January 06, 2025 01:12 am (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
Bharatiya Janata Party releases first list of candidates for Delhi Assembly polls, fields Parvesh Sahib Singh Verma against Kejriwal | Firecracker unit explosion in Tamil Nadu's Virudhunagar kills 6 | Body of independent journalist, who went missing on Jan 1, found in a septic tank in Chhattisgarh | Delhi: 14-year-old student stabbed to death outside school after brawl with classmate | Rohit Sharma confirms he is not retiring amid speculations after skipping Sydney Test | India objects to China's 'new counties' announcement, says parts of these come under Ladakh | No cause for alarm over HMPV virus spread in China: Indian Health Agency | PM Modi gives a call for change in Delhi launching fierce attack on Arvind Kejriwal's AAP | Quran open to passage glorifying violence, bomb-making materials tracked in New Orleans attacker Shamshud-Din Jabbar's home | Jasprit Bumrah leads India in series decider after Rohit Sharma opts to rest in Sydney Test amid poor show with willow

Apex bank to watch developments in the months ahead says RBI governor

| | Jun 07, 2016, at 07:40 pm
#Apex bank #RBI Governor
Mumbai, Jun 7 (IBNS): Reserve Bank of India Governor Raghuram Rajan said the central bank would watch macroeconomic and financial developments in the months ahead with a view to responding as space opens up, while he was addressing the media on Tuesday.
Dr Rajan said, "Transmission of policy into bank lending rates still remains work in progress. We will shortly review the operation of the Marginal Cost Lending Rate framework to iron out any issues. Timely capital infusions into constrained public sector banks will also aid credit flow."
 
On liquidity, there have been two concerns. 
 
He said, "First on the maturing of FCNR(B) deposits, our sense is that the leveraged portions of those deposits will not be renewed. Therefore, there could possibly be outflows of the order of $ 20 billion. The RBI has covered those requirements in the forward markets, and will take some advance deliveries in the lead up to the maturation of the deposits.
 
"Of course, some counterparties are apprehensive that they will not be able to deliver easily on the dollars we are owed, and hence there may be some dollar shortage in the market. This is something that we will monitor. We may supply dollars in case of extreme volatility, but no one should take this for granted. We are, however, committed to supply short term rupee liquidity to the extent needed, to support our monetary stance," Rajan added.
 
Talking about the second concern on liquidity, Rajan said, "the concern is how long we propose to take to move from a situation of systemic liquidity deficit to one of close to neutrality. This is something that depends on market and external conditions. As you know, a fair amount of durable liquidity has already been supplied. In addition, we are seeing outstanding cash balances come down somewhat. We will not commit to a timeframe, but will be opportunistic in moving the system towards the goal."
 
Finally, on the bank clean up, Rajan said, "we are working together with the government on facilitating the process. There are discussions on mechanisms that will leave projects with appropriate capital structures and access to credit, as well as some incentive for promoters to earn their way out of difficulty. SEBI is also being consulted. There is also a discussion of various funds to invest in stressed situations."
 
However,the RBI has no intention to go back to the days of forbearance or reverse the move towards transparent bank balance sheets, he said.

 

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.
Related Images
Veedol signs former Indian skipper Sourav Ganguly as brand ambassador
Veedol signs former Indian skipper Sourav Ganguly as brand ambassador Jun 29, 2024, at 06:38 am
In Images: Glimpses from Bengali film Fatafati's premiere
In Images: Glimpses from Bengali film Fatafati's premiere May 13, 2023, at 08:39 pm
Gautam Adani meets Bangladesh PM Sheikh Hasina
Gautam Adani meets Bangladesh PM Sheikh Hasina Sep 06, 2022, at 06:46 am