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Reserve Bank of India – Press Releases

Press Releases

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Reserve Bank of India announces the auction of Government of India Treasury Bills as per the following details:

Sr. No Treasury Bill Notified Amount
(in ₹ crore)		 Auction Date Settlement date
1 91 Days 15,000 June 16, 2021
(Wednesday)		 June 17, 2021
(Thursday)
2 182 Days 15,000
3 364 Days 6,000
  Total 36,000    

The sale will be subject to the terms and conditions specified in the General Notification F.No.4(2)-W&M/2018 dated March 27, 2018 along with the Amendment Notification No.F.4(2)-W&M/2018 dated April 05, 2018, issued by Government of India, as amended from time to time. State Governments, eligible Provident Funds in India, designated Foreign Central Banks and any person or institution specified by the Bank in this regard, can participate on non-competitive basis, the allocation for which will be outside the notified amount. Individuals can also participate on non-competitive basis as retail investors. For retail investors, the allocation will be restricted to a maximum of 5 percent of the notified amount.

The auction will be Price based using multiple price method. Bids for the auction should be submitted in electronic format on the Reserve Bank of India’s Core Banking Solution (E-Kuber) system on Wednesday, June 16, 2021, during the below given timings:

Category Timing
Competitive bids 10:30 am – 11:30 am
Non-Competitive bids 10:30 am – 11:00 am

Results will be announced on the day of the auction.

Payment by successful bidders to be made on Thursday, June 17, 2021.

Only in the event of system failure, physical bids would be accepted. Such physical bids should be submitted to the Public Debt Office (email; Phone no: 022-22632527, 022-22701299) in the prescribed form obtainable from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx) before the auction timing ends. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595666, 022-27595415, 022-27523516). For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).

Ajit Prasad
Director   

Press Release: 2021-2022/355

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Home finance firms to comply with risk-based internal audit norms

Banking & Finance

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The Reserve Bank of India (RBI) has mandated Risk-Based Internal Audit (RBIA) framework for all deposit-taking Housing Finance Companies (HFCs), irrespective of their size, and for non-deposit taking HFCs with asset size of ₹5,000 crore and above.

The central bank said these entities have to put in place an RBIA framework by June 30, 2022.

The RBIA framework has been mandated in the backdrop of the troubles at Dewan Housing Finance Corporation Ltd and Reliance Home Finance.

The RBI had mandated an RBIA framework for non-banking finance companies in February 2021. HFCs, which are also NBFCs, have now been brought under the ambit of this framework.

According to the RBI, an independent and effective internal audit function provides vital assurance to the financial entity’s board and its senior management regarding the quality and effectiveness of the entity’s internal control, risk management and governance framework.

The internal audit function is required to broadly assess and contribute to the overall improvement of the organisation’s governance, risk management, and control processes using a systematic and disciplined approach.

Third line ofdefence

The RBIA function is an integral part of sound corporate governance and is considered as the third line of defence, with the management, and risk management and compliance being the first two.

The essential requirements for a robust internal audit function include sufficient authority, proper stature, independence, adequate resources and professional competence.

On February 3, 2021, the RBI had mandated the RBIA framework for all deposit-taking NBFCs, irrespective of their size; all non-deposit taking NBFCs (including Core Investment Companies) with asset size of ₹5,000 crore and above; and all Urban Co-operative Banks (UCBs) having asset size of ₹500 crore and above.

The above-mentioned Supervised Entities have to implement the RBIA framework by March 31, 2022.

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Ravi Parthasarathy, ex-Chairman of IL&FS Group, held on cheating charge

Banking & Finance

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The Economic Offences Wing of the Tamil Nadu Police has arrested Ravi Parthasarathy, 69, former chairman of the IL&FS Group in connection with alleged cheating of a Chennai-based private limited company of ₹200 crore through IL&FS Transportation Networks India Ltd (ITNL), Mumbai.

Ravi Parthasarathy was arrested in Mumbai and brought to Chennai on Thursday. He was produced before the Special Court for cases under the TNPID Act and remanded to judicial custody for 15 days.

The Economic Offences Wing of the State police had last January arrested Ramchand Karunakaran, former managing director, and Hari Sankaran, former vice-chairman and director of ITNL, who were also cited as accused in this case.

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Forex reserves vault over $600-b mark

Banking & Finance

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India’s foreign exchange (forex) reserves crossed the important milestone of $600 billion, aided by a whopping $6.842 billion jump in the reserves in the week ended June 4, 2021.

As on June 4, 2021, India’s reserves stood at $605 billion. The increase in reserves in the reporting week came mainly on the back of foreign currency assets (FCA) soaring by $7.362 billion.

FCA comprise multi-currency assets that are held in multi-asset portfolios (investment in securities, deposits with other central banks & BIS, and deposits with commercial banks overseas).

The other three components of the reserves, however, declined: Gold (by $502 million), Special Drawing Rights ($1 million) and Reserve Position in the IMF ($16 million).

During the calendar year so far, the reserves rose 32 per cent year-on-year (or by $103.305 billion vs. 78.149 billion in the year ago period).

In a recent press meet, Governor Shaktikanta Das said emerging market economies have to build up their own buffers and RBI is no exception to that.

Foreign investment inflows

State Bank of India’s Economic Research Department, in its report “Ecowrap”, said that India witnessed a record amount of foreign investment inflows into equity markets which supported the rupee. The report emphasised that due to the volatile nature of inflows, they increase the possibility of a currency getting hammered once sentiments start turning sour.

“This is especially true for developing market currencies. Sell-off pressures are only warded off when there are ample foreign reserves with the central bank of the said economy.

“Thus, the Reserve Bank intervened in the forex market through operations in the onshore/offshore OTC (over-the-counter) and exchange traded currency derivatives (ETCD) segments in order to maintain orderly market conditions by containing excessive volatility in the exchange rate and accumulating sizeable reserves as ammunition,” said Soumya Kanti Ghosh Group Chief Economic Adviser.

Brickwork Ratings, in its report “Drishtikone”, attributed the record level of forex reserves to huge foreign portfolio investment inflows into domestic equity markets in FY21.

“A risk-off by foreign investors due to the prevailing uncertainty on domestic economic recovery already led to capital outflows in April and May.

Exchange rate volatility

“The exchange rate volatility demands more forex interventions by the RBI. Hence, the accumulation of forex reserves helps the RBI to maintain the exchange rate at a comfortable level and also deal with external spillovers,” the report said.

CRISIL Research, in a report, observed that record high forex reserves, and foreign investor inflows owing to interest rate differential between India and global economies, will also prop up the rupee.

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ED issues show cause notice to WazirX, directors under FEMA

Banking & Finance

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In a move that further raises concerns over the functioning of crypto-currency exchanges, the Enforcement Directorate has issued a show-cause notice to one of the largest domestic crypto-exchange, WazirX, and its Directors Nischal Shetty and Sameer Hanuman Mhatre for alleged violation of the Foreign Exchange Management Act on transactions involving crypto-currencies worth ₹2,790 crore.

WazirX was bought out by Chinese crypto-currency firm Binance in 2019.

WazirX launches NFT marketplace for Indian artists

In a statement on Friday, the ED said it has initiated a probe on the basis of its ongoing money-laundering investigation into Chinese-owned illegal betting applications. In September, the agency had searched 15 locations in Delhi, Gurugram, Mumbai and Pune and busted a worth ₹1,268-crore online betting racket involving Chinese companies. In December, the ED said a large amount of money was inexplicably transferred using crypto-currency.

On Friday, the ED said the investigations had revealed some Chinese nationals had laundered proceeds of crime amounting to about ₹57 crore, by converting Indian rupee deposits into crypto-currency Tether and then transferring it to Binance (the exchange is registered in Cayman Islands) Wallets on instructions from abroad.

Range of transactions

“WazirX allows wide range of transactions with crypto-currencies, including exchange into Indian rupees and vice-versa; exchange of crypto-currencies; and even transfer/receipt of crypto-currency held in its pool accounts to wallets of other exchanges which could be held by foreigners in foreign locations,” the ED said.

Crypto exchanges bet big on India

WazirX does not collect documents, in clear violation of the mandatory Anti-Money Laundering (AML) and Combating of Financing of Terrorism (CFT) norms and FEMA guidelines, it said.

In the period under investigation, users of WazirX have, through its pool account, received crypto-currency worth ₹880 crore from Binance accounts and moved out crypto-currency worth ₹1,400 crore to Binance accounts.

No audit trail

The main concern for the investigative agency is that none of these transactions is available on blockchain for any audit/investigation. Also, It was found that WazirX customers could transfer ‘valuable’ crypto-currencies to any person irrespective of his/her location and nationality without any documentation, making it a safe haven for those looking to launder money or for other illegitimate activities.

Nischal Shetty, CEO and Founder, WazirX, however, said the company is yet to receive any show-cause notice from the ED.

“WazirX is in compliance with all applicable laws. We go beyond our legal obligations by following Know Your Customer (KYC) and AML processes and have always provided information to law enforcement authorities. We are able to trace all users on our platform with official identity information. Should we receive a formal communication or notice from the ED, we will fully cooperate in the investigation,” he said in a statement. The cryptocurrency exchange also tried to ease investor concerns. “Your funds are absolutely safe,” it said in a tweet. While last week, the RBI said it has major concerns around crypto-currencies, most crypto exchanges in the country say the concerns are unfounded as all transactions are based on proper AML and KYC processes.

 

 

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Covid-19: SC refuses to pass direction on plea to redress borrower hardship

Banking & Finance

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Press Trust of India The Supreme Court on Friday refused to pass direction on a plea seeking measures to redress the financial hardship faced by borrowers during the second wave of Covid-19 pandemic, saying it is in the realm of policy decision.

“The government has many things to do. They have to spend money on vaccine, on migrant labourers,” the apex court said, adding that it is for the Centre and the RBI to consider the issue.

“These are issues having financial implications and we are not the experts,” a bench of Justices Ashok Bhushan and MR Shah told advocate Vishal Tiwari, who has filed the petition.

The top court was hearing the plea which sought directions to the Centre and the Reserve Bank of India (RBI) to take remedial measures to redress the financial stress faced by borrowers during the second wave of the Covid-19 pandemic.

During the hearing, Tiwari referred to the reports on how the second wave of the pandemic has affected the economy.

“The petitioner submits that the circular does not address the hardship of the borrowers. Be that as it may, the financial relief and other measures are in the domain of the government,” the bench said in its order.

“We are of the view that no direction be passed. We observe that all the issues which are raised are policy matters and it is for the Union of India and the Reserve Bank of India to take appropriate decision,” the apex court said.

The bench said it had dealt with similar aspects in a writ petition which was filed last year.

The plea had sought directions to the Centre and the RBI to permit the lending institutions to grant interest free moratorium period for term loan and defer the payment of loan instalments for a period of six months or till the situation from Covid-19 normalises.

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About 45% fintech lenders see no impact of Covid-19 second wave on loan disbursements: FACE Survey

Banking & Finance

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About 45 per cent of fintech and digital lenders did not witness any significant impact on business during the second wave of the Covid-19 pandemic, according to a new survey.

In fact, they continued to disburse loans at the same or higher levels as they did in the fourth quarter of 2021, it revealed.

The survey by Fintech Association for Consumer Empowerment (FACE) of over 100 members revealed that 56.3 per cent of respondents continued to disburse loans in the second wave of the pandemic but did so cautiously and selectively.

Also read: Fintech start-up Boxop ties up with Mahindra Insurance for Covid treatment

About 31.3 per cent of the respondents disbursed loans at the same rate as that of pre- Covid levels while 12.5 per cent were disbursing loans at higher levels that the January-to-March 2021 quarter.

“Members with large customer-base have observed lesser impact on disbursement business continued to provide support,” the survey revealed, adding that members involved in lending to self-employed customers have seen some impact on lending linked to business closures for significant period.

Loan restructuring

“The study was conducted to understand the impact of Covid-19 second wave on digital lending business and fintech industry. The report highlights that how the Covid-19 outbreak and moratorium announcement by RBI has led to uncertainties in the lending business; however, the impact of pandemic on the digital lending business was less severe than compared to the last wave,” said a statement on Friday.

The survey also revealed that about 56 per cent of the members expect to provide loan restructuring to 10 per cent or less of the customers.

In terms of collections, about 69 per cent of the respondents said they see 10 per cent to 20 per cent less collections in the 31-60 day overdue bucket and 61-90 day overdue bucket.

The respondents had retrained their underwriting models after the initial wave of Covid-19 since these models continued to perform well during the second wave. The survey claims that 57.1 per cent of the respondents prefer using the underwriting model that was used during the first wave.

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10-year G-Sec auction sees devolvement

Banking & Finance

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Government securities (G-Secs) prices rose on Friday despite the Reserve Bank of India (RBI) devolving the 10-year benchmark G-Sec on primary dealers (PDs) at the weekly auction.

Market participants attributed this to the aforementioned security being among the six G-Secs RBI will be buying under the third tranche of open market purchase of G-Secs under the G-Sec Acquisition Programme (G-SAP 1.0).

Though the cut-off price at the auction of the 10-year G-Sec came in at ₹98.97 — about 19 paise higher than previous closing price (of ₹98.7850) — bond dealers say many of the bids would have been below Thursday’s closing price, leading to devolvement of the paper PDs.

PDs, who underwrite G-Sec auctions, had to pick up ₹9975.763 crore worth of this paper out of the total notified amount of ₹14,000 crore.

Marzban Irani, CIO-Fixed Income, LIC Mutual Fund, said the central bank has kept the yield on the 10-year on a tight leash in view of the large Government borrowing programme amid the Covid-19 pandemic, while the market players want it to leave the yields to market forces.

Keeping yields in check

Irani observed that G-Sec prices did not fall despite devolvement of the 10-year G-Sec on PDs as market participants know that RBI will buy this security through G-SAP.

In the secondary market, the benchmark 10-year G-Sec coupon rate: 5.85 per cent) rose 9 paise to close at ₹98.875 (previous close ₹98.785), with the yield declining about a basis point to 6.0072 per cent (6.0199 per cent).

Bond yield and price are inversely related and move in opposite directions.

The auction of the other two G-Secs — 4.26 per cent GS 2023 and 6.76 per cent GS 2061 — sailed through.

Under G-SAP, RBI commits upfront to a specific amount of open market purchases of G-Secs with a view to enabling a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions. According to State Bank of India’s economic research report “Ecowrap”, the G-SAP programme of the RBI has been largely successful in keeping the bond yields in check.

However, to make the impact more meaningful, RBI may consider shifting the focus on 7-8 year papers while announcing Open Market Operation/ G-SAP, etc., it added.

“This will smoothen the curve and also reduce upward pressure on benchmark yield. Additionally, RBI can also come up with a prior calendar of bucket-wise maturity for GSAP-2.0,” Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said.

Furthermore, more purchases might be done in illiquid securities compared to liquid securities in each bucket. Accordingly, banks will be able to offload their HTM (held-to-maturity) stocks and buy liquid ones.

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Reserve Bank of India – Press Releases

Press Releases

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1. Reserve Bank of India – Liabilities and Assets*
(₹ Crore)
Item 2020 2021 Variation
Jun. 5 May 28 Jun. 4 Week Year
1 2 3 4 5
4 Loans and Advances          
4.1 Central Government – – – – –
4.2 State Governments 8806 6473 11235 4762 2429
* Data are provisional.

2. Foreign Exchange Reserves
Item As on June 4, 2021 Variation over
Week End-March 2021 Year
₹ Cr. US$ Mn. ₹ Cr. US$ Mn. ₹ Cr. US$ Mn. ₹ Cr. US$ Mn.
1 2 3 4 5 6 7 8
1 Total Reserves 4417018 605008 83554 6842 198066 28024 625005 103305
1.1 Foreign Currency Assets 4094919 560890 84842 7362 170751 24197 590620 97260
1.2 Gold 274540 37604 -1522 -502 26817 3724 30007 5252
1.3 SDRs 11050 1513 75 -1 186 28 149 71
1.4 Reserve Position in the IMF 36510 5000 159 -16 312 75 4229 722
*Difference, if any, is due to rounding off

4. Scheduled Commercial Banks – Business in India
(₹ Crore)
Item Outstanding as on May. 21, 2021 Variation over
Fortnight Financial year so far Year-on-year
2020-21 2021-22 2020 2021
1 2 3 4 5 6
2 Liabilities to Others            
2.1 Aggregate Deposits 15166808 -50058 262423 53280 1330357 1336894
2.1a Growth (Per cent)   –0.3 1.9 0.4 10.6 9.7
2.1.1 Demand 1694752 -25017 -172096 -166457 131818 249845
2.1.2 Time 13472056 -25041 434519 219737 1198539 1087049
2.2 Borrowings 244661 5773 -18650 636 -67020 -46128
2.3 Other Demand and Time Liabilities 563200 -14704 -84761 -93414 34521 44285
7 Bank Credit 10833589 -36399 -148108 -115923 601208 610835
7.1a Growth (Per cent)   –0.3 –1.4 –1.1 6.2 6.0
7a.1 Food Credit 90663 5569 27652 29409 13694 11247
7a.2 Non-food credit 10742926 -41968 -175760 -145332 587514 599589

6. Money Stock: Components and Sources
(₹ Crore)
Item Outstanding as on Variation over
2021 Fortnight Financial Year so far Year-on-Year
2020-21 2021-22 2020 2021
Mar. 26 May 21 Amount % Amount % Amount % Amount % Amount %
1 2 3 4 5 6 7 8 9 10 11 12
M3 18773142 18933423 -27806 -0.1 430945 2.6 160281 0.9 1809831 11.7 1702515 9.9
1 Components (1.1.+1.2+1.3+1.4)                        
1.1 Currency with the Public 2757847 2862466 23145 0.8 163038 6.9 104618 3.8 395420 18.7 349679 13.9
1.2 Demand Deposits with Banks 1984261 1819170 -24360 -1.3 -172942 -10.0 -165091 –8.3 136998 9.6 254420 16.3
1.3 Time Deposits with Banks 13983686 14203336 -26147 -0.2 437828 3.5 219650 1.6 1264337 10.7 1091492 8.3
1.4 ‘Other’ Deposits with Reserve Bank 47347 48451 -445 -0.9 3021 7.8 1104 2.3 13076 46.0 6923 16.7
2 Sources (2.1+2.2+2.3+2.4-2.5)                        
2.1 Net Bank Credit to Government 5692569 5823113 -148360 -2.5 591230 11.9 130543 2.3 947185 20.6 271520 4.9
2.1.1 Reserve Bank 982063 1025199 -128203   273808   43136   386791   -240801  
2.1.2 Other Banks 4710506 4797914 -20157 -0.4 317422 8.0 87407 1.9 560394 15.0 512322 12.0
2.2 Bank Credit to Commercial Sector 11610050 11486691 -41912 -0.4 -164204 -1.5 -123360 –1.1 644781 6.3 612250 5.6
2.2.1 Reserve Bank 8524 1435 -4542   -7486   -7089   -3565   -4245  
2.2.2 Other Banks 11601526 11485256 -37370 -0.3 -156718 -1.4 -116270 –1.0 648346 6.3 616495 5.7

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 Opera tions# Special Long- Term Repo Operations for Small Finance Banks Special Reverse Repo£ Net Injection (+)/
Absorption (-)
(1+3+5+6 +9+10+11+12-2-4-7-8-13)
Repo Reverse Repo* Variable Rate Repo Variable Rate Reverse Repo Sale Purchase
1 2 3 4 5 6 7 8 9 10 11 12 13 14
May 31, 2021 – 359149 – – 0 – – – 795 – – – – -358354
Jun. 1, 2021 – 402563 – – 0 – – – 500 – – – – -402063
Jun. 2, 2021 – 404497 – – 0 – – – – – – – – -404497
Jun. 3, 2021 – 406786 – – 209 – – – 290 – – – – -406287
Jun. 4, 2021 – 358822 – 200029 0 – – – 620 – – – 150 -558381
Jun. 5, 2021 – 35574 – – 1021 – – – – – – – – -34553
Jun. 6, 2021 – 999 – – 38 – – – – – – – – -961
* 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) and On Tap Targeted Long Term Repo Operations. Negative (-) sign indicates repayments done by Banks.
& Negative (-) sign indicates repayments done by Banks.
£ As per the Press Release: 2021-2022/177 dated May 07, 2021, as an additional incentive Banks are eligible to park their surplus liquidity up to the size of the COVID loan book under a special 14-day reverse repo window to be conducted on each reporting Friday at a rate which is 25 bps lower than the repo rate.

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

Ajit Prasad
Director   

Press Release: 2021-2022/354

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Reserve Bank of India – Tenders

Tenders

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The tender for the captioned work was invited on June 03, 2021 and the last date of submission of the tender was kept June 24, 2021.

2. In connection to the above, we are arranging a pre-bid meeting on June 17, 2021 at 11.30 AM on 5th Floor, Main Office Building, Reserve Bank of India, Near Gandhi Bridge, Ahmedabad, Gujarat – 380014.

3. All concerned may please take note of the above.

4. The Corrigendum and minutes of Pre-bid meeting shall form part of the Tender Documents. Duly signed and stamped copies of the same have to be uploaded by the bidders along with the Tender. Any bid received without sign and stamp is liable to be rejected.

Regional Director
Reserve Bank of India
Ahmedabad Regional Office

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