Category: RBI News

(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.

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

Sources of Variation in Foreign Exchange Reserves: April-December 2020

During April-December 2020, 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 changes), foreign exchange reserves increased by US$ 83.9 billion during April-December 2020 as compared with US$ 40.7 billion during April-December 2019. Foreign exchange reserves in nominal terms (including valuation changes) increased by US$ 108.0 billion during April-December 2020 as compared with US$ 47.0 billion in the corresponding period of 2019-20 (Table 2).

The valuation gain, reflecting the depreciation of the US dollar against major currencies and increase in gold prices, amounted to US$ 24.1 billion during April-December 2020 as compared with US$ 6.3 billion during April-December 2019.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1331

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

Today, the Reserve Bank released its quarterly house price index (HPI)¹ (base: 2010-11=100) for Q3:2020-21, based on transaction level data received from housing registration authorities in ten major cities (viz., Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow and Mumbai). Time series on all-India and city-wise HPI are available at the Bank’s Database of Indian Economy (DBIE) portal (https://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics > Real Sector > Price & Wages > Quarterly).

Highlights:

• The annual growth (y-o-y) in all-India HPI remained low at 1.1 per cent in Q3:2020-21, similar to the previous quarter but lower than 3.0 per cent a year ago. HPI growth (y-o-y) across major cities varied widely from an increase of 6.0 per cent (Bengaluru) to a contraction of (-) 7.7 per cent (Kochi).

• The all-India HPI increased by 1.2 per cent in Q3:2020-21 over the previous quarter; Chennai, Delhi, Bengaluru and Lucknow recorded sequential (q-o-q) increase in HPI while it contracted for other cities.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1329

¹Compiled in the Department of Statistics and Information Management, Reserve Bank of India. Reference may be made to the article “House Price Index: 2010-11 to 2013-14” in October 2014 issue of the RBI Bulletin (weblink: https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx) for HPI compilation methodology.