Reserve Bank of India – Press Releases
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Month: September 2021
Bank officers union extends support to Bharath Bandh by farmers, BFSI News, ET BFSI
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Bank unions today have extended support to the Bharath Bandh called by farmers, demanding a roll back of the three farm laws.
The All India Bank Officers’ Confederation said that its affiliates and state units will also support the farmer protests.
The union questioned the government’s plan of doubling farmers’ income by 2022, citing the NSS Land and Livestock holdings of Households and Situation Assessment of Agricultural Households, 2018-19 report released earlier this month.
The report highlighted that the average outstanding loan per agricultural household has increased to Rs 74,121 in 2018 from Rs 47,000 in 2013. The growing indebtedness of agricultural households reflects deep farm distress, the union said.
The bandh will be held from 6am to 4pm, during which all government and private offices, educational and other institutions, shops, industries, commercial establishments, public events and functions will be closed across the country.
According to reports, some banks in the country will remain shut today – banks in Maharashtra and some banks in Bihar.
The Samyukt Kisan Morcha, the umbrella body of over 40 farm unions leading the protests, called for the Bharat Bandh today, the day their protests complete 10 months.
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Banks may sell Rs 1 lakh crore of fraud-hit loans to NARCL, ARCs, BFSI News, ET BFSI
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Banks may offload about Rs 1 lakh crore of accounts with fraudulent activities to National Asset Reconstruction Company Ltd (NARCL) and other ARCs with the Reserve Bank of India allowed lenders to sell such loans.
In the last three years, banks have declared loan frauds amounting to Rs 3.95 lakh crore.
The new rule is part of the RBIs final norms on the transfer of loan exposures.
The move has opened a new avenue for ARCs, which till now were allowed to take over non-performing assets as well as loans which are in default for 60 days.
This bad loans that ARCs can take over include loan exposures classified as fraud as on the date of transfer provided that the responsibilities of the transferor with respect to continuous reporting, monitoring, filing of complaints with law enforcement agencies and proceedings related to such complaints shall also be transferred to the ARC, the central bank said. The transfer of such loan exposures to an ARC, however, does not absolve the transferor from fixing the staff accountability as required under the extant instructions on frauds.
Banks have to make 100% provision in four quarters for accounts tagged in the fraud category. In the case of non-performing assets without delayed recovery, 100% provisioning effectively happens over eight quarters.
The RBI has clarified on the called Swiss Challenge Method, applicable while transferring stressed loans by lenders. The RBI had proposed de-regulate price discovery by departing from Swiss Challenge auction method, where the highest bid in the first round or unsolicited bid received becomes the base for seeking counter offers.
The central bank said that in cases where the aggregate exposure of lenders to a borrower whose loan is being transferred is above 1 bln rupees, Swiss Challenge method must be followed. In all other cases, the bilateral negotiations shall be subject to the price discovery and value maximisation approaches adopted by the transferor as part of the board approved policy, which may also include Swiss Challenge method, it said However, in case of such transfers used as means for resolution under the RBI’s Jun 7, 2019 circular, Swiss Challenge method would be mandatory irrespective of the exposure threshold.
The RBI said that lenders must have a board-approved policy on the adoption of Swiss Challenge method. The policy could include parameters such as a tolerance limit on haircut required by the lenders in the base-bid and minimum mark-up for over the base for seeking counter offers, the RBI said. Such minimum mark-up, difference between the challenger and the base-bid expressed as a percentage of the base-bid, must not be less than 5% and not be more than 15%.
The bad bank
Finance Minister Nirmala Sitharaman on Thursday announced a Rs 30,600 crore government guarantee for the National Asset Reconstruction Company Limited (NARCL) for acquiring stressed loan assets, paving the way for operationalisation of the bad bank.
The finance minister in Budget 2021-22 announced the setting up of a bad bank as part of the resolution of bad loans worth about Rs 2 lakh crore.
The bad bank or NARCL will pay up to 15 per cent of the agreed value for the loans in cash and the remaining 85 per cent would be government-guaranteed security receipts (SRs). The government guarantee would be invoked if there is a loss against the threshold value.
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Bank Holidays in October 2021, List of Bank Holidays in October in India: Banks to remain shut for up to 21 days in October; check full list here
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Banks will not be closed for all 21 days for all states as these are state-specific holidays for different occasions
2021 Bank Holidays in October: Banks in India will remain closed for up to 21 days in October 2021, including second and fourth Saturdays, and Sundays. Apart from weekly offs, banks will remain shut in different states on account of different holidays. Banks will not be closed for all 21 days for all states as these are state-specific holidays for different occasions. On October 2, banks across the country will remain shut as it will be a gazetted holiday. The Reserve Bank of India has categorised holidays under three categories — Holiday under Negotiable Instruments Act; Holiday under Negotiable Instruments Act and Real-Time Gross Settlement Holiday; and Banks’ Closing of Accounts. The list of holidays given below has been notified by RBI.
Bank holidays in October 2021
1 October 2021 – Half Yearly Closing of Bank Accounts
2 October 2021 – Mahatma Gandhi Jayanti
6 October 2021 – Mahalaya Amavasye
7 October 2021 – Mera Chaoren Houba of Lainingthou Sanamahi
12 October 2021 – Durga Puja (Maha Saptami)
13 October 2021 – Durga Puja (Maha Ashtami)
14 October 2021 – Durga Puja/Dussehra (Maha Navami)/Ayutha Pooja
15 October 2021 – Durga Puja/Dasara/Dusshera (Vijaya Dashmi)
16 October 2021 – Durga Puja (Dasain)
18 October 2021 – Kati Bihu
19 October 2021 – Id-E-Milad/Eid-e-Miladunnabi/Milad-i-Sherif (Prophet Mohammad’s Birthday)/Baravafat
20 October 2021 – Maharishi Valmiki’s Birthday/Lakshmi Puja/Id-E-Milad
22 October 2021 – Friday following Eid-i-Milad-ul-Nabi
October 26 – Accession Day
Banks across Gangtok will remain closed on 1 October 2021, on account of half-yearly closing of bank accounts. On 6 October 2021, only banks Agartala, Bengaluru, and Kolkata will remain shut to observe Mahalaya Amavasye. Only banks in Imphal will observe a holiday on 7 October 2021, on account of Mera Chaoren Houba of Lainingthou Sanamahi. On 12 October 2021, banks in Agartala and Kolkata will remain shut due to Durga Puja (Maha Saptami). On the next day, banks in Agartala, Bhubaneswar, Gangtok, Guwahati, Imphal, Kolkata, Patna, and Ranchi will observe a holiday on account of Durga Puja (Maha Ashtami). On 14 October, banks across Agartala, Bengaluru, Chennai, Gangtok, Guwahati, Kanpur, Kochi, Kolkata, Lucknow, Patna, Ranchi, Shillong, and Thiruvananthapuram will be closed for Durga Puja/Dussehra (Maha Navami)/Ayutha Pooja.
On 15 October 2021, except for Imphal and Shimal, banks across the country will remain closed for Durga Puja/Dasara/Dusshera (Vijaya Dashmi). Only banks in Gangtok will remain closed on 16 October to observe Durga Puja (Dasain). On 18 October, banks in Guwahati will be closed; on 19 October, banks in Ahmedabad, Belapur, Bhopal, Chennai, Dehradun, Hyderabad, Imphal, Jammu, Kanpur, Kochi, Lucknow, Mumbai, Nagpur, New Delhi, Raipur, Ranchi, Srinagar, Thiruvananthapuram will remain shut for Id-E-Milad/Eid-e-Miladunnabi/Milad-i-Sherif. Banks in Agartala, Bengaluru, Chandigarh, Kolkata, Shimla, will be closed on 20 October for Maharishi Valmiki’s Birthday. On 22 and 26 October, banks in Jammu and Srinagar will remain closed for Eid-i-Milad-ul-Nabi, and Accession Day, respectively.
Weekend Bank Holidays in October 2021
3 October 2021 – Sunday
9 October 2021 – 2nd Saturday
10 October 2021 – Sunday
17 October 2021 – Sunday
23 October 2021 – 4th Saturday
24 October 2021 – Sunday
31 October 2021 – Sunday
All the private and public sector banks across the country remain shut on the second and fourth Saturdays of every month, along with a weekly holiday on Sunday. Even as banks will remain shut on the above-mentioned days, customers can avail online services. Moreover, mobile and internet banking will remain operational.
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Rupee slips 5 paise to 73.73 against US dollar in early trade
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The Indian rupee edged lower by 5 paise to trade at 73.73 against the US dollar in opening deals on Monday due to fresh demands for dollar from banks and importers.
Though, a sustained bull run in the domestic equity market and dollar’s weakness against key rivals overseas lent some support to the rupee and checked its further fall, analysts said.
At the interbank foreign exchange, the rupee opened on a weak note at 73.70 and slid further to 73.73 as the trade progressed, logging a loss of 5 paise against the greenback over its previous close.
On Friday, the Indian currency had closed 4 paise down at 73.68 against the US dollar.
Dollar index
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.11 per cent to 93.22.
On the domestic equity market front, the BSE Sensex was trading 114.73 points or 0.19 per cent higher at 60,163.20. Similarly, the NSE Nifty was trading 23.25 points or 0.13 per cent up at 17,876.45.
Meanwhile, global crude oil benchmark Brent futures advanced 1.19 per cent to $79 per barrel.
Foreign institutional investors were net buyers in the capital market on Friday as they purchased shares worth ₹442.49 crore, as per exchange data.
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Post Office Time Deposit (TD) Scheme Giving Lucrative Interests On Fixed Term
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Investment
oi-Kuntala Sarkar
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Post Office savings schemes are popular among Indian citizens because of the security and lucrative interest rates. At present many people are turning towards the mutual fund, SIP, and the equity markets, but Post Office (PO) schemes are still adopted by a large number of populations, mostly in the rural parts of India. Post Office National Savings Time Deposit (TD) Scheme is one of the most popular fixed schemes for its availability of small-scale savings with good interest rate options. The TD account gives better returns than some other savings bank accounts. Another reason to choose the Post Office Time Deposit (TD) Scheme is that you can withdraw your money from the scheme after 6 months of deposit if you require the money suddenly, on an immediate basis, unlike the Kisan Vikas Patra (KVP) or National Savings Certificates (NSC) by PO.
Interest rates of TD account
| Tenure | Interest rate |
|---|---|
| 1 year A/c | 5.50% |
| 2 years A/c | 5.50% |
| 3 years A/c | 5.50% |
| 5 years A/c | 6.70% |
Information source: indiapost.gov.in
Interest under the scheme will be paid annually but it is calculated quarterly, and if you want the interest amount will be credited to your TD account itself. The investment under 5 years TD will qualify for the benefit of section 80C of the Income Tax Act, 1961. The deposit amount shall be repayable after the expiry of 1 year, 2 years, 3 years, and 5 years. However, on maturity depositors can also further extend the TD account for another tenure for which the account was initially opened. You can transfer your TD account from one PO branch to another.
Interest calculation for example
| Deposit amount (INR) | Tenure | Interest rate (percentage) | Total interest amount (INR) |
|---|---|---|---|
| 100000 | 1 | 5.50% | 5614 |
| 100000 | 2 | 5.50% | 11229 |
| 100000 | 3 | 5.50% | 16843 |
| 100000 | 5 | 6.70% | 34350 |
Withdraw rule
No deposit shall be withdrawn before the expiry of six months from the date of deposit. If the TD account is closed after 6 months but before 1 year, the PO Savings Account Interest rate will be applicable. If 2 or 3 or 5 years TD account prematurely closed after 1 year, interest shall be calculated 2% less than of TD interest rate for the completed years, and for a part period less than a year, PO Savings Interest rates will be applicable.
Account opening rule
The minimum amount for opening of TD account is Rs. 1000 and in multiple of Rs. 100 with no maximum limit for investment. One can open the account for 1 year, 2 years, 3 years, and 5 years. Any person above 18 years can open a TD account with a nominee, but a parent can also open an account on behalf of a child above 10 years. A joint account can be opened with either 2 persons’ names or 3 persons’ names, with the nominee. However, if the investor is a senior citizen, he/she can invest in the Senior Citizen Savings Scheme that will fetch around a 7.4% interest rate.
SBI interest rates for comparison
SBI’s interest rate of Fixed Deposit (FD) scheme for 3 years to less than 5 years is 5.30%, while for 5 years to less than 10 years SBI will give 5.40% interest (source: sbi.co.in/web/personal-banking/investments-deposits/deposits/fixed-deposit). One should also remember that SBI SB Deposit accounts present interest rate (w.e.f May, 31, 2020) is 2.70% p.a. (source: sbi.co.in/web/interest-rates/savings-bank-deposits). Hence, the Post Office National Savings Time Deposit (TD) Scheme is a highly appreciated scheme for common Indians.
Story first published: Monday, September 27, 2021, 9:30 [IST]
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Reserve Bank of India – Press Releases
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Pivotal week for Indian traders may pave way for foreign inflows
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Indian investors face a crucial week with announcements due on a key index review for the nation’s bonds and also on the government’s borrowing plan for the next six months.
FTSE Russell will announce its annual review for equity and fixed-income markets on Thursday, with Indian debt already on a watchlist for potential upgrading. While the government has yet to say when it will announce its next borrowing program, officials from the central bank and finance ministry will decide the plan on Monday, people familiar have said.
“This week will lay the ground for the second half of the year, and could be an inflection point for the markets,” said Madhavi Arora, lead economist at Emkay Global Financial Services Ltd. in Mumbai. “Bond index inclusion could be a game changer for India, luring massive foreign inflows.”
G-secs react to the beginning of Fed taper
The rupee has declined about 1 per cent this month so far, and is among Asia’s worst performers, as the Fed’s hawkish pivot strengthened the dollar, even as the Reserve Bank of India has maintained its easy stance. A potential inclusion by FTSE Russell may pave the way for big foreign inflows and burnish the rupee and bonds.
The rupee appears poised for more near-term losses against the greenback given the currency pair’s slow stochastics, a momentum indicator, signalling it is still not in the oversold territory against the dollar. However, any further losses may be limited given initial rupee support around 74 level.
Bond markets await RBI move
Indian bonds are already heading for the biggest monthly gain since April, and may get a further boost if the government decides to cut back borrowing for the second half of the fiscal year as revenue improves.
Index addition looks more imminent after a finance ministry official earlier this month said the nation has completed most of the work required to be a part of the global benchmarks
India’s inclusion in the global bond indexes, expected by early 2022, may attract as much as $250 billion of inflows in the next decade, according to Morgan Stanley, which sees the 10-year bond yields to ease to 5.85 per cent in 2022 from 6.18 per cent on Friday. The move may lead to the rupee gaining by more than 1.5 per cent to 72.50 per dollar, from Friday’s close, according to HDFC Securities Ltd.
Indian bonds are also under review for inclusion by JPMorgan Chase & Co., which typically assesses its index this month, while Bloomberg Index Services Ltd. last week said there is currently no estimated timeline in place for India’s inclusion in the Bloomberg Global Aggregate Index.
An index inclusion “could be a big trigger, leading to rapid appreciation in the rupee,” said Dilip Parmar, analyst at HDFC Securities. “The central bank may not be too aggressive in buying or selling dollars, and may give time for the rupee to adjust to the market.”
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Panels to scrutinize all cooperative gold loans in Tamil Nadu, BFSI News, ET BFSI
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MADURAI: Special teams constituted to scrutinize gold loans provided by cooperative societies across the state have to complete 100% scrutiny of all loans and submit their reports to the concerned regional registrar of cooperative societies by November 15.
The regional joint registrars would submit their compiled reports on the status of the loans in their regions to Registrar of Cooperative Societies, Chennai by November 20.
This was stated in a communication dated September 24 from the registrar to the managing director, Central Cooperative Bank, Chennai, regional registrars and other officials. It said the chief minister had announced under Rule 110 of the Assembly that all eligible gold loans up to five sovereigns obtained through cooperative societies would be waived. But it has been detected that misappropriations have taken place in providing these gold loans and hence it has been decided to scrutinize the loans provided through the societies.
According to the chief minister’s announcement in the Assembly, the state would incur an expenditure of Rs 6,000 crore due to the waiver. The registrar has said that all gold loans that had been obtained till March 31, 2021 and from April 1, 2021 to the date of scrutiny should be reviewed 100%.
Committees comprising joint registrars of the societies should decide on the number of gold appraisers needed for the scrutiny and form committees.
Cooperative societies in each region would be scrutinized by teams from the neighbouring region. For example, Trichy region would be reviewed by officials from Ariyalur, Karur by Dindigul, Theni region by officials from Madurai etc..
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IL&FS and ITNL looking to replace auditor SRBC & Co, BFSI News, ET BFSI
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Infrastructure Leasing & Financial Services (IL&FS) and subsidiary IL&FS Transportation Networks Ltd (ITNL) are evaluating replacement of auditor SRBC & Co, an EY affiliate, as their statutory auditor, after a damning audit quality review report by the National Financial Reporting Authority.
The 343-page report released on Thursday said SRBC did not raise red flags in critical areas like going concern, evaluation of ITNL’s investments and loans.
Responding to ET’s query, IL&FS said discussions were ongoing around the continuation or otherwise of the auditor, and that the audit committee would soon take a call.
“So far neither IL&FS/ITNL has asked SRBC to resign, nor has SRBC offered to resign. This is under examination and is being referred to the audit committee of ITNL for appropriate recommendation to the board of ITNL,” IL&FS spokesperson Sharad Goel said.
EY did not respond till Sunday press time to an email seeking comment, sent on Friday evening.
The National Financial Reporting Authority (NFRA), part of the Ministry of Corporate Affairs, has gone into detail how the auditor did not interpret some of the accounting entries as they ought to be.
This would mean that the financial statements prepared by ITNL and approved by the auditor did not represent the real picture.
This development comes at a time when IL&FS’ government-appointed board is trying to sell ITNL’s assets.
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