Page 10 - Banking Finance JANUARY 2017
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RBI CORNER
Urjit gets Rs 2 lakh salary RBI directs banks to deposit CRR
In a surprise attempt, the Reserve Bank of India has increased the cash reserve
and no support staff: RBI
requirement (CRR) for incremental deposits between Sep-
Reserve Bank of India governor Urjit tember 16 and November 11 to 100%. The current CRR
Patel earns a little is just 4%.
over Rs 2 lakh as sal-
ary and has not The RBI move will require all excess deposits that banks
been provided with in India are getting to be kept with the central bank for
any support staff at which the banks will not earn any interest. Banks will pay interest rate of 4% to
his residence, the depositors, but will earn nothing from RBI on the incremental deposits.
central bank has said in reply to a Market players are surprised that the RBI made the rules that included deposits
Right to Information query. that accrued to banks since September 16, nearly eight weeks before the
Patel is at present in possession of demonetisation decision of November 8. They said in effect this brings back the
the deputy governor's flat in memories of 'retrospective' measures, which had made India infamous in terms
Mumbai. He was the bank's deputy of taxation about three years ago.
governor before taking over from
Raghuram Rajan in September. At RBI to open 'Islamic Window' in conventional banks
present two cars and two drivers The Reserve Bank of India (RBI) has proposed opening of "Islamic window" in
have been provided to him. usual banks for "gradual" introduction of Sharia-com-
pliant or interest-free banking in the country.
The Centre had recently declined to
share details on the appointment of Both the Centre and RBI are exploring the possibility
Patel as the central bank chief, says of introduction of Islamic banking for long to ensure
these are "cabinet papers" and can- financial inclusion of those sections of the society that
not be made public. remain excluded due to religious reasons. Islamic or Sharia banking is a finance
system based on the principles of not charging interest, which is prohibited un-
RBI forms task force to der Islam.
ease currency exchange The RBI told the finance ministry, "In our considered opinion, given the complexi-
facility in Nepal ties of Islamic finance and various regulatory and supervisory challenges involved
in the matter and also due to the fact that Indian banks have no experience in
The Reserve Bank of India has
formed a task this field, Islamic banking may be introduced in India in a gradual manner".
force to ease
currency ex- RBI relaxes norms for REs, NBFCs following
change facility demonetisation
in Nepal for
Realising that small borrowers may fall behind on repayment of their loan dues
non-Indians who possess the now-de- following the cash crunch triggered by demonetisation
funct notes of 500 and 1,000 denomi- of Rs 500 and Rs 1,000 notes, the Reserve Bank of India
nations, as a Nepalese parliamentary
panel asked the government to take has temporarily relaxed prudential norms for banks and
"necessary steps" to settle the issue. non-banking finance companies, allowing short-term de-
ferment of classification of such loans as sub-standard.
The task force will come up with mo-
dalities to address the problems By allowing regulated entities (REs), such as banks and
faced by people of Nepal and Bhutan non-banking finance companies (NBFCs), an additional 60 days beyond what is
- where the banknotes were in wide applicable to them for recognition of a loan account as sub-standard, the central
circulation, said Bhisma Raj bank has saved them the burden of provisioning.
Dhungana, chief of Foreign Exchange Once the loan is classified as sub-standard, the lenders have to make a general
Management Department of the provision of 15 per cent on the total outstanding; this could have adverse impli-
Nepal Rastra Bank (NRB). cations for their bottomline.
10 | 2017 | JANUARY | BANKING FINANCE
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