While the nation adjusts to the new normal arising out of the historic demonetization and debates its merit/demerit, it also has another important fall-out. The move can lead to huge bonanza for government in the form of sharp increase in the transfer from RBI. This would be equivalent to the amount of Rs 500 and Rs 1,000 notes that does not come up for replacement. Let’s see how..
RBI has been deliberating upon creating an umbrella structure to monitor and regulate co-operative banks (CBs), a long debated proposal. CBs gained lot of prominence subsequent to demonetization for being misused to turn black money into white. Even though they are much smaller in size, they play an important role in meeting the needs of … Continue reading Co-operative Banks – Understanding The Structure..
The promulgation of the Ordinance yesterday for resolution of Non Performing Assets (NPAs) is another measure to tackle the crisis gripping the banking sector. Yet, the ordinance could be another dead ball and nothing that one can hope would work wonders due to lack of market participants. A look at the implication of the ordinance… An Ordinance is … Continue reading Ordinance on NPAs – The Fight Continues…
NPAs of the banking sector, especially the public sector continue to remain high, estimated at about 12% for PSBs. While various measures have been taken to resolve the issue, none seems to have worked so far. This has led to the proposal of creating a public sector asset rehabilitation agency (PARA) by the Economic Survey, … Continue reading Resolving NPAs – Understanding Asset Rehabilitation Agency..
Belying the expectations of a rate cut, the monetary policy committee (MPC) has not only decided to keep the rates unchanged in its meeting today but more importantly, has shifted its stance from “accommodative” to “neutral’. This is “to assess the transitory effects of demonetization on inflation and the output gap”. The shift marks a significant … Continue reading Monetary Policy – From “Accommodative” to “Neutral” stance..
Demonetisation has brought focus on currency in circulation and different types of money supply. Even though currency in circulation has come down, other forms of money supply do not show similar decrease. How is that so and what are the characteristics and significance of different types of money supply. A look at the same.. The first … Continue reading Money Supply – Understanding the Different Forms..
Corporate sector have improved its financial position substantially during first half of 2016-17 as per the Financial Stability Report published by RBI last week. However, the impact of this on bank NPAs is still not visible. Gross NPAs of the banks has increased during the last six months and may take some more time before … Continue reading Corporate & Financial Sector Performance – RBI Report..
The announcement by honourable Prime Minister to demonetise 500 and 1,000 rupee currency notes is truly unprecedented, probably beyond anything that the nation has witnessed since the imposition of emergency. While demonetisation has happened earlier too in 1978, the scale at which it is being done now is much higher. What is even more amazing … Continue reading The “Surgical Strike” on Black Money..!
Government’s notification last week to set up a public debt management cell (PDMC), to be converted into PDMA in two years, is one more step ahead in financial sector reforms. Contrary to perception, the idea had been floating around for more than a decade with a committee submitting its report in 2008. The only difference … Continue reading Understanding Public Debt Management Agency..
The MPC (Monetary Policy Committee) decision to cut rate by 25 basis points in its first ever meeting today, also the first under the new governor Dr Urjit Patel, appears not entirely convincing from inflation control perspective. Yet this would bring cheers to both corporate and retail borrowers and hopefully, the clamour for rate cut would … Continue reading RBI rate cut – Is it justified.??