Category: RBI News

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

Key Features of India’s IIP in June 2021

• Net claims of non-residents on India declined by US$ 24.3 billion during April-June 2021 to US$ 327.0 billion as at end-June 2021 (Table 1).

• Reserve assets accounted for 95 per cent of the increase of US$ 35.9 billion in Indian residents’ overseas financial assets during the quarter.

• Foreign-owned assets in India recorded an increase of US$ 11.6 billion, corresponding to an equal rise in inward foreign direct investment.

• Variation in exchange rate of rupee vis-a-vis other currencies affected change in liabilities, when valued in US$ terms.

• Reserve assets continued to have the dominant share (68.3 per cent) in India’s international financial assets (Table 2).

• The share of non-debt liabilities in total international liabilities edged up to 52.7 per cent in June 2021 (Table 3).

• The ratio of international assets to international liabilities has gradually improved to 73.2 per cent in June 2021 from 68.5 per cent a year ago.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/963

Preliminary data on India’s balance of payments (BoP) for the first quarter (Q1), i.e., April-June 2021-22, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q1:2021-22

• India’s current account balance recorded a surplus of US$ 6.5 billion (0.9 per cent of GDP) in Q1:2021-22 as against a deficit of US$ 8.1 billion (1.0 per cent of GDP) in Q4:2020-21 and a surplus of US$ 19.1 billion (3.7 per cent of GDP) a year ago [i.e. Q1:2020-21].

• The surplus in the current account in Q1:2021-22 was primarily on account of contraction in the trade deficit to US$ 30.7 billion from US$ 41.7 billion in the preceding quarter, and an increase in net services receipts.

• Net services receipts increased, both sequentially and on a year-on-year (y-o-y) basis, on the back of robust performance of net exports of computer and business services.

• Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 20.9 billion, an increase of 14.8 per cent from their level a year ago.

• Net outgo from the primary income account, mainly reflecting net overseas investment income payments, decreased sequentially as well as on a y-o-y basis.

• In the financial account, net foreign direct investment recorded inflow of US$ 11.9 billion as against outflow of US$ 0.5 billion in Q1:2020-21.

• Net foreign portfolio investment was US$ 0.4 billion as compared with US$ 0.6 billion in Q1:2020-21.

• Net external commercial borrowings to India recorded inflow of US$ 0.5 billion in Q1:2021-22 as against an outflow of US$ 0.6 billion a year ago.

• Net inflow on account of non-resident deposits decreased to US$ 2.5 billion from US$ 3.0 billion in Q1:2020-21.

• There was an accretion of US$ 31.9 billion to the foreign exchange reserves (on a BoP basis) as compared with that of US$ 19.8 billion in Q1:2020-21 (Table 1).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/960

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

Sources of Variation in Foreign Exchange Reserves: April-June 2021

During April-June 2021, 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$ 31.9 billion during April-June 2021 as compared with US$ 19.8 billion during April-June 2020. Foreign exchange reserves in nominal terms (including valuation effects) increased by US$ 34.1 billion during April-June 2021 as compared with US$ 27.9 billion in the corresponding period of the preceding year (Table 2).

The valuation gain, reflecting the depreciation of the US dollar against major currencies and increase in gold prices, amounted to US$ 2.2 billion during April-June 2021 as compared with US$ 8.0 billion during April-June 2020.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/961

The stock of external debt at end-June 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-June 2021 are presented below.

Highlights

• At end-June 2021, India’s external debt was placed at US$ 571.3 billion, recording an increase of US$ 1.6 billion over its level at end-March 2021 (Table 1).

• The external debt to GDP ratio declined to 20.2 per cent at end-June 2021 from 21.1 per cent at end-March 2021.

• Valuation gain due to the appreciation of the US dollar vis-à-vis Indian rupee was placed at US$ 1.7 billion. Excluding the valuation effect, external debt would have increased by US$ 3.3 billion instead of US$ 1.6 billion at end-June 2021 over end-March 2021.

• Commercial borrowings remained the largest component of external debt, with a share of 37.4 per cent, followed by non-resident deposits (24.8 per cent) and short-term trade credit (17.4 per cent).

• At end-June 2021, long-term debt (with original maturity of above one year) was placed at US$ 468.8 billion, recording an increase of US$ 0.2 billion over its level at end-March 2021.

• The share of short-term debt (with original maturity of up to one year) in total external debt increased marginally to 17.9 per cent at end-June 2021 from 17.7 per cent at end-March 2021; however, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 16.8 per cent at end-June 2021 (17.5 per cent at end-March 2021).

• 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 44.7 per cent of total external debt at end-June 2021 (44.6 per cent at end-March 2021) and stood at 41.8 per cent of foreign exchange reserves (44.1 per cent at end-March 2021) (Table 2).

• US dollar denominated debt remained the largest component of India’s external debt, with a share of 52.4 per cent at end-June 2021, followed by debt denominated in the Indian rupee (33.2 per cent), yen (5.8 per cent), SDR² (4.4 per cent) and the euro (3.4 per cent).

• The borrower-wise classification shows that the outstanding government debt decreased, while non-government debt increased at end-June 2021 (Table 3).

• The share of outstanding debt of non-financial corporations in total external debt was the highest at 40.6 per cent, followed by deposit-taking corporations (except the central bank) (28.1 per cent), general government (18.7 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 34.7 per cent, followed by currency and deposits (25.0 per cent), trade credit and advances (17.9 per cent) and debt securities (16.9 per cent) (Table 4).

• Debt service (i.e., principal repayments and interest payments) declined to 4.1 per cent of current receipts at end-June 2021 as compared with 8.2 per cent at end-March 2021, reflecting lower repayments and higher current receipts (Table 5).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/962

The Reserve Bank of India, in consultation with the State Governments/Union Territories (UTs), announces that the quantum of total market borrowings by the State Governments/UTs for the quarter October – December 2021, is expected to be ₹2,01,910.87 crore. The weekly schedule of auctions to be held during the quarter along with the name of States/UTs who have confirmed participation and tentative amounts indicated by them is as under:

The actual amount of borrowings and the details of the States/UTs participating would be intimated by way of press releases two/ three days prior to the actual auction day and would depend on the requirement of the State Governments/UTs, approval from the Government of India under Article 293(3) of the Constitution of India and the market conditions. RBI would endeavour to conduct the auctions in a non-disruptive manner, taking into account the market conditions and other relevant factors and distribute the borrowings evenly throughout the quarter. RBI reserves the right to modify the dates and the amount of auction in consultation with State Governments/UTs.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/966

The Reserve Bank of India, vide directive DCBS.CO.BSD-I/D-4/12.22.141/2016-17 dated August 31, 2016, had placed Maratha Sahakari Bank ltd, Mumbai 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 September 30, 2021.

2. It is hereby notified for the information of the public that, the 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 November 30, 2021 as per the directive DOR.MON/D-39/12.22.140/2021-22 dated September 30, 2021, subject to review.

3. All other terms and conditions of the Directives under reference shall remain unchanged. A copy of the directive dated September 30, 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 the 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: 2021-2022/965