RBI extended SAARC Currency Swap Arrangement

Reserve Bank of India (RBI) on 23rd February 2016 extended the Two billion US dollars SAARC Currency Swap Arrangement till 14th November 2017. The extension aims at enhacing economic co-operation and strengthens financial stability within the SAARC region.

Under this arrangement, Reserve Bank of India will offer Swap Arrangement up to and overall amount of Two billion US dollar both in foreign currency & Indian rupee to SAARC nations.

Reserve Bank of India offered the SAARC Swap Arrangement to SAARC nations on 15th November 2012. All SAARC member countries including the Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan & Sri Lanka can avail the facility.

Swap amount available to various member central banks has been arrived at broadly based on 2 months import cover subject to a floor of 100 million US dollar and a maximum of 400 million US dollar per country.

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RBI extended SAARC Currency Swap Arrangement

Reserve Bank of India rates unchanged in Sixth bi-monthly monetary policy review for year 2016

The Reserve Bank of India (RBI) in its 6th bi-monthly monetary policy review for year 2016 has maintained status quo in key policy interest rate.Key policy interest rates were kept unchanged on the basis of an assessment of the current & evolving macroeconomic situation in the country. Reserve Bank Of India has kept its stance on the credit policy accommodative.
Key policy rates are Repo rate under the liquidity adjustment facility (LAF):

unchanged at 6.75%.
Reverse repo rate under the LAF:

Unchanged at 5.75 %. Marginal standing facility (MSF) rate and the Bank Rate has unchanged at 7.75%.
Cash Reserve Ratio (CRR) of scheduled banks:

• Unchanged at 4.0 % of net demand and time liability (NDTL). Continuation of liquidity under overnight repos at 0.25 % of bank wise NDTL at the LAF repo rate.


• Continuation of liquidity under 14 day term repos as well as longer term repos of up to 0.75 % of NDTL of the banking system through auctions.


• RBI projections In Financial Year (FY) 2016 growth will be at 7.4% with downward bias and FY17 growth at 7.6 Percent despite headwinds.


• Inflation will be around 5 percent for FY 16-17 due to good monsoon projections that can pull the inflation down.


• The inflation rate has evolved closely along the trajectory set by the monetary policy stance of Reserve Bank Of India.

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Reserve Bank of India rates unchanged in Sixth bi-monthly monetary policy review for year 2016

IDFC became 2nd lender to enter the banking sector and gets banking licence from RBI

Infrastructure Development Financing Company (IDFC). Ltd became 2nd lender to enter the banking sector since 2004, as the Reserve Bank of India granted Banking licence on 24 July 2015.Yes Bank has the 1st bank to got the banking licence in 2004. However, IDFC & Microfinance Company Bandhan Financial Services Private Limited were granted preliminary bank permits by RBI in April 2014 and Bandhan got Banking licence from RBI in June 2015.Where as IDFC plans to start operations from 1st October 2015. IDFC pvt ltd. will start its operations with 20 branches and with initial loan book of 55,thousand crore rupees.
About IDFC Pvt. Ltd:

IDFC is a leading public limited infrastructure finance company that provides end to end infrastructure financing or project implementation services.IDFC was incorporated in 1997 with main motive to provide finance for infrastructure projects and advisory services for asset management or investment banking.Its independent director is ex Comptroller and Auditor General of India Mr. Vinod Rai.

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IDFC became 2nd lender to enter the banking sector and gets banking licence from RBI

Rs 10 coins to mark International Yoga Day issued by RBI

Reserve Bank of India (RBI) will soon issue 10 rupee denomination coins to commemorate International Yoga Day which is being observed every year on 21 June.

Features of the coin:

• Coin’s obverse side:It will bear Lion Capital of Ashoka Pillar in the centre. The legend ‘Satyameva Jayate’ will be inscribed below.


• The left periphery will bear word ‘Bharat’ in Devnagri script which will be flanked. While, on the right periphery word ‘INDIA’ in English will be flanked.


• Denominational or numeric value ‘10’ and Rupee symbol in the international numerals will be engraved below the Lion Capital.

Coin’s reverse side:

• It will bear the logo of ‘International Day of Yoga’ along with inscription ‘Samanjasya evam Shanti ke Liye Yog’ in Devnagri script.


• It will also bear ‘YOGA FOR HARMONY AND PEACE’ around the logo and design and the date ‘21 JUNE’ will be at the bottom of the logo.


• Left periphery will bear inscription ‘Antarrashtriya Yog Divas’ in Devnagri script and the right periphery will bear ‘INTERNATIONAL DAY OF YOGA’ in English.

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Rs 10 coins to mark International Yoga Day issued by RBI

Reserve Bank of India allows to close branches in urban areas

RBI has taken decision to allow banks to merge, shift or close branches in urban areas.In this regard, RBI has issued a notification that mention detailed provisions of above decisions. This move will give banks greater operational freedom but it won’t be valid for rural areas.
As per RBI notifcation:

• Merger, shifting or closure of any rural branch as well as sole-semi-urban branch will require prior approval of the District Level Review Committee and District Consultative Committee.


• Banks making changes should inform customers of its branch time before actual merger, shifting & closure of the office.


• The banking activity,which include deposit or loan business should not be maintained at both places. In case of new location as part shifting should be located within one km of the existing location.


• The banks should ensure that they continue to fulfill the role entrusted to these branches under the Direct Benefit Transfer Schemes and other government sponsored programmes.


• The apex bank has allowed banks to shift their some branch in any centre due rent or space constraints without seeking prior approval of RBI.

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Reserve Bank of India allows to close branches in urban areas

Reserve Bank of India notified Interest Subvention Scheme

On 13 August 2015 Reserve Bank of India notified the Union Budget 2015-16 Interest Subvention Scheme and asked all banks to provide interest concession of 2% on short term crop loans of up to Three lakh rupees.

Central bank in its notification said that interest sub-vention of 2% per-annum will be made available to public and private sector banks provided they lend short-term credit at the ground level at 7% per annum to farmers.

The bank said that additional interest subvention of 3% will be available to the farmers for re-paying the loan promptly from the date of disbursement of crop loan. This implies that farmers paying promptly would get short term crop loans at 4% during the year 2015-16.

To provide relief to farmers affected by the natural calamities.The RBI has said that interest sub-vention of 2% will continue to be available to banks for the 1st year on the restructured amount. However, such restructured loans may attract normal rate of interest from the 2nd year onwards.
Background:

The government in the Budget for 2015-16 proposed to implement interest sub-vention scheme in the 2015-16 fiscal for short-term crop. loans up to 3 lakh rupees.

After that, the Union Govt. on 21 July 2015 extended (ISS) to Public Sector Banks,private sector commercial banks, rural regional banks (RRBs), cooperative banks and NABARD.

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Reserve Bank of India notified Interest Subvention Scheme

7 non banking finance companies licence suspended by the RBI

The Reserve Bank of India suspends the licence of 7 non banking finance companies. The 7 NBFCs whose licences were suspended that are:

• Religare Finance


• Artisans Micro Finance


• The Eden Trade and Commerce


• RCS Parivar Finance


• Nott Investments


• Dewra Stocks


• Securities, Swetasree Finance.

Religare Finance company licence was suspended by Reserve Bank of India(RBI) as it did not conducted lending operation for long period of time.

Reserve Bank of India role in issuing licence to the NBFCs:

• A Non Banking Financial Company is a company registered by the govt. under the Companies Act, 1956, whose principal business is lending, investments and receiving deposits.


• At present there are around 12 Thousand (NBFCs) in India. (NBFC) does not include any institution whose principal business is agricultural activity, trading, industrial activity or sale/purchase/construction of the immovable property.


• Reserve Bank of India has power under the RBI Act 1934 to register, regulate, lay down policy, inspect, issue directions, supervise and exercise surveillance over the (NBFCs) that meet the 50-50 criteria of principal business.


• Any (NBFCs) that doesn’t carry out its principal business according to the directions or orders issued by (RBI) under (RBI) Act is eligible for penal action that can also result in cancelling the Certificate of Registration issued to the (NBFC).

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7 non banking finance companies licence suspended by the RBI