MIRA INFORM
REPORT
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Report Date : |
11.08.2011 |
IDENTIFICATION DETAILS
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Name : |
RESERVE BANK OF |
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Registered
Office : |
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Country : |
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Financials (as
on) : |
30.06.2010 |
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Year of
Establishment : |
01.04.1935 |
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Legal Form : |
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Line of Business
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The Bank is entrusted with monetary stability, management of currency and
supervision of financial system |
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No. of Employees
: |
20295 [Approximately] |
RATING & COMMENTS
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MIRA’s Rating : |
Aaa (89) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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Maximum Credit Limit : |
Large |
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Status : |
Excellent |
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Payment Behaviour : |
No Complaints |
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Litigation : |
Clear |
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Comments : |
The Reserve Bank of It is the Central Bank of the country, having control of other Banks
in The subject can be considered good for business dealings at usual
trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
INFORMATION DECLINED BY
Management Non Co-Operative.
LOCATIONS
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Registered Office : |
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Tel No.: |
91-22-22660868 |
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Fax No.: |
91-22-22661784 |
DIRECTORS
As on 30.06.2010
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Name : |
Mr. D Subbarao |
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Designation : |
Governor |
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Address : |
Reserve Bank of |
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Name : |
Mrs. Shyamala Gopinath |
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Designation : |
Deputy Governor |
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Address : |
Reserve Bank of |
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Name : |
Mrs. Usha Thorat |
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Designation : |
Deputy Governor |
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Address : |
Reserve Bank of |
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Name : |
Mr. K C Chakrabarty |
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Designation : |
Deputy Governor |
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Address : |
Reserve Bank of |
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Name : |
Mr. Subir Gokarn |
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Designation : |
Deputy Governor |
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Address : |
Reserve Bank of |
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DIRECTORS NOMINATED UNDER SECTION 8 (1) (B) OF THE RBI ACT, 1934 |
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Name : |
Mr. Y H Malegam |
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Designation : |
Director |
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Address : |
Meher Chambers (2nd floor) |
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Name : |
Mr. Suresh D Tendulkar |
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Designation : |
Director |
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Address : |
AD-86-C, Shalimar Bagh, |
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Name : |
Mr. U R Rao |
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Designation : |
Director |
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Address : |
Antariksh Bhavan, New |
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Name : |
Mr. Lakshmi Chand |
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Designation : |
Director |
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Address : |
C-12, Sector 14, NOIDA, Gautham Budh Nagar, |
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DIRECTORS NOMINATED
UNDER SECTION 8 (1) (C) OF THE RBI ACT, 1934 |
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Name : |
Mr. H P Ranina |
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Designation : |
Director |
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Address : |
506, Raheja Centre, 214 Backbay Reclamation, Free |
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Name : |
Mr. Azim Premji |
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Designation : |
Director |
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Address : |
Doddakannelli, |
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Name : |
Mr. Kumar Mangalam Birla |
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Designation : |
Director |
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Address : |
Aditya Birla Group of Companies, Aditya Birla Centre, S. K. Ahire
Marg, Worli |
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Name : |
Mr. Shahi Rajagopalan |
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Designation : |
Director |
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Address : |
Plot No. 10, Saket Phase 2, Kapra, ECIL Post, |
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Name : |
Mr. Suresh Neotia |
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Designation : |
Director |
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Address : |
B-32, Greater Kailash Part – I, |
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Name : |
Mr. A Vaidyanathan |
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Designation : |
Director |
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Address : |
B-1, Sonali Apartment, Old No. 11, |
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Name : |
Mr. Man Mohan Sharma |
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Designation : |
Director |
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Address : |
2/3 Jaswant Baug ( |
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Name : |
Mr. Sanjay Labroo |
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Designation : |
Director |
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Address : |
Global |
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DIRECTORS NOMINATED
UNDER SECTION 8 (1) (D) OF THE RBI ACT, 1934 |
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Name : |
Mr. Ashok Chawla |
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Designation : |
Director |
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Address : |
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MEMBER OF LOCAL BOARDS |
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Western Area: |
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Eastern Area: |
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Northern Area: |
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Southern Area: |
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Name : |
Mr. V K Sharma |
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Designation : |
Executive Director |
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Name : |
Mr. C Krishnan |
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Designation : |
Executive Director |
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Name : |
Mr. Anand Sinha |
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Designation : |
Executive Director |
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Name : |
Mr. V S Das |
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Designation : |
Executive Director |
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Name : |
Mr. G Gopalkrishna |
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Designation : |
Executive Director |
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Date of Appointment : |
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Name : |
Mr. H R Khan |
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Designation : |
Executive Director |
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Name : |
Mr. D K Mohanty |
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Designation : |
Executive Director |
PRINCIPAL OFFICERS
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CENTRAL OFFICE |
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Department of Administration and Personnel Management |
Mr. Prabal Sen, Principal Chief General Manager |
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Customer Service Department |
Mr. Kaza Sudhakar, Chief General Manager |
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Department of Banking Operations and Development |
Mr. B. Mahapatra, Chief General Manager-in-Charge |
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Department of Banking Supervision |
Mr. N. Krishna Mohan, Chief General Manager-in-Charge |
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Department of Communication |
Mr. A.I. Killawala, Press Relations Officer (Gr. F) |
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Department of Currency Management |
Mr. R. Gandhi, Chief General Manager |
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Department of Economic Analysis and Policy |
Mr. K.U.B. Rao, Officer-in-Charge |
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Department of Expenditure and Budgetary Control |
Ms. Deepa Srivastava, Chief General Manager |
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Department of External Investments and Operations |
Ms. Meena Hemchandra, Chief General Manager-in-Charge |
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Department of Government and Bank Accounts |
Mr. S.V. Raghavan, Chief General Manager-in-Charge |
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Department of Information Technology |
Mr. A.S. Ramasastri, Chief General Manager |
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Department of Non-Banking Supervision |
Uma Subramaniam, Chief General Manager-in-Charge |
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Department of Payment and Settlement Systems |
Mr. G. Padmanabhan, Chief General Manager |
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Department of Statistics and Information Management |
Mr. A.M. Pedgaonkar, Principal Adviser |
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Financial Markets Department |
Mr. P. Krishnamurthy, Chief General Manager |
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Financial Stability Unit |
Rabi N. Mishra, General Manager (OIC) |
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Foreign Exchange Department |
Mr. Salim Gangadharan, Chief General Manager-in-Charge |
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Human Resources Development Department |
Mr. Deepak Singhal, Chief General Manager |
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Inspection Department |
Mr. Karuna Sagar, Chief General Manager |
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Internal Debt Management Department |
Mr. K.K. Vohra , Chief General Manager |
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Legal Department |
Mr. G.S. Hegde, Legal Adviser-in-Charge |
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Monetary Policy Department |
Mr. Janak Raj, Adviser-in-Charge |
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Premises Department |
Mr. S. Venkatachalam, Chief General Manager |
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Rajbhasha Department |
Roopam Misra, General Manager-in-Charge |
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Rural Planning and Credit Department |
Ms. Deepali Pant Joshi, Chief General Manager-in-Charge |
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Secretary’s Department |
Mr. G.E. Koshie, Chief General Manager & Secretary |
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Urban Banks Department |
Mr. A. Udgata, Chief General Manager-in-Charge |
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COLLEGES |
PRINCIPALS/CHIEF
GENERAL MANAGER |
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Centre for Advanced Financial Learning, Mumbai |
- |
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College of Agricultural Banking, Pune |
Kamala Rajan |
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Mr. J. Sadakkadulla |
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OFFICES |
REGIONAL
DIRECTORS |
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Chenna |
Mr. K. R. Ananda |
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Kolkata |
Mr. S. Karuppasamy |
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Mumba |
Mr. J.B. Bhoria |
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Mr. Sandip Ghose |
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BRANCHES |
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Ahmedabad |
Mr. A. K. Bera |
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Mr. P. Vijaya Bhaskar |
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Mr. Rajesh Verma |
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Mr. B.K. Bhoi |
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Mr. Jasbir Singh |
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Guwahati |
Mr. Surekha Marandi |
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Mr. A.S. Rao |
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Jaipur |
Mr. B.P. Kanungo |
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Jammui |
Mr. Arnab Roy |
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Mr. Bazil Shaikh |
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Mr. D.P.S. Rathore |
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Mr. Phulan Kumar |
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Mr. G. Mahalingam |
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Thiruvananthapuram |
Mr. Suma Varma |
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OFFICERS-IN-CHARGE |
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Belapur |
Mr. Shekhar Bhatnagar, General Manager (OIC) |
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Dehradun |
Mr. V.S. Bajwa, General Manager (OIC) |
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Gangtok |
Mr. E.E. Karthak, General Manager (OIC) |
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Mr. E. Madhavan, General Manager (OIC) |
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Panaji |
Mr. M.A.R. Prabhu, Deputy General Manager (OIC) |
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Mr. Arvind Kumar Sharma, General Manager (OIC) |
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Mr. Hrudananda Panda, General Manager (OIC) |
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Shimla |
Mr. S.K. Bal, General Manager (OIC) |
BUSINESS DETAILS
|
Line of Business : |
The Bank is entrusted with monetary stability, management of currency
and supervision of financial system |
GENERAL INFORMATION
|
No. of Employees : |
20295 [Approximately] |
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Bankers : |
Not Available |
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
Not Available |
CAPITAL STRUCTURE
As on 30.06.2010
Paid Up Capital: Rs. 50.000 Millions.
FINANCIAL DATA
[all figures are
in Rupees Millions]
BALANCE SHEET
ISSUED DEPARTMENT
|
Liabilities |
30.06.2010 |
30.06.2009 |
30.06.2008 |
Assets |
30.06.2010 |
30.06.2009 |
30.06.2008 |
|
Notes held in the Banking Department |
326.151 |
212.580 |
162.271 |
Gold Coin and
Bullion: |
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Notes in Circulation |
8420083.640 |
7016553.271 |
6123239.351 |
a) Held in |
485772.152 |
383262.706 |
323088.120 |
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b) Held Outside |
-- |
-- |
-- |
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Foreign Securities |
7923009.296 |
6620644.142 |
5788788.661 |
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Total Notes Issued |
8420409.791 |
7016765.851 |
6123401.622 |
Total |
8408781.448 |
7003906.848 |
6111876.781 |
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Rupee Coin |
1164.043 |
2394.703 |
1060.541 |
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Government of |
10464.300 |
10464.300 |
10464.300 |
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Internal Bills of Exchange and other Commercial Paper |
-- |
-- |
-- |
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Total
Liabilities |
8420409.791 |
7016765.851 |
6123401.622 |
Total Assets |
8420409.791 |
7016765.851 |
6123401.622 |
BANKING
DEPARTMENT
|
Liabilities |
30.06.2010 |
30.06.2009 |
30.06.2008 |
Assets |
30.06.2010 |
30.06.2009 |
30.06.2008 |
|
Capital Paid-up |
50.000 |
50.000 |
50.000 |
Notes |
326.151 |
212.580 |
162.271 |
|
Reserve Fund |
65000.000 |
65000.000 |
65000.000 |
Rupee Coin |
0.634 |
0.477 |
0.357 |
|
National Industrial Credit (Long Term Operations) Fund |
190.000 |
180.000 |
170.000 |
Small Coin |
0.308 |
0.341 |
0.623 |
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National Housing Credit (Long Term Operations) Fund |
1930.000 |
1920.000 |
1910.000 |
Bills Purchased
and Discounted |
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a) Internal |
-- |
-- |
-- |
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Deposits |
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b) External |
-- |
-- |
-- |
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a) Government |
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c) Government Treasury Bills |
-- |
-- |
-- |
|
i) Central Government |
364574.108 |
229904.288 |
1916260.559 |
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ii) State Government |
413.315 |
413.450 |
413.139 |
Balance Held Abroad |
3392263.423 |
5123207.765 |
6883433.497 |
|
b)Banks |
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Investments |
3100688.135 |
1516754.239 |
1292087.955 |
|
i) Scheduled Commercial Banks |
3077594.100 |
2506644.962 |
2988099.722 |
Loan and
Advances to |
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|
|
|
ii) Scheduled State Co-Operative Banks |
40654.376 |
35209.111 |
41226.668 |
i) Central Government |
-- |
-- |
-- |
|
iii) Other Scheduled Co-Operative Banks |
49867.682 |
34890.820 |
51862.725 |
ii) State Government |
733.800 |
-- |
-- |
|
iv) Non-Scheduled State Co-Operative Banks |
686.380 |
670.747 |
632.069 |
Loans and
Advances to |
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v) Other Banks |
92247.962 |
66717.611 |
86891.456 |
i) Scheduled Commercial Banks |
26231.700 |
2800.000 |
21021.400 |
|
c) Others |
128077.253 |
164755.986 |
121102.252 |
ii) |
-- |
-- |
-- |
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iii) Other Schduled Co-Operative Banks |
410.000 |
-- |
-- |
|
Bills Payable |
794.562 |
1958.603 |
3192.920 |
iv) Non-Scheduled State Co-Operative Banks |
-- |
-- |
-- |
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v)NABARD |
-- |
-- |
-- |
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vi) Others |
2752.298 |
111028.248 |
1326.898 |
|
Other Liabilities |
3288093.560 |
3957075.524 |
3229681.034 |
Loans, Advances and Investments form National Industrial Credit (Long
Term Operations) Fund |
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a) Loans ands
Advances to |
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|
|
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|
i) Industrial Development Bank of |
-- |
-- |
-- |
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|
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ii) Export Import Bank of |
-- |
-- |
-- |
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|
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iii) Industrial Investment Bank of India Limited |
-- |
-- |
-- |
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iv) Others |
-- |
-- |
-- |
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|
Loans, Advances and
Investments form National Housing Credit (Long Term Operations) Fund: |
|
|
|
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a) Loans and Advances to National Housing Bank |
-- |
-- |
500.000 |
|
|
|
|
|
b) Investments in bonds/ debentures issued by National Housing Bank |
-- |
-- |
-- |
|
|
|
|
|
Other Assets |
586766.849 |
311387.452 |
308059.543 |
|
|
|
|
|
|
|
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|
TOTAL
LIABILITIES |
7110173.298 |
7065391.102 |
8506592.544 |
TOTAL ASSETS |
7110173.298 |
7065391.102 |
8506592.544 |
PROFIT & LOSS
ACCOUNT
|
INCOME |
30.06.2010 |
30.06.2009 |
30.06.2008 |
|
Interest, Discount, Exchange, Commission Etc. |
271661.224 |
332308.841 |
211121.268 |
|
|
|
|
|
|
Total |
271661.224 |
332308.841 |
211121.268 |
|
|
|
|
|
|
EXPENDITURE |
|
|
|
|
|
|
|
|
|
Interest |
10.160 |
13.287 |
25.819 |
|
Establishment |
19868.229 |
24482.515 |
14308.661 |
|
Directors’ and local Board Members’ Fees and Expenses |
20.815 |
16.690 |
17.912 |
|
Remittance of Treasure |
371.210 |
324.584 |
305.642 |
|
Agency Charges |
28550.206 |
29991.946 |
2111.356 |
|
Security Printing (Cheques, Note Forms etc.) |
27541.235 |
20631.697 |
20322.304 |
|
Printing and Stationery |
265.889 |
206.303 |
162.901 |
|
Postage and Telecommunication Charge |
424.893 |
526.910 |
386.016 |
|
Rent, Taxes, Insurance, Lighting etc. |
851.556 |
858.749 |
691.725 |
|
Auditors’ Fees and Expenditure |
25.117 |
22.668 |
20.116 |
|
Law Charge |
27.554 |
23.280 |
21.364 |
|
Depreciation and Repairs to Bank’s Property |
2742.193 |
2345.638 |
1561.654 |
|
Miscellaneous Expenses |
3332.167 |
2734.574 |
2035.798 |
|
|
|
|
|
|
Total |
84031.224 |
82178.841 |
41971.268 |
|
|
|
|
|
|
Available Balance |
187630.000 |
250130.000 |
10150.000 |
|
Less: Contribution To: |
|
|
|
|
National Industrial Credit (Long Term Operations) Fund |
10.000 |
10.000 |
-- |
|
National Rural Credit ( Long Term Operations) Fund |
10.000 |
10.000 |
-- |
|
National Rural Credit (Stabilization) Fund |
10.000 |
10.000 |
-- |
|
National Housing Credit (Long Term Operations) Fund |
10.000 |
10.000 |
-- |
|
|
40.000 |
40.000 |
40.000 |
|
|
|
|
|
|
Surplus Payable
to the Central Government |
18759.000 |
250090.000 |
150110.000 |
LOCAL AGENCY FURTHER INFORMATION
ASSESSMENT OF
2009-10
In 2009-10, the focus of macroeconomic policy shifted from containing
the contagion of the global crisis to management of recovery. The impact of the
global crisis on the Indian economy was particularly visible in the extent of
deceleration in GDP growth over two successive quarters in the second half of
2008-09, and the weakness in both private consumption and investment demand.
While exports declined, growth in industrial production decelerated sharply,
capital inflows reversed, corporate sales growth dipped, exchange rate of the
Rupee depreciated and asset prices, particularly stock prices, fell.
Towards managing the crisis, the Reserve Bank had lowered the repo rate
by 425 basis points, the reverse repo rate by 275 basis points and the CRR by
400 basis points over a period of about seven months between October 2008 and
April 2009. The overall provision of potential liquidity through conventional as
well as several non-conventional liquidity windows was close to Rs.5600000.000
millions, or equivalent of about 9.0 per cent of GDP. The magnitude and the
speed of monetary policy response were unprecedented, reflecting the scale and
potential impact of the global crisis. The fiscal response, that involved
deviation from the fiscal consolidation path defined by the FRBM, had also led
to expansion in gross fiscal deficit of the central government from 2.5 per
cent of GDP in 2007-08 to 6 per cent in 2008-09.
By the beginning of 2009-10, it was apparent that the risk of contagion
to the financial system was minimal, even though sustained weakness in the real
economy put some stress on the financial system. To enable a faster recovery,
the growth supportive fiscal and the monetary policy stances continued into the
first half of the year. As headline inflation turned negative during June-
August 2009, the risks from policy stimulus were low in the near term.
Financial market activities recovered ahead of GDP, and with the return of
capital inflows, the Rupee also appreciated, reversing part of the depreciation
that took place in the second half of 2008-09. Subdued private consumption
demand and depressed private investment demand were reflected in the deceleration
in credit and money growth. The large borrowing programme of the government,
which was frontloaded in the first half, was managed in a non-disruptive
manner, reflecting pro-active liquidity management by the Reserve Bank.
In the second half of the year, firmer signs of robust recovery
gradually emerged. Investment demand accelerated, corporate sales growth picked
up, credit demand recovered, exports and imports turned around, industrial
production witnessed sharp recovery and capacity utilisation levels improved.
Although a deficient monsoon dampened agricultural output, given the lower
share of agriculture, adverse impact on overall GDP growth was small. However,
against the backdrop of structural imbalances in many agricultural products,
deficient monsoon had a stronger impact on inflation. Inflation in primary
commodities moved up from single digit in October 2009 to 18.3 per cent by
March 2010. There was also increasing generalisation of the inflation process,
with high inflation in both manufactured products and fuel group. There was
evidence of inflation persistence, and relative price variability also
declined, indicating increasing generalisation.
Notwithstanding the limitations of monetary policy in dealing with
inflation driven by supply shocks, the Reserve Bank initiated calibrated
normalisation of monetary policy aimed at anchoring inflationary expectations
without hurting the recovery. Plans for fiscal exit were also announced in the
Union Budget for 2010-11 in February 2010. Thus, while fiscal and monetary
policy responses to the global crisis contributed to a faster recovery in
growth in 2009-10, the need for appropriately timed policy exit was recognized
early, in view of the emerging inflationary pressures as also the challenge to
medium-term growth from high inflation and a weak fiscal position.
PROSPECTS FOR
2010-11
The outlook for GDP growth in 2010-11 has improved significantly, given
the broad-based, robust recovery seen in the last quarter of 2009- 10. The
prospects of continuation of the momentum are good, driven by buoyant
performance of the industrial sector, a better performance of the monsoon
relative to last year, and sustained resilience of services. From the demand
side, investment demand had already witnessed a sharp acceleration by the
fourth quarter of 2009-10 and trends in the growth of production of capital
goods in the first quarter of this year suggest continuation of the momentum.
Private consumption demand, going by the recent pattern in corporate sales, the
production of consumer durables and auto sales suggest a gradual pick-up, which
could accelerate to make the growth process more self-sustaining. Although
concerns about a possible weakening of global recovery persist, domestic risks
to growth have receded significantly. As a result, the Reserve Bank revised
upwards its GDP growth projection for 2010-11 to 8.5 per cent in July 2010,
from 8 per cent with an upward bias in April 2010.
Supply bottlenecks, whether in the form of inability of production to
respond to growing demand or in the form of inadequacy of the supply chain,
have exerted significant inflationary pressures in recent years, impeding the
progress on inclusive growth through asymmetric impact on different sections of
the society. In the first quarter of 2010-11, headline inflation remained in
double digits. Continuation of the monetary policy normalisation process that
started in October 2009 led to cumulative increase in the repo rate by 100
basis points, the reverse repo rate by 125 basis points and CRR by 100 basis
points, effected over the period February 2010 to July 2010. The effective
policy rate has, of course, been raised by 250 basis points in view of the repo
rate emerging as the operating rate. Taking into account the double digit
inflation in the first quarter of 2010-11, as well as the expected beneficial
effect of a relatively better monsoon on food inflation, the base line
projections available about global commodity prices, and the lagged impact of
monetary policy measures, the Reserve Bank revised its inflation projection to
6.0 per cent for March 2011 in July 2010 from the earlier projection of 5.5 per
cent made in April 2010.
The global economy, which recovered faster than expected in the first
quarter of 2010, slipped again into a state of uncertainty caused by concerns
relating to fiscal sustainability in the Euro zone and other advanced
economies. Advanced economies will need to resolve the tension between
continuing the fiscal stimulus to sustain the recovery and returning to fiscal consolidation
to preserve medium-term growth prospects. The volatility in global markets so
far has affected Indian stock markets, and the global near term outlook for
trade and capital flows is uncertain. While the strength of domestic growth
implies that import growth will exceed export growth, persistence of risk
aversion among global investors due to uncertain global environment could make
capital inflows more volatile. The multi-speed growth pattern across advanced
and emerging economies and their divergent inflation paths would widen further
the asymmetry in monetary exit, all of which could potentially add volatility
to global commodity and asset prices as well as exchange rates. The uncertain
global environment warrants adoption of caution in the formulation of policies
during 2010-11.
In the evolving domestic and external environment, the Reserve Bank
would have to deal with several near to medium-term challenges, many of which
are complex and involve trade-offs. Some of the major challenges are outlined
here.
NEAR TO
MEDIUM-TERM CHALLENGES FOR THE RESERVE BANK
Monetary Policy
Response to Supply Shocks
Negative supply shocks in last two years have imparted significant
volatility to the inflation path in
The Reserve Bank had to face this dilemma when the economy was
recovering from a slowdown in growth in the second half of 2009-10. Despite the
high headline inflation and increasing persistence and generalisation of the
inflation path, the output stabilisation objective had to be pursued along with
the anti inflationary measures aimed at anchoring inflation expectations. Given
the asymmetric impact of negative supply shocks on output and inflation, the
Reserve Bank’s monetary policy actions needed to be crafted carefully, based on
an assessment of what monetary policy could do effectively for such sources of
inflation and the risk to recovery it may pose by premature monetary
tightening. This was reflected in the Reserve Bank’s calibrated approach to
monetary policy normalisation, where the direction of policy was clear, even
though the timing and magnitude of each action was conditioned by the evolving
growth-inflation outlook, along with assessment of risks, both domestic and
external.
Repeated supply shocks pose a constant challenge to ensuring a low
inflation regime in
Crude oil has been another major source of supply shock, and import
dependence in oil to the extent of more than 80 per cent adds complexity to
management of inflation. Unlike food, the spillover to the core inflation in
the case of oil is much faster, through the input cost channel. While the past
policy of allowing only partial pass-through to domestic inflation through an
administered pricing mechanism helped in stabilising the influence of volatile
international oil prices on domestic inflation, it also exerted significant
fiscal pressures. Weak fiscal conditions represent a potential risk to both
medium-term inflation and growth outlook. The June 2010 decision of the government
to deregulate petrol prices completely while also revising the prices of other
administered petroleum products to better reflect the international price
trends is an important, long overdue reform, even though it came at a time when
the headline inflation was already high. Complete deregulation of all petroleum
products in due course will have to be the next logical step of this important
reform. This will, first of all, help in avoiding suppressed inflation, which
in turn will facilitate better adjustment of demand through greater energy
conservation. Secondly, public sector oil companies often delay necessary
investment plans under the burden of large under-recoveries associated with the
administered pricing system. Greater investment on exploration activities and
addition of refining capacity could also be possible with complete price
deregulation. More importantly, full pass-through of international prices to
domestic prices will encourage greater investment in alternative sources of
energy. Since fuel for cooking purposes is a basic need, that may have to be
subsidised at the margin, given particularly the risk to environment through
deforestation as a possible response to high cost of cooking. But such
subsidies must be better targeted and also appear explicitly in the budget, and
be financed within the broad contours of the envisaged fiscal consolidation.
With services accounting for the largest share of the country’s GDP, and
increasing proportion of disposable income of the people being spent on
services, prices of commonly used services have become important from the stand
point of assessment of consumer welfare. While prices of certain services like
telecommunications have declined considerably, prices of other services like
private education and health care have gone up significantly, though part of
that may reflect premium for improving quality of services. For a realistic
assessment of inflation conditions, thus, there is a need for a more
representative national level measure of consumer inflation that covers the
consumers across all sections of the society and also includes mass consumption
services.
Fiscal Space for
Increasing the Flexibility of Monetary Policy
In response to the global crisis, there was significant coordination
between the government and the Reserve Bank in planning policy actions,
conditioned by the compelling circumstances. Low inflation and weak demand for
credit from the private sector allowed the Reserve Bank to maintain ample
liquidity conditions and complete large borrowings of the government in a
non-disruptive manner during 2009-10. With inflation firming up in the second
half of 2009-10 and demand for credit from the private sector also exhibiting
acceleration in growth, fiscal exit became essential to gain the space required
for monetary policy to respond effectively to the situation. Persistence of
fiscal imbalances over extended periods tends to increase risks for inflation
through money-financed pressures on aggregate demand, interest rates through
crowding-out pressures, and exchange rate through the twin deficit channel. The
Reserve Bank, thus, stressed the importance of fiscal consolidation once signs
of a stronger recovery in growth started to emerge during 2009-10. The extent
to which fiscal imbalances could pose risks to growth and financial stability
became evident in several Euro zone countries, starting from the beginning of
2010- 11 when market assessment of sovereign risks changed significantly in
anticipation of possible
default by
The Union Budget for 2010-11, recognizing the importance of fiscal
consolidation to improve the overall macro-economic environment, announced
plans for exit, both during the year and over the medium-term. The high growth
phase of
Fiscal consolidation needs to be carried forward, with particular
emphasis on the quality of fiscal adjustment. The fiscal space in
Capital Flows –
Managing Surges and Sudden Stops
Volatile capital movements have influenced the domestic stock price
movements, exchange rate and domestic liquidity conditions significantly in the
past. In 2009-10, the current account deficit widened to 2.9 per cent of GDP.
Volatile capital flows have been a potential source of instability for EMEs.
Costs could magnify for an economy during periods of both too little and too
much of capital flows, unless they are managed judiciously.
While capital inflows last year and this year so far have remained
moderate, there is a possibility of return of another phase of surge in capital
flows to India, in response to global search for yield in an environment of
easy liquidity conditions in advanced economies and the prospect of relatively
higher return on investment in India in view of its superior growth outlook.
While stronger growth could help in absorbing higher magnitude of foreign
capital within the limits of sustainable current account deficit, excess
inflows would entail the risk of exerting appreciation pressure on the exchange
rate of the rupee, which in turn could weaken the competitive advantage of
Indian exports. Sterilised interventions could limit the pressure on
appreciation, but may lead to a higher interest rate environment. Unsterilised
intervention, that could relieve the pressure on both exchange rate and
interest rate, however, would involve excess liquidity creation. In an
environment of high inflation, this option could only exacerbate the situation
further.
High inflation would also adversely impact export competitiveness,
through appreciation of the real effective exchange rate (REER), which would
further widen the CAD. Excess capital flows, thus, would continue to pose
challenges for the country’s exchange rate, interest rate and inflation
environment, and through these channels, may at times also weaken the
beneficial impact of capital flows on economic growth. Unlike the pre-global
crisis period, international perception seems to have changed significantly in
terms of support for use of soft capital controls to deal with excessive
capital flows. In the case of EMEs, surges in capital flows have contributed to
asset price build up, along with exchange rate appreciation. Given the
complications asset price build-up could pose for monetary policy and the
potential risks to financial stability, management of capital flows in
FINANCING OF
INFRASTRUCTURE
The infrastructure gap of
The infrastructure investment need during the Twelfth Plan (2012-17)
period is estimated to be about US$ 1 trillion. The scale of the requirements
needs to be seen in relation to
The banking system, despite the risk of assetliability mismatch while
lending long-term for infrastructure projects, has seen high growth in credit
to this sector in recent years. Bank credit to the infrastructure sector witnessed
an annual compound growth of 48.6 per cent during the last ten years, and the
share of bank finance to infrastructure in gross bank credit increased from
about 2 per cent to more than 12 per cent during the corresponding period.
Thus, while banks continue to be a prime source of financing for infrastructure
projects, alternative non-banking financing has to be attracted with
appropriate policies to be able to address the financing constraint to growth
in infrastructure.
This suggests that private non-banking financing has to increase
significantly, from both domestic and external sources. Equity and debt
financing needs would require more accommodative FDI policies, development of a
domestic corporate debt market and creation of debt funds. The India Infrastructure
Debt Fund (IIDF) (proposed by the India-US Business CEOs Forum, the feasibility
of which is being examined by the Planning Commission) aims at addressing a key
challenge in the current financing pattern of infrastructure in
Financial
Inclusion – Strengthening the Contribution of Finance to Sustainable Growth
The benefits of financial sector reforms have been visible in the step
up in
The Reserve Bank has significantly scaled up its efforts aimed at
increasing the level of penetration of bank financing in the economy, using
appropriate regulation as well as moral suasion. The regulation on branch
licensing has been relaxed to promote financial inclusion. The recent
deregulation of bank lending rates for small loans below Rs.0.200 million
should promote financial inclusion by increasing the credit flow to small
borrowers at reasonable rate and direct bank finance would provide effective
competition to other forms of high cost credit. Domestic commercial banks are
also required to prepare their own Financial Inclusion Plans (FIPs) and
implement over coming years, adhering to their laid out performance assessment
norms. The Unique Identification Number (UID) project of the government will
also help banks in meeting the Know Your Customer (KYC) norms while furthering
financial inclusion. The government has already set up two funds – the
Financial Inclusion Fund for meeting the costs of developmental and promotional
interventions towards financial inclusion, and the Financial Inclusion
Technology Fund for meeting the costs of technology adoption. Many government
schemes involving large amounts of money often do not reach the targeted group
of people in the absence of adequate penetration of banks. Financial inclusion
could enhance the benefits of government programmes through direct transfer of
the amounts to the bank accounts of the beneficiaries.
While the contribution of agriculture and allied activities to overall
GDP has declined over time to about 15 per cent, a large segment of the labour
force and population still depends on agriculture and unorganised production
activities and also live in rural areas. The proposal to set up a National
Rural Financial Inclusion Plan with a target
of providing access to financial services to at least 50 per cent of the
excluded rural households by 2012, and the remaining by 2015, needs to be
adopted.
Given that the recent trend in urbanization will accelerate, financial
inclusion initiatives may also need to focus on the urban population since the
needs, expectations, and constraints of the financially excluded people in the
urban centers could be completely different. Financial inclusion is a win-win
proposition for the people, banks and
the nation. The merits of financial sector reform need to be seen
through the prism of what finance could do to harness the growth potential with
stability, and financial inclusion represents a critical component of the
policy process that intends to make the financial system serve the needs of the
real economy.
FINANCIAL MARKETS
Financial markets functioned in an orderly manner through 2009-10. As
the overall liquidity conditions remained in surplus, money market interest
rates generally stayed close to the lower bound of the LAF rate corridor. The
large market borrowing by the Government put upward pressure on the yields on
government securities during 2009-10. However, this was contained by active
liquidity management by the Reserve Bank. Lower credit demand by the private
sector also helped in containing the upward pressure on yield. Equity markets
generally remained firm during the year with intermittent corrections in line
with the global pattern. Resource mobilisation through public issues increased.
Housing prices rebounded during 2009-10. According to the Reserve Bank’s
survey, they surpassed their pre-crisis peak levels in Mumbai. The exchange
rate exhibited greater flexibility.
Financial markets represent the medium through which the impact of adverse
global shocks manifests first. The impact of the global crisis on
at home, the risk of stress in the financial system constraining the
recovery was also largely avoided. As the financial institutions in
Financial market developments tend to pose two way complex and
persistent challenges to policy making: first, the uncertainty about how
adverse shocks transmit through the financial markets to the real economy;
second, how monetary policy measures transmit through the financial markets to
attain the ultimate objectives relating to the real economy. While Indian
markets, in particular the equity and forex markets, exhibited volatility in
response to adverse external news relating to the developments in Dubai World
and
International
Financial Markets
Global financial market conditions improved during 2009 despite the drag
from the global financial crisis; although there were phases of intermittent
excess volatility. The sovereign risk concerns, however, dominated the
financial markets towards the end of 2009 and beginning of 2010, with the Dubai
World debt standstill and the sovereign debt problem of
Reduction in risk perception towards EMEs along with continuance of low
policy rates in the advanced economies for extended periods, led to revival in
capital flows, which in turn contributed to increase in asset prices and also
kept appreciation pressures on the exchange rates of EMEs. In
THE MONETARY
POLICY PROCESS
The formulation of monetary policy in the Reserve Bank reflects an
extensive consultative process where the views and suggestions of various
stakeholders are elicited and analysed. While the pre-policy consultations with
industry associations, bankers and economists contribute to the information set
used for policy making, the surveys conducted by the Reserve Bank targeted at
the common man, corporates and professional forecasters also provide important
lead information. After the policy, as part of the communication process,
questions from the press and analysts are answered, which help in receiving
post-policy feedback. The institutional framework for consultation on important
technical aspects of policy making is a critical part of the monetary policy
process in
The Technical Advisory Committee (TAC) on Monetary Policy reviews
macroeconomic and monetary developments and advises the Reserve Bank on the
stance of monetary policy and monetary measures. The TAC’s role is advisory in
nature and the responsibility, accountability and time path of decision-making
remains entirely with the Reserve Bank. Between the usual quarterly cycles
formalised for policy announcements, monetary measures can be announced at any
point of time depending upon the evolving macroeconomic conditions.
It has been the endeavour of the Reserve Bank to make the policy making
process more consultative. With effect from October 2005, the Reserve Bank has
introduced pre-policy consultation meetings with the IBA, market participants
(FIMMDA, FEDAI and PDAI), representatives of trade and industry (CII, FICCI,
ASSOCHAM and FIEO), credit rating agencies (CRISIL and ICRA), and other
institutions (UCBs, MFIs, SMEs, NBFCs, rural co-operatives and RRBs). These
meetings focus on macroeconomic developments, liquidity position, interest rate
environment and monetary and credit developments along with forward-looking
suggestions. This consultative process has contributed to enriching the policy
formulation mechanism and enhanced the effectiveness of monetary policy
measures. In addition, meetings are also held with economists, media persons,
analysts and journalists on a half-yearly basis in April and October to know
their views on the global/ domestic macroeconomic situation and solicit their
advice on monetary policy measures.
MONETARY POLICY
OPERATIONS:
CONTEXT AND
RATIONALE
Annual Policy
Statement 2009-10
The Annual Policy Statement 2009-10 was presented in the backdrop of an
uncertain global environment and significant slowdown in the domestic economic
activity with deceleration in growth seen in all constituent sectors of the
economy. The fiscal and monetary stimuli measures initiated in the second half
of 2008-09, coupled with lower commodity prices, helped in cushioning the
downturn in growth. For policy purpose, the Policy Statement placed the real
GDP growth for 2009-10 at around 6.0 per cent. This reflected significant
moderation, in relation to the 8.9 per cent average annual growth achieved
during 2003-08, requiring continuation of an accommodative monetary policy
stance.
As global commodity prices abated significantly under the pressure of
global recession, domestic headline WPI inflation declined to close to zero.
While prices of manufactured products decelerated sharply and of fuel group
declined, prices of food articles remained high. Keeping in view the global
trend in commodity prices and domestic demand-supply balance, the Annual Policy
Statement placed the WPI inflation at around 4.0 per cent by end-March 2010.
Money supply (M3) growth for 2009-10 was placed at 17.0 per cent and the
adjusted non-food credit growth at 20.0 per cent.
Based on the overall assessment of the macroeconomic situation, the
Policy Statement emphasised the need to ensure a policy regime that would enable
credit expansion at viable rates while preserving credit quality so as to
support the return of the economy to a high growth path. The monetary stance
emphasised the need to maintain a monetary and interest rate regime supportive
of price stability and financial stability, taking into account the emerging
lessons of the global financial crisis. Against the backdrop of global and
domestic developments, the Reserve Bank reduced the LAF rates to their
historically lowest levels. The repo rate and the reverse repo rate were
reduced by 25 basis points each.
First Quarter
Review 2009-10
By the time of the First Quarter Review in July 2009, some tentative
lead signs of recovery in GDP growth were visible, which included positive
growth in industrial production, optimism in business confidence surveys,
rebound in stock prices, renewed activity in the primary capital market and
improved external financing conditions. Simultaneously, several risks to the
overall outlook had to be recognised for policy purposes, which included
delayed and deficient monsoon, food price inflation, rebound in global
commodity prices, continuing weak external demand and high fiscal deficit.
Accordingly, the Review noted that an uptrend in the growth momentum was
unlikely before the middle of 2009-10 and the growth projection for 2009-10 was
placed at 6.0 per cent with an upward bias.
On the inflation front, pressures from global commodity prices, which
had been abating markedly since August 2008, bottomed out in early 2009 and had
rebounded ahead of global recovery. The Reserve Bank’s inflation expectations
survey showed that while inflation expectations remained well-anchored, a
majority of the respondents expected inflation to rise over the next three
months to one year. The Statement further pointed out that the base effect,
which generated the negative WPI inflation prevailing then, would completely
wear off by October 2009 and thereafter the WPI inflation would creep up even
without any major supply shock. The WPI inflation for end-March 2010 was
revised upward to around 5.0 per cent. Taking into consideration the high
borrowing requirements of the government and to ensure that it was managed in a
non-disruptive manner, the indicative trajectory of M3 growth was increased to
18.0 per cent.
The First Quarter Review observed, in definitive terms, that the
accommodative monetary stance prevailing then was not the steady state stance
and going forward, the Reserve Bank would have to reverse the expansionary
measures to anchor inflation expectations and subdue inflationary pressures
while preserving the growth momentum. Consistent with the assessment of
macroeconomic and monetary conditions, the repo rate, the reverse repo rate and
the CRR were kept unchanged.
Second Quarter
Review 2009-10
Tentative signs of recovery noticed in the first quarter became
increasingly visible in the beginning of the second quarter of 2009-10. The
Second Quarter Review noted in October 2009 that this, combined with the easing
of international financing conditions, augured well for a pick-up in investment
activity. The business confidence surveys also pointed to further improvement
in the outlook. On the assumption of a modest decline in agricultural
production due to the deficient monsoon, however, the baseline projection for
GDP growth for 2009-10 was maintained at 6.0 per cent with an upside bias.
The WPI inflation after remaining negative during June-August 2009
turned positive beginning September 2009. The inflationary pressures emanated
from domestic sources, reflecting increase in prices of food articles and food
products on account of weak monsoon. As the upside risk to inflation in terms
of the global trend in commodity prices and the domestic demand-supply balance
had materialised, the baseline projection for WPI inflation at end-March 2010
was revised to 6.5 per cent with an upside bias.
On evidence of easing of access for corporates to non-bank sources of
financing, both domestic and international, and taking into consideration the
completion of around four-fifths of the government borrowing programme and the
subdued credit offtake from banks in the first half of the year, the indicative
trajectory of adjusted non-food credit and M3 growth was revised downwards to
18.0 per cent and 17.0 per cent, respectively.
Around this time, an intense debate had started in many countries about
the exit strategy from the expansionary monetary policy, especially the time
and sequence of exit. In light of the buildup of domestic inflationary
pressures, along with the definitive indications of the economy reverting to
the growth track, the debate on the strategy for an appropriate exit from the
accommodative monetary policy came to the forefront of policy deliberations in
Arguments for beginning the reversal of monetary easing in
Arguments for deferring reversal of monetary easing were that premature
tightening could hurt the growth impulses and that the inflationary pressures
were driven by supply-side constraints, particularly food prices, for which
monetary policy is typically not an efficient instrument of control. Moreover,
tightening ahead of other economies and consequent widening of interest rate
differential with the rest of the world entailed the risk of incentivising
larger capital flows, with attendant costs to the economy in terms of exchange
rate appreciation, larger systemic liquidity and fiscal costs of sterilisation.
The precise challenge for the Reserve Bank was to support the recovery
process without compromising price stability. The Reserve Bank began the first
phase of exit in October 2009. Most of the non-conventional monetary policy
measures were terminated, which included some sector specific liquidity
facilities provided during the crisis. The statutory liquidity ratio (SLR) of
banks was restored to its pre-crisis level of 25 per cent of net demand and
time liabilities (NDTL). Further, on account of growing evidence of excess
liquidity feeding through asset prices, with potential financial stability
concerns, the provisioning requirement for advances to the commercial real
estate sector classified as ‘standard assets’ was increased from 0.4 per cent
to 1.0 per cent.
Third Quarter
Review 2009-10
By January 2010, there were clear signs of the global economy
stabilising while the domestic growth signals pointed towards a consolidation of
the recovery process. The indicators of real sector activity suggested that the
upside bias to growth highlighted in the First/Second Quarter Reviews had
materialised. Hence, the baseline projection for GDP growth for 2009-10 was
revised upwards to 7.5 per cent, assuming a near zero growth in agricultural
production and continued recovery in industrial production and services sector
activity.
On the prices front, there were incipient signs of the sustained
increase in food prices beginning to spill over to other commodities and
services as well. The Review noted that with growth accelerating, capacity
constraints could potentially reinforce supply-side inflationary pressures. It
also highlighted the limited scope imports provided to contain domestic food
prices as global commodity prices were showing signs of firming up, with prices
of some being higher than the prices prevailing in
With the government borrowing programme almost completed and with
adequate liquidity in the system to meet the anticipated increase in credit
demand from the commercial sector, the indicative M3 growth and adjusted
non-food credit projections were revised downwards to 16.5 per cent and 16.0
per cent, respectively.
With clear signs that the recovery was consolidating, the policy stance
changed from ‘managing the recovery’ to ‘containing inflation and inflationary
expectations’. In particular, it was felt that main policy instruments were at
levels more consistent with a crisis situation than with a fast recovering
economy and it was imperative to carry forward the process of exit from an
accommodative policy stance. Accordingly, the CRR was increased by 75 basis
points to absorb a part of the excess liquidity from the system (about
Rs.360000.000 millions).
Mid-cycle Measures
in March 2010
Headline WPI inflation on a year-on-year basis overshot the Reserve
Bank’s baseline projection for year-end inflation to reach 9.9 per cent (provisional)
in February 2010. The rate of increase in the prices of non-food manufactured
goods accelerated quite sharply. Furthermore, increasing capacity utilisation
and rising commodity and energy prices were exerting pressure on the overall
inflation. Taken together, these factors were seen to heighten the risks of
supply-side pressures translating into a generalized inflationary process. The
Reserve Bank increased the repo rate and reverse repo rate under the LAF by 25
basis points each with effect from March 19, 2010, with a view to anchoring
inflationary expectations and containing inflation. As liquidity in the banking
system was adequate, credit expansion for sustaining the recovery was not
expected to be affected.
Monetary Policy
Statement 2010-11
By April 2010, available data suggested that the recovery was firmly in
place. There was a sustained increase in bank credit and in the flow of
financial resources to the commercial sector from non-bank sources. On balance,
under the assumption of a normal monsoon and sustenance of good performance of
the industrial and services sectors, the baseline projection of real GDP growth
for 2010-11 was placed at 8.0 per cent with an upside bias.
The Reserve Bank’s industrial outlook survey showed that the corporates
were increasingly regaining their pricing power in many sectors, raising the
possibility of accentuation of demand pressures as the recovery gained further
momentum. Further, the inflation expectations of households continued to
remain at an elevated level. There were three major uncertainties in
formulating the outlook for inflation in 2010-11 – prospects of the monsoon in
2010-11 were not clear, crude prices continued to be volatile and there was
evidence of demand side pressures building up. The baseline projection for WPI
inflation for March 2011 was placed at 5.5 per cent.
There was surplus liquidity throughout the year, but the magnitude of
the surplus declined towards the end of 2009-10, consistent with the policy
stance. Keeping in view the need to balance the resource demand to meet credit
offtake by the private sector and government borrowings, M3 growth and non-food
credit growth for 2010-11 were placed at 17.0 per cent and 20.0 per cent,
respectively.
The monetary policy stance for 2010-11 was guided by the following three
considerations. First, the need to move in a calibrated manner in the direction
of normalising the policy instruments in a scenario where the real policy rates
were still negative. Second, the need to ensure that demand side inflation did
not become entrenched. Third, the need to balance the monetary policy
imperative of absorbing liquidity while ensuring that credit was available to
both the government and the private sector. Accordingly, both repo and reverse
repo rates as well as CRR were increased by 25 basis points each.
Mid-Cycle Policy
Measures in July 2010
Significant developments took place subsequent to the announcement of
the Monetary Policy in April 2010. Though recovery was consolidating,
developments on the inflation front raised several concerns. Overall, WPI
inflation increased to 10.2 per cent (provisional) in May 2010, up from 9.6 per
cent (provisional) in April 2010. Year-on-year WPI non-food manufacturing
products inflation, which was (-) 0.4 per cent in November 2009 and 5.4 per
cent in March 2010, rose further to 6.6 per cent in May 2010. Year-onyear fuel
price inflation also surged. The upward revision in administered fuel prices on
June 25, 2010 was also expected to influence inflation in months ahead.
Accordingly, the repo rate and the reverse repo rate under the LAF were
increased by 25 basis points each on July 2, 2010.
First Quarter
Review 2010-11
The dominant concern that shaped the monetary policy stance in the First
Quarter Review was high inflation. Even as food price inflation and, more
generally, consumer price inflation showed some moderation, they were still in
double digits. Non-food inflation rose and demand-side pressures were clearly
evident. In view of consolidating and more broad-based domestic recovery, the
First Quarter Review revised upward the baseline projection of real GDP growth
for the year to 8.5 per cent. The baseline projection for WPI inflation for
March 2011 was raised to 6.0 per cent. Consistent with this assessment, the
repo rate was hiked by 25 basis points and the reverse repo rate by 50 basis
points. The monetary policy actions were intended to moderate inflation by
reining in demand pressures and inflationary expectations, maintain financial
conditions conducive to sustaining growth, generate liquidity conditions
consistent with more effective transmission of policy actions and reduce the
volatility of short-term rates in a narrower corridor.
Given the context of the changing liquidity dynamics, particularly
between surplus and deficit modes, it was proposed to set up a Working Group to
review the current operating procedure of monetary policy of the Reserve Bank,
including the LAF. It was also announced that mid-quarter reviews of Monetary Policy
would be done in June, September, December and March.
Overall Assessment
The process of exit from monetary expansion in
FOREIGN EXCHANGE
MARKET
India experienced a resumption of net capital inflows during 2009-10, as
witnessed in other emerging market economies (EMEs), driven by the easy
liquidity conditions in the global system, low interest rates prevailing in
advanced economies and robust growth prospects of the domestic economy. Large
and persistent capital flows can potentially jeopardise financial stability as
surge in capital inflows in excess of domestic absorptive capacity, could give
rise to liquidity overhang, exert upward pressures on exchange rate and
overheat asset prices. Further, volatile capital flows are often procyclical,
which complicate macroeconomic management. FDI and NRI deposits have been
stable components of capital flows in
BUSINESS
DESCRIPTION
Central bank, whose basic functions are to regulate the issue of bank
notes and keeping of reserves with a view to securing monetary stability in
India and generally to operate the currency and credit system of the country to
its advantage.
PRESS RELEASE:
INDIAN
STOCKS FALL NEARLY 3% ON OPENING
AGENCE FRANCE-PRESSE
09 AUGUST 2011
MUMBAI, AUG 9,
2011 (AFP)
Indian stocks fell nearly three percent at the opening of trade on
Tuesday, tracking plunging Asian markets after sharp losses on Wall Street
overnight.
The benchmark 30-share Sensex on the Bombay Stock Exchange lost 505.89
points or 2.98 percent to 16,484.29 within minutes of the opening.
The index then retraced on bargain hunting to 16,682.18 but was still
down nearly 2.0 percent. Software exporters with large exposure to the
Global fund managers and policy makers said they will scrutinise
statements from the US Federal Reserve later on Tuesday to review policies,
amid doubts about what it can do to head off a double-dip recession.
India's economy fared better than most Western countries during the last
global financial crisis, posting 6.8 percent annual growth in 2008-09, as it
remains largely insulated, led by local demand for most of its goods and
services.
ASIAN
CURRENCIES TO HEAD NORTHWARDS
GULF NEWS (UNITED ARAB EMIRATES)
09 AUGUST 2011
BY BABU DAS AUGUSTINEDEPUTY BUSINESS EDITOR
Dubai Asian currencies are likely to resume gains as the region's
relatively fast economic growth attracts funds and near-zero interest rates in
the
Analysts favoured Asian emerging market currencies "From an foreign
exchange strategy perspective, we recommend that investors maintain core Asian
currencies excluding the yen longs on the view that ‘risk-off-related
turbulence is likely to be temporary and replaced in short order by broad-based
US dollar weakness," Standard Chartered wrote in a note yesterday.
In Asia the yuan strengthened 0.14 per cent to 6.4265 per dollat as of
5:02pm in Hong Kong, while the
Both currencies rose for the first time in five days. The ringgit slid
0.15 per cent to 3.0195, a fifth straight decline, and the rupiah appreciated
0.39 per cent to 8,541.
With the gain in currencies more central banks including Japanese
central bank is expected to intervene in the foreign exchange markets.
"The RBI's move indicates it's vigilant and concerned about
financial stability in markets," said Sonal Varma, a Mumbai-based
economist at Nomura Holdings Inc. "Domestic growth remain strong, though
there are heightened concerns after the recent global developments."
GOVT
REPORT SAYS 4 IN EVERY 1,000 NOTES ARE FAKE
MINT
09 AUGUST 2011
New Delhi, Aug. 9 -- Four in every 1,000 currency notes in circulation
in India are fake, amounting to as much as Rs 32000.000 millions in 2010, a
confidential government report has found in a first-ever attempt to estimate
the quantum of counterfeit notes in the country.
The so-called white paper on the status of fake Indian currency notes,
prepared jointly by the Intelligence Bureau, Research and Analysis Wing,
Directorate of Revenue Intelligence and the Central Bureau of Investigation,
says this seriously affects the "credibility of the rupee as legal
tender".
Mint has reviewed a copy of the report that was submitted to the
government in June. Fake currency is 0.0004-0.0012% of bank notes in
circulation, it cites the Reserve Bank of India (RBI) as saying, which is four
in every one million, much lower than the white paper estimate.
The central bank does not have an estimate of fake currency notes
circulating in the country, an RBI spokesman said in an emailed response,
adding that the banking regulator is not aware of the existence of any white
paper on the subject. Indian bank notes are secure, RBI asserted. The report,
which is not in the public domain, also points a finger at Pakistan, saying its
government officials are directly involved in the process of making and
distributing large numbers of fake notes.
The
The incidence of fake notes in various countries has typically been
lower than what the white paper has found in
"We are approaching international forums to make counterfeit notes
equivalent to terror financing," a government official in the cabinet
secretariat said, requesting anonymity. "We have already approached FATF
(Financial Action Task Force) and shared this report with the
FATF is an international organization that combats money laundering and
terrorist financing. appu.s@livemint.com Published by HT Syndication with
permission from MINT. For any query with respect to this article or any other
content requirement, please contact Editor at htsyndication@hindustantimes.com
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist organization
or whom notice had been received that all financial transactions involving
their assets have been blocked or convicted, found guilty or against whom a
judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling shareholders,
director, officer or employee of the company is a government official or a
family member or close business associate of a Government official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.45.20 |
|
|
1 |
Rs.73.50 |
|
Euro |
1 |
Rs.64.76 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
10 |
|
OPERATING SCALE |
1~10 |
10 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
10 |
|
--PROFITABILIRY |
1~10 |
10 |
|
--LIQUIDITY |
1~10 |
10 |
|
--LEVERAGE |
1~10 |
10 |
|
--RESERVES |
1~10 |
10 |
|
--CREDIT LINES |
1~10 |
10 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
NO |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
89 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.