusion that the charge regarding non-compliance with RBI directions on ‘Loans and advances to directors, relatives and firms /concerns in which they are interested’ was substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)    
Chief General Manager

Press Release: 2020-2021/1334

Data on sectoral deployment of bank credit collected from select 33 scheduled commercial banks, accounting for about 90 per cent of the total non-food credit deployed by all scheduled commercial banks for the month of February 2021, are set out in Statements I and II.

Highlights of the sectoral deployment of bank credit are given below:

• On a year-on-year (y-o-y) basis, non-food bank credit growth stood at 6.5 per cent in February 2021 as compared to 7.3 per cent in February 2020.

• Continuing its uptrend, credit growth to agriculture and allied activities accelerated to 10.2 per cent in February 2021 from 5.8 per cent in February 2020.

• Credit to industry contracted marginally by 0.2 per cent in February 2021 as compared to 0.7 per cent growth in February 2020 mainly due to contraction in credit to large industries by 1.5 per cent (0.7 per cent growth in February 2020). Credit to medium industries registered a robust growth of 21.0 per cent in February 2021 as compared to 3.9 per cent a year ago and credit to micro & small industries registered a growth of 1.5 per cent in February 2021 as compared to a contraction of 0.4 per cent a year ago.

• Within industry, credit to ‘food processing’, ‘beverages and tobacco’, ‘mining and quarrying’, ‘textiles’, ‘gems and jewellery’, ‘paper and paper products’, ‘glass and glassware’ and ‘vehicles, vehicles parts and transport equipment’ registered accelerated growth in February 2021 as compared to the growth in the corresponding month of the previous year.  However, credit growth to ‘petroleum, coal products and nuclear fuels’, ‘cement and cement products’, ‘all engineering’, ‘chemicals and chemicals products’, ‘rubber, plastic and their products’, ‘basic metal and metal products’, ‘construction’ and ‘infrastructure’ decelerated/contracted.

• Credit growth to the services sector accelerated to 9.3 per cent in February 2021 from 6.9 per cent in February 2020 mainly due to good performance of credit to transport operators and trade.

• The slowdown in growth of personal loans continued, as it decelerated to 9.6 per cent in February 2021 from 17.0 per cent a year ago.

Ajit Prasad
Director   

Press Release: 2020-2021/1333

Today, the Reserve Bank released data relating to India’s International Investment Position at end-December 2020.

Key Features of India’s IIP in December 2020

• Net claims of non-residents on India increased by US$ 3.1 billion from their level at the end of the previous quarter (Table 1).

• Higher increase in foreign-owned assets in India (US$ 52.3 billion) vis-à-vis Indian residents’ overseas financial assets (US$ 49.2 billion) resulted in the rise in India’s net foreign liabilities during the quarter.

• Reserve assets accounted for over two-thirds of India’s international financial assets (Table 2).

• Foreign direct investment (FDI) and portfolio equity investment dominated the rise in India’s foreign liabilities; the share of non-debt liabilities in total external liabilities increased to 52.4 per cent (50.8 per cent at end-September 2020) (Table 3).

• The ratio of India’s international financial assets to international financial liabilities improved to 71.4 per cent in December 2020 from 62.1 per cent a year ago.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1332

¹India’s quarterly IIP is disseminated with a quarter lag. The IIP for end-September 2020 was placed in the public domain on December 30, 2020.

Preliminary data on India’s balance of payments (BoP) for the third quarter (Q3), i.e., October-December 2020-21, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q3:2020-21

• India’s current account balance recorded a deficit of US$ 1.7 billion (0.2 per cent of GDP) in Q3:2020-21 after a surplus of US$ 15.1 billion (2.4 per cent of GDP) in Q2:2020-21 and US$ 19.0 billion (3.7 per cent of GDP) in Q1:2020-21; a deficit of US$ 2.6 billion (0.4 per cent of GDP) was recorded a year ago [i.e. Q3:2019-20].

• Underlying the current account deficit in Q3:2020-21 was a rise in the merchandise trade deficit to US$ 34.5 billion from US$ 14.8 billion in the preceding quarter, and an increase in net investment income payments.

• Net services receipts increased, both sequentially and on a year-on-year basis, primarily on the back of higher net export earnings from computer services.

• Private transfer receipts, mainly representing remittances by Indians employed overseas, declined marginally on a y-o-y basis but improved sequentially by 1.5 per cent to US$ 20.7 billion in Q3:2020-21.

• Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 10.1 billion from US$ 7.4 billion a year ago.

• In the financial account, net foreign direct investment (FDI) recorded robust inflow of US$ 17.0 billion as compared with US$ 9.7 billion in Q3:2019-20.

• Net foreign portfolio investment (FPI) was US$ 21.2 billion as compared with US$ 7.8 billion in Q3:2019-20, primarily reflecting net purchases by foreign portfolio investors in the equity market.

• With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of US$ 1.7 billion in Q3:2020-21 as against an inflow of US$ 3.2 billion a year ago.

• Net accretions to non-resident deposits increased to US$ 3.0 billion from US$ 0.8 billion in Q3:2019-20.

• There was an accretion of US$ 32.5 billion to the foreign exchange reserves (on a BoP basis) as compared with that of US$ 21.6 billion in Q3:2019-20 (Table 1).

BoP during April-December 2020

• India recorded a current account surplus of 1.7 per cent of GDP in April-December 2020 as against a deficit of 1.2 per cent in April-December 2019 on the back of a sharp contraction in the trade deficit.

• Net invisible receipts were lower in April-December 2020 due to a moderation in net private transfer receipts and an increase in investment income payments.

• Net FDI inflows at US$ 40.8 billion in April-December 2020 were higher than US$ 31.1 billion in April-December 2019.

• Net FPI inflows stood at US$ 28.9 billion in April-December 2020, higher than US$ 15.1 billion a year ago.

• In April-December 2020, there was an accretion of US$ 83.9 billion to the foreign exchange reserves (on a BoP basis).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1330