Category: RBI News

Reserve Bank of India vide directive DCBS.CO.BSD-I/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. The validity of the directions was extended from time-to-time, the last being up to June 30, 2021.

2. It is hereby notified for the information of the public that, 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 September 30, 2021 as per the directive DOR.MON/D-21/12.22.140/2021-22 dated June 29, 2021, subject to review.

3. All other terms and conditions of the Directive under reference shall remain unchanged. A copy of the directive dated June 29, 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 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: 2021-2022/460

(For the Quarter ending September 2021)

After reviewing the cash position of the Central Government, 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 September 2021 as under:

2. The Government of India / Reserve Bank of India will continue to 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 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: 2021-2022/459

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 May 2021, are set out in Statements I and II.

On a year-on-year (y-o-y) basis, non-food bank credit¹ growth stood at 5.9 per cent in May 2021 as compared to 6.1 per cent in May 2020.

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

• Credit to agriculture and allied activities continued to perform well, registering an accelerated growth of 10.3 per cent in May 2021 as compared to 5.2 per cent in May 2020.

• Credit growth to industry decelerated to 0.8 per cent in May 2021 from 1.7 per cent in May 2020. Size-wise, credit to medium industries registered a robust growth of 45.8 per cent in May 2021 as compared to a contraction of 5.3 per cent a year ago. Credit growth to micro and small industries accelerated to 5.0 per cent in May 2021 as compared to a contraction of 3.4 per cent a year ago, while credit to large industries contracted by 1.7 per cent in May 2021 as compared to a growth of 2.8 per cent a year ago.

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

• Credit growth to the services sector decelerated to 1.9 per cent in May 2021 from 10.3 per cent in May 2020, mainly due to deceleration in credit growth to NBFCs, transport operators and commercial real estate. However, credit to trade segment continued to perform well, registering accelerated growth of 12.4 per cent in May 2021 as compared to 7.7 per cent a year ago.

• Personal loans registered an accelerated growth of 12.4 per cent in May 2021 as compared to 10.6 per cent a year ago, primarily due to accelerated growth in vehicle loans and credit card outstanding.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/458

Today, the Reserve Bank released data relating to India’s International Investment Position as at end-March 2021.

Key Features of India’s IIP in March 2021

I. Quarterly Variations:

• Net claims of non-residents on India increased by US$ 11.2 billion during Q4:2020-21 to US$ 352.7 billion in March 2021 (Table 1).

• The increase in net claims was due to larger increase in foreign-owned assets in India (US$ 17.9 billion) vis-à-vis the overseas financial assets of Indian residents (US$ 6.7 billion) during the quarter.

• Indian residents’ overseas financial assets abroad increased largely on the back the increase in overseas direct investment as well as currency and deposits.

• Inward portfolio investment and loans were major contributors to the rise in India’s foreign liabilities.

• Depreciation of the Indian rupee against the US dollar during the quarter contributed to changes in India’s liabilities, when valued in the US dollar terms.

• Reserve assets accounted for over two-thirds of India’s international financial assets (Table 3).

• Non-debt liabilities had 52.4 per cent share in India’s external liabilities (Table 4).

II. Annual Variations:

• During 2020-21, non-residents’ net claims on India reduced by US $ 22.7 billion: increase in overseas assets of Indian residents (US$ 141.2 billion) exceeded the rise in foreign owned assets in India (US$ 118.5 billion) (Table 1).

• The increase in international financial assets of Indian residents was led by a large accretion of US$ 99.2 billion in reserve assets; overseas direct investment and currency and deposits were the other major components.

• Inward direct investment and portfolio equity investment together accounted for nearly 90 per cent of the increase in international financial liabilities during 2020-21.

• The ratio of India’s international financial assets to international financial liabilities increased to 70.9 per cent in March 2021 from 65.6 per cent a year ago.

III. Ratio of International Financial Assets and Liabilities to GDP (at current prices):

• The ratios of reserve assets, Indian residents’ overseas financial assets and claims of non-residents on India to GDP at current market prices surged during 2020-21, largely due to the decline in GDP during the year, caused by the COVID-19 pandemic (Table 2).

• The ratio of net IIP of India to GDP also improved to (-) 13.1 per cent in March 2021 from (-) 13.9 per cent a year ago.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/454

Earlier today, the Reserve Bank of India released the balance of payments (BoP) data for January-March 2021 on its website (www.rbi.org.in). On the basis of these data, the sources of variation in foreign exchange reserves during 2020-21 are detailed below.

Sources of Variation in Foreign Exchange Reserves: 2020-21

During 2020-21, there was an increase in the foreign exchange reserves, the sources of which are set out in Table 1.

On a balance of payments basis (i.e., excluding valuation effects), foreign exchange reserves increased by US$ 87.3 billion during 2020-21 as against an increase of US$ 59.5 billion during 2019-20. Foreign exchange reserves in nominal terms (including the valuation effects) increased by US$ 99.2 billion during 2020-21 compared with US$ 64.9 billion in the preceding year (Table 2).

The valuation gain, reflecting depreciation of US dollar against major currencies and increase in gold prices, amounted to US$ 11.9 billion during 2020-21 compared with US$ 5.4 billion during 2019-20.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/456

Preliminary data on India’s balance of payments (BoP) for the fourth quarter (Q4), i.e., January-March 2020-21, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q4:2020-21

• India’s current account balance (CAB) recorded a deficit of US$ 8.1 billion (1.0 per cent of GDP) in Q4:2020-21 as against a surplus of US$ 0.6 billion (0.1 per cent of GDP) in Q4:2019-20 and a deficit of US$ 2.2 billion (0.3 per cent of GDP) in the preceding quarter, i.e., Q3:2020-21.

• The current account deficit in Q4:2020-21 was primarily on account of a higher trade deficit and lower net invisible receipts than in the corresponding period of the previous year.

• Net services receipts increased on the back of a rise in net earnings from computer, transport and business services on a year-on-year basis.

• Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to US$ 20.9 billion, up by 1.7 per cent from their level a year ago.

• Net foreign portfolio investment (FPI) increased by US$ 7.3 billion – mainly on account of net purchases in the equity market – as against a decline of US$ 13.7 billion in Q4:2019-20.

• Net external commercial borrowings to India was lower at US$ 6.1 billion in Q4:2020-21 as compared with US$ 9.4 billion a year ago.

• There was an accretion of US$ 3.4 billion to the foreign exchange reserves (on a BoP basis) as compared with an accretion of US$ 18.8 billion in Q4:2019-20 (Table 1).

BoP during 2020-21

• The current account balance recorded a surplus of 0.9 per cent of GDP in 2020-21 as against a deficit of 0.9 per cent in 2019-20 on the back of a sharp contraction in the trade deficit to US$ 102.2 billion from US$ 157.5 billion in 2019-20.

• Net invisible receipts were lower in 2020-21 due to increase in net outgo of overseas investment income payments and lower net private transfer receipts, even though net services receipts were higher than a year ago.

• Net FDI inflows at US$ 44.0 billion in 2020-21 were higher than US$ 43.0 billion in 2019-20.

• Net FPI increased by US$ 36.1 billion in 2020-21 as compared to US$ 1.4 billion a year ago.

• External commercial borrowings to India recorded inflow of US$ 0.2 billion as compared with US$ 21.7 billion in 2019-20.

• In 2020-21, there was an accretion of US$ 87.3 billion to foreign exchange reserves (on a BoP basis).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/454

The stock of external debt at end-March 2021 as well as revised data for earlier quarters are set out in Statements I (old format) and II (IMF format)¹. The major developments relating to India’s external debt as at end-March 2021 are presented below.

Highlights

• At end-March 2021, India’s external debt was placed at US$ 570.0 billion, recording an increase of US$ 11.5 billion over its level at end-March 2020 (Table 1).

• The external debt to GDP ratio increased to 21.1 per cent at end-March 2021 from 20.6 per cent at end-March 2020.

• Valuation loss due to the depreciation of the US dollar vis-à-vis Indian rupee and major currencies such as euro, SDR² and pound sterling was placed at US$ 6.8 billion. Excluding the valuation effect, the increase in external debt would have been US$ 4.7 billion instead of US$ 11.5 billion at end-March 2021 over end-March 2020.

• Commercial borrowings remained the largest component of external debt, with a share of 37.4 per cent, followed by non-resident deposits (24.9 per cent) and short-term trade credit (17.1 per cent).

• At end-March 2021, long-term debt (with original maturity of above one year) was placed at US$ 468.9 billion, recording an increase of US$ 17.3 billion over its level at end-March 2020.

• The share of short-term debt (with original maturity of up to one year) in total external debt declined to 17.7 per cent at end-March 2021 from 19.1 per cent at end-March 2020; the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 17.5 per cent at end-March 2021 (22.4 per cent at end-March 2020).

• Short-term debt on residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 44.6 per cent of total external debt at end-March 2021 (42.4 per cent at end-March 2020) and stood at 44.1 per cent of foreign exchange reserves (49.6 per cent at end-March 2020) (Table 2).

• US dollar denominated debt remained the largest component of India’s external debt, with a share of 52.1 per cent at end-March 2021, followed by the Indian rupee (33.3 per cent), yen (5.8 per cent), SDR (4.4 per cent) and the euro (3.5 per cent).

• The borrower-wise classification shows that the outstanding debt of both government and non-government sectors increased at end-March 2021 (Table 3).

• The share of outstanding debt of non-financial corporations in total external debt was the highest at 40.4 per cent, followed by deposit-taking corporations (except the central bank) (28.2 per cent), general government (18.8 per cent) and other financial corporations (8.1 per cent).

• The instrument-wise classification shows that the loans were the largest component of external debt, with a share of 34.8 per cent, followed by currency and deposits (25.2 per cent), trade credit and advances (17.6 per cent) and debt securities (17.0 per cent) (Table 4).

• Debt service (principal repayments plus interest payments) increased to 8.2 per cent of current receipts at end-March 2021 as compared with 6.5 per cent at end-March 2020, reflecting higher repayments and lower current receipts (Table 5).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/455