4 Best Performing Floater Funds To Start SIP In 2021

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HDFC Floater Rate Debt Fund Direct Plan Growth

This fund was launched in January 2013 by the fund house HDFC Mutual Fund. HDFC Floating Rate Debt Fund Direct Plan has a one-year growth rate of 6.30 percent. According to Value Research statistics, it has generated 8.36 percent average yearly returns since its inception. Axis Bank Ltd., Embassy Office Parks REIT, Canara Bank, Gujarat State, Muthoot Finance Ltd., and the Reserve Bank of India are the fund’s top holdings.

The fund’s expense ratio is 0.23 percent, and its debt sector allocation is allocated across financial, energy, sovereign, construction, and others. The fund presently has Rs 17,250 Cr in assets under management (AUM), and the latest NAV as of July 8, 2021 is Rs 38.91. The fund not only has outstanding stability in terms of generating returns but also has provided good returns in the past, according to the historical performance. SIPs in this fund can be started with a minimum contribution of Rs 1000 and there is no exit load.

ICICI Prudential Floating Interest Fund Direct Plan Growth

ICICI Prudential Floating Interest Fund Direct Plan Growth

This Floater mutual fund scheme was launched in January 2013, by the fund house ICICI Prudential Mutual Fund. ICICI Prudential Floating Interest Fund Direct Plan -Growth returns over the last year are 6.96 percent, according to Value Research data. Since its inception, it has generated an average yearly return of 8.82 percent. State Bank of India, Gujarat State, Motherson Sumi Systems Ltd., SRF Ltd., Rajasthan State, Embassy Office Parks REIT, and Motherson Sumi Systems Ltd. are the fund’s top holdings.

The expense ratio of the fund is 0.60 percent, and its debt sector allocation is balanced between sovereign, construction, and others. The fund’s current AUM is Rs 12,113 Cr and the latest NAV as of 8 July 2021 is Rs 350.61. The fund does not have an exit load and one can start SIP with Rs 500.

Aditya Birla Sun Life Floating Rate Fund Direct Plan Growth

Aditya Birla Sun Life Floating Rate Fund Direct Plan Growth

Aditya Birla Sun Life Mutual Fund introduced this Floater mutual fund plan in January 2013. Aditya Birla Sun Life Floating Rate Direct Fund’s 1-year growth results are 5.04 percent. According to Value Research statistics, it has produced 8.56 percent average yearly returns since its inception. The fund has a 0.23 percent expense ratio, and its top holdings include Axis Bank Ltd., Aditya Birla Finance Ltd., Haryana State, National Bank For Agriculture & Rural Development, Sikka Ports and Terminals Ltd., Indian Oil Corporation Ltd., and Nabha Power Ltd.

The debt sector allocation of the fund is categorized into financial, energy, sovereign, and others. The fund’s current AUM is Rs 14,324 Cr, and the latest NAV is Rs 274.88 as of July 8, 2021. There is no exit load on the fund, and one may begin SIP with as little as Rs 1000.

Nippon India Floating Rate Fund Direct Growth

Nippon India Floating Rate Fund Direct Growth

The fund house Nippon India Mutual Fund introduced this Floater mutual fund product in January 2013. The 1-year returns for Nippon India Floating Rate Fund Direct-Growth are 5.82 percent. According to Value Research, it has achieved 8.59 percent average yearly returns since its inception. The fund’s major holdings are GOI, Rural Electrification Corporation Ltd., Madhya Pradesh State, Tata Capital Housing Finance Ltd., State Bank of India, LIC Housing Finance Ltd., Reliance Industries Ltd., Axis Bank Ltd., HDFC Ltd, and National Bank For Agriculture & Rural Development.

The fund has an expense ratio of 0.24%. The fund’s debt sector allocation is segmented into engineering, financial, energy, sovereign, and others. As of July 8, 2021, the fund’s current AUM is Rs 15,676 Cr, and the latest NAV is Rs 36.60. The fund has no exit load, and one may start a SIP with as low as Rs 100.

Best Performing Floater Funds In 2021

Best Performing Floater Funds In 2021

Here are the best performing floater funds in 2021 based on past returns and ratings.

Funds 1-Year Returns 3-Year Returns 5- Year Returns Rating
HDFC Floater Rate Debt Fund Direct Plan Growth 6.30% 8.05% 7.80% 4 star by Morningstar
ICICI Prudential Floating Interest Fund Direct Plan Growth 6.96% 8.52% 8.31% 5 star by Morningstar
Aditya Birla Sun Life Floating Rate Fund Direct Plan Growth 5.04% 7.89% 7.85% 5 star by Morningstar
Nippon India Floating Rate Fund Direct Growth 5.82% 9.01% 8.10% 5 star by Morningstar

Should you invest?

Should you invest?

Starting from March 2021 till now, floater debt funds have done really well, the reason behind this is floater rate funds invest in AAA-rated instruments and they have given average returns of 7 to 8 percent in the last 1 to 3 years. Floater funds are diversified with fixed-coupon bonds and derivative instruments, which means that in the current environment, these funds can provide high returns in the short term, as this category has gained popularity in recent months.

Because the funds primarily invest in floating-rate securities, the return on floater funds would rise if there is a surge in interest rates. As interest rates are projected to steadily rise in the coming months, investors may invest in floater funds for short to medium term. Investors seeking consistent returns can consider investing in ultra-short term or liquid funds of this category, but keeping default or credit risk in consideration.

Disclaimer

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in



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RBI advises banks to shift away from LIBOR to alternative reference rates

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The Reserve Bank of India (RBI) has encouraged banks and financial institutions to cease entering into new financial contracts that reference LIBOR as a benchmark as soon as practicable and and in any case by December 31, 2021.

The central bank also advised banks and financial institutions to encourage their customers to cease entering into new London Interbank Offered Rate (LIBOR) referenced contracts.

Instead of LIBOR, the central bank asked them to use any widely accepted alternative reference rates (ARR).

This directive has been issued to ensure orderly, safe and sound LIBOR transition and considering customer protection, reputational and litigation risks involved, the RBI said in a circular.

LIBOR has been used in the global financial system as one of the benchmarks for a large volume and broad range of financial products and contracts.

According to a 2014 Financial Stability Board report, the cases of attempted market manipulation and false reporting of global reference rates, together with the post (global financial)-crisis decline in liquidity in interbank unsecured funding markets, have undermined confidence in the reliability and robustness of existing interbank benchmark interest rates.

The “Roadmap for LIBOR Transition” comes in the aforementioned context.

Comprehensive review

The RBI wants banks/financial institutions to undertake a comprehensive review of all direct and indirect LIBOR exposures and put in place a framework to mitigate risks arising from such exposures on account of transitional issues including valuation and contractual clauses.

They may also put in place the necessary infrastructure to be able to offer products referencing the ARR.

The central bank underscored that continued efforts to sensitise clients about the transition as well as the methodology and convention changes involved in the alternatives to LIBOR will be critical in this context.

While certain US dollar LIBOR settings will continue to be published till June 30, 2023, the RBI observed that the extension of the timeline for cessation is primarily aimed at ensuring roll-off of US dollar LIBOR-linked legacy contracts, and not to encourage continued reliance on LIBOR.

“It is, therefore, expected that contracts referencing LIBOR may generally be undertaken after December 31, 2021, only for the purpose of managing risks arising out of LIBOR contracts (e.g. hedging contracts, novation, market-making in support of client activity, etc.), contracted on or before December 31, 2021,” it added.

MIFOR

RBI said banks are also encouraged to cease using the Mumbai Interbank Forward Outright Rate (MIFOR), published by the Financial Benchmarks India (FBIL), which references the LIBOR as soon as practicable and in any event by December 31, 2021.

FBIL has started publishing daily adjusted MIFOR rates from June 15, 2021 and modified MIFOR rates from June 30, 2021 which can be used for legacy contracts and fresh contracts respectively.

Banks may trade in MIFOR after December 31, 2021 only for certain specific purposes such as transactions executed to support risk management activities such as hedging, required participation in central counterparty procedures (including transactions for hedging the consequent MIFOR exposure), market-making in support of client activities or novation of MIFOR transactions in respect of transactions executed on or before December 31, 2021.

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Average ticket size of AePS transactions rising: Rapipay Fintech

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The average transaction size for Aadhaar Enabled Payment System has increased in recent months along with the volume of transactions on the platform with greater adoption.

“The average ticket size of AePS transactions has increased from ₹2,500 to ₹2,900 in the last two quarters, showing increasing trust and usage of AePS in India, especially in the rural markets,” said Yogendra Kashyap, MD and Founder, RapiPay Fintech.

Monthly data from the National Payments Corporation of India had revealed that AePS transactions in June stood at 8.75 crore in volume and ₹24,667.8 crore in value. In contrast, there were 8.42 crore transactions worth ₹24,619.24 crore in May on the platform.

Daily AePS transactions in July have also remained high. On July 6, there were 31.7 lakh AePS transactions amounting to ₹854.95 crore.

Rapipay reported an 18 per cent increase in AePS transactions in June this year compared to May.

Kashyap attributed this growth to reopening of markets and movement of people in June after lockdown restrictions were eased.

“This gave required impetus to businesses across industries and hence cash withdrawal requirement in both urban and rural markets increased,” he said.

Rapipay also reported an eight per cent increase in overall cash out transactions from AePS and Micro ATMs in the first quarter of the fiscal as against the fourth quarter of 2020-21.

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Top banks eye overseas AT1 bond sale as domestic investors turn wary, BFSI News, ET BFSI

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As mutual funds turn wary of AT1 bonds, banks are looking overseas to raise capital through the instrument.

Five top lenders, including HDFC Bank, Axis Bank and State Bank of India, are looking to raise up to $2 billion overseas in the next few months through Additional Tier I (AT1) as they anticipate an increase in credit demand.

State Bank of India, plans to raise upto Rs 14,000 crore through additional tier-I bonds (AT1 bonds) in the current financial year (FY22) to enhance capital adequacy profile.

The Central Board approved the capital raise by way of issuance of Basel lll-compliant debt instruments in rupee and/or US dollar in FY22, the bank said last month.

Canara Bank is planning to raise up to Rs 3,400 crore in capital by issuing fresh AT1 bonds.

These bonds are expected to offer yields between 4 per cent and 5 per cent. Covering currency risks, the total cost may go up to 9 per cent.

AT1 bonds

AT1 bonds, also known as perpetual bonds, add to a bank’s capital base and allow a lender to meet fund adequacy thresholds set by regulators. Such securities do not have any fixed maturity but generally have a five-year call option, giving defined exit routes to investors. These papers are always rated one or two notches below the same issuer’s

general corporate rating. Domestic investors, including mutual funds, are wary of AT1 bonds after Yes Bank wrote off over Rs 8,000 crore of such bonds during its bailout in 2020.

State Bank of India was the only bank from the country to raise AT1 bonds overseas in 2016. Five-year call options on that series of AT1 bonds could be exercised this year.

Between FY18 and FY21, perpetual bond sales by banks have nearly halved to Rs 18,772 crore from Rs 34,860 crore three years ago. In FY22, AT1 bond sales have so far been negligible.

Sebi directive

Capital market regulator Sebi has eased the valuation rule pertaining to perpetual bonds in March last year.

The move came after the finance ministry asked the Securities and Exchange Board of India (Sebi) to withdraw its directive to mutual fund houses to treat additional tier-I (AT-1) bonds as having maturity of 100 years as it could disrupt the market and impact capital-raising by banks.

Sebi said the deemed residual maturity of Basel III AT-1 bonds will be 10 years until 31 March, 2022, and would be increased to 20 and 30 years over the subsequent six-month period.

From April 1, 2023, onwards, the residual maturity of AT-1 bonds will become 100 years from the date of issuance of the bonds.

In addition, Sebi said that deemed residual maturity of Basel III Tier 2 bonds would be considered 10 years or contractual maturity, whichever is earlier, until March 2022. After that, it will be in accordance with the contractual maturity.

AT-1 bonds are considered perpetual in nature, similar to equity shares as per the Basel III guidelines. They form part of the tier-I capital of banks.



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Global banks include Zoom in their apps for business communications, BFSI News, ET BFSI

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BFSI companies, which have been operating out of employee homes during the pandemic, are tying up with Zoom as they aggressively adopt virtual communication models.

“A few big global banks have already entered into this collaborative model with Zoom. HSBC UK has expanded its use of video appointments using Zoom. The customers can get mortgage advice, upload any supportive evidence onto the system, and take out a mortgage via this collaborative technology,” Harry Moseley, CIO, Zoom, told ETBFSI.

In a deal between Goldman Sachs Japan and SoftBank group, the Goldman Sachs group set up a framework to coordinate with a 60 member sales team via Zoom.Stressing on the importance of Zoom in banking communications, Moseley said, “If I am selling banking products to you, if I am talking to you about portfolio or investment strategies, etc., the natural tendency of people is to express their positive or negative sentiment. These nonverbal cues are super important.”

Collaborative models

BFSI companies are investing in partnerships and collaborative models involving new tech to stay relevant in a rapidly evolving space. Embedding the Zoom elements in banking, financial services, and insurance apps can help in enhanced customer interaction, Moseley said.

“Financial services in general look forward to reducing the friction to connect with their clients. With virtual communications, they have seen an uptick in volumes and uptick in interactions, and an uptick in a sort of ability to connect with clients,” Moseley said.

Changing work structure

The BFSI sector has been aggressive in adopting digitization. Given the pandemic, they are looking for more collaborations and capabilities in the virtual environment.

“Organisations today need to rethink the whole office structure. Offices need to be collaborative and physically safe. There should be inclusivity, collaboration and safety in the work environment,” Moseley said. “Work is not a place. Work is something we do,” he said.

Zoom has more than 300 million users and can accommodate 50,000 people at a time.



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Square plans to make hardware wallet for bitcoin, BFSI News, ET BFSI

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Square Inc will make a hardware wallet for bitcoin, the payments company confirmed in a tweet on Thursday shortly before U.S. Senator Elizabeth Warren flagged growing risks posed to consumers and financial markets by the cryptocurrency market.

Bitcoin wallets can be stored offline or online at cryptocurrency exchanges, venues where bitcoin can be bought and sold for traditional currencies or other virtual coins.

With a non-custodial wallet, you have sole control of your private keys, which in turn control your cryptocurrency and prove the funds are yours. With a custodial wallet, another party controls your private keys. Most custodial wallets are web-based exchange wallets.

“We have decided to build a hardware wallet and service to make bitcoin custody more mainstream…”, Jesse Dorogusker, head of hardware at Square said in a twitter thread https://bit.ly/2TUta9H.

Many companies have emerged to serve a growing need to protect their assets from online theft.

Last month, Chief Executive Officer Jack Dorsey hinted in a tweet https://bit.ly/36prSGA that the company was considering creating a non-custodial hardware wallet for bitcoin. Dorsey is also the chief executive of Twitter Inc.

Cryptocurrencies reached a record capitalization of $2 trillion in April, but U.S. oversight of the market remains patchy.

Warren, a former U.S. presidential candidate, on Thursday raised concerns in a letter to Securities and Exchange Commission Chair Gary Gensler, in an effort that could help lay the groundwork for legislation to regulate the fast-growing cryptocurrency market.



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US IPO market a danger zone for Chinese firms after Beijing crackdown, BFSI News, ET BFSI

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HONG KONG/NEW YORK: China’s stepped-up scrutiny of overseas listings by its companies and a clampdown on ride-hailing giant Didi Global Inc soon after its debut in New York have darkened the outlook for listings in the United States, bankers and investors said.

On Tuesday Beijing said it would strengthen supervision of all Chinese firms listed offshore and tighten rules for cross-border data flows, a sweeping regulatory shift that is also set to weigh on the long-term valuations of the IPO-bound companies, they said.

Bankers and investors expect the pace of activity to slow in the near-term as investors grapple with Beijing’s decision to tighten supervision of firms listed offshore, coming just days after regulators stunned investors by launching a cybersecurity investigation into Didi.

“It suffices to say those Chinese companies already planning to list in the US will have to pause, or even abandon the plans altogether, in the face of mounting uncertainties and confusions,” said Fred Hu, chairman of Primavera Capital Group.

“The US market is off limits, at least for now,” said Hu, whose private equity firm’s portfolio include a number of tech companies that have gone public overseas. “…The stakes are extraordinarily high, for both the tech companies and for China as a country.”

US capital markets have been a lucrative source of funding for Chinese firms in the past decade, especially for technology companies looking to benchmark their valuations against listed peers there and tap an abundant liquidity pool.

A record $12.5 billion has been raised so far in 2021 in 34 offerings from listings of Chinese firms in the US, Refinitiv data shows, well up from the $1.9 billion worth of new listings in 14 deals in the year-ago period.

Analysts say China’s moves to look more closely at firms venturing overseas add a new layer of uncertainty for firms already struggling to navigate escalating tensions between Beijing and Washington over a broad range of issues.

“The message is that for a successful overseas listing, Chinese regulators must be involved, as well as international cooperation with overseas regulatory bodies,” said Louis Lau, California-based Brandes Investment Partners’ director of investments.

“Overseas-listed Chinese companies may have had the mistaken impression that it can ignore Chinese regulators just because they are not listed in China,” Lau, whose company holds Chinese stocks, told Reuters.

The broader regulatory clampdown and Didi’s listing dustup drove the S&P/BNY Mellon China Select ADR Index, which tracks the American depositary receipts of major US-listed Chinese companies, down 3.4% on Tuesday.

‘CLEAR SIGNAL’ Catching many investors, and Didi, off-guard, the Cyberspace Administration of China (CAC) on Sunday ordered the ride-hailing firm to remove its apps from app stores in China for illegally collecting users’ personal data, less than a week after it made its debut on the New York Stock Exchange following its $4.4 billion initial public offering.

It was the largest Chinese IPO in the US since e-commerce giant Alibaba Group raised $25 billion in 2014.

For investors, the euphoria was shortlived, with Didi’s shares diving nearly a third since its debut on June 30. The stock fell for third consecutive session on Wednesday, ending down 4.6%.

The CAC also announced probes into Kanzhun Ltd’s online recruiting app Zhipin and truck hailing company Full Truck Alliance.

“It’s a clear signal that the Chinese government is not particularly happy that these firms continue to decide to raise capital in the west,” said Jordan Schneider, a technology analyst at research firm Rhodium Group.

The measures come as the US securities regulator in March began rolling out new regulations that could see Chinese companies delisted if they do not comply with US auditing rules.

BOOST FOR HONG KONG

While the latest crackdown has dimmed the outlook for large Chinese IPOs in New York, not all companies are rushing to pull their ongoing offerings just yet.

LinkDoc Technology Ltd, which is described as a Chinese medical data solutions provider, is currently raising up to $211 million in a US IPO and is due to price its shares after the US market closes Thursday.

There has been no change to that time table yet, according to two sources with direct knowledge.

LinkDoc did not immediately respond to a request for comment.

Wall Street banks, which have benefited from Chinese firms’ rush to list in New York in recent years, are also expected to take a hit on their fee income in the near-term, according to bankers.

Investment banking fees from Chinese offerings were worth $485.8 million so far in 2021, Refinitiv data shows. Goldman Sachs, Morgan Stanley and JPMorgan are at the top of the league table for deal volume, according to the data.

Goldman Sachs and JPMorgan declined to comment, while Morgan Stanley did not respond.

Some bankers said the latest regulatory clampdown will further boost Hong Kong’s allure as a fundraising venue for Chinese companies looking to avoid the new restrictions for listing in the United States.

Underscoring that optimism, shares in Hong Kong Exchanges and Clearing Ltd (HKEX) rose as much as 6.2% on Wednesday, and was the second most actively traded stock by turnover.

“Buying is fueled by an expectation that HKEX may become the only IPO center for Chinese firms seeking listing and the main center for raising foreign capital,” said Steven Leung, sales director at brokerage UOB Kay Hian in Hong Kong.



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BofA debuts cryptocurrencies research team led by Alkesh Shah, BFSI News, ET BFSI

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Bank of America Corp. created a new team dedicated to researching cryptocurrencies, marking Wall Street’s latest push to capitalize on investors’ frenzy for digital assets.

Alkesh Shah will lead the effort, which will also cover technologies tied to digital currencies, and report to Michael Maras, who leads fixed-income, currencies and commodities research globally, according to an internal memo seen by Bloomberg. A spokeswoman for the firm confirmed the contents of the memo, declining to comment further.

“Cryptocurrencies and digital assets constitute one of the fastest growing emerging technology ecosystems,” Candace Browning, head of global research for Bank of America, said in the memo. “We are uniquely positioned to provide thought leadership due to our strong industry research analysis, market-leading global payments platform and our blockchain expertise.”

Banks have been increasingly looking to expand into the wild world of cryptocurrencies, with many pushing to offer wealth-management products or custody services for the asset class. Some banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., have begun offering crypto-futures trading.

Shah joined Bank of America in 2013 after stints at Morgan Stanley and Lehman Brothers Holdings Inc. and previously led Bank of America’s global technology specialist team. Mamta Jain and Andrew Moss will also join the lender’s research arm as part of the changes and continue to report to Shah, Browning said in the memo.



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RBI asks banks to prepare for transition from LIBOR, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) has issued an advisory asking banks to prepare for the transition out of London Interbank Offered Rate (LIBOR).

In August last year, the RBI requested banks to frame a Board approved plan, outlining an assessment of exposures linked to LIBOR and the steps to be taken to address risks arising from the cessation of LIBOR, including preparation for the adoption of the Alternative Reference Rates (ARR).

“Banks and financial institutions are encouraged to cease, and also encourage their customers to cease, entering into new financial contracts that reference LIBOR as a benchmark and instead use any widely accepted ARR (Alternative Reference Rates), as soon as practicable and in any case by December 31, 2021,” an RBI circular said on Thursday.

The directive comes with the objective of orderly, safe, and sound LIBOR transition and considering customer protection, reputational and litigation risks involved, banks or financial institutions.

While certain US dollar LIBOR settings will continue to be published till June 30, 2023, the extension of the timeline for cessation is primarily aimed at ensuring roll-off of USD LIBOR-linked legacy contracts, and not to encourage continued reliance on LIBOR.

“It is, therefore, expected that contracts referencing LIBOR may generally be undertaken after December 31, 2021, only for the purpose of managing risks arising out of LIBOR contracts (e.g. hedging contracts, novation, market-making in support of client activity, etc.), contracted on or before December 31, 2021,” it said.



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Reserve Bank of India – Press Releases

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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