Page 8 - Banking Finance March 2019

RBI CORNER

RESERVE BANK



Sebi wants discontinua- Bank of Japan, RBI sign pact for currency swap
The Bank of Japan and the Reserve Bank of India have signed a currency swap
tion of RBI representa- agreement that enables both countries to swap their local
tion on its board currencies (i.e., either Japanese yen or Indian rupee) against
Sebi wants the government to dis- US dollar for up to $75 billion.The agreement is effective
continue the from 28.2.19. "The authorities of both countries believe that,
practice of its by enhancing financial cooperation, the bilateral swap
agreement will contribute to the stability of financial markets, thereby further
board having a
nominee from developing the economic and trade ties between the two countries," RBI said.
the Reserve
Bank of India, or alternatively provide RBI forms task force on offshore rupee market
for a cross-representation of the two Reserve Bank of India has constituted a task force on offshore rupee market to
regulators on each other's boards. find ways to move non-resident Indian to the domestic
market and improve liquidity to promote on-shore hedg-
Sebi first proposed to the Ministry of
Finance to discontinue RBI's repre- ing activity. The task force will examine offshore rupee
markets in depth and recommend appropriate policy
sentation on its board, as it already
measures that also factor in the requirement of ensur-
has adequate presence of the gov-
ernment nominees. Besides, the ing the stability of the external value of the rupee. The
boards of other regulators such as panel will be chaired by former deputy governor of the RBI Usha Thorat. Ajit
IRDAI for insurance sector and PFRFA Ranade, Chief Economist of the Aditya Birla Group, Sajjid Chinoy, Chief Econo-
mist of JPMorgan India and Surendra Rosha, CEO of HSBC India are other mem-
for pension sector do not have nomi-
bers of the task force. The panel will also have nominees from the government,
nees from other regulators, while
there is no corresponding represen- Sebi and the RBI.
tation of other regulators on the
RBI's board, Sebi has contended. RBI to pump in Rs 1 lakh cr cash to ease liquidity
RBI will infuse Rs 1 lakh crore in cash into the banking system to ease liquidity.
However, the Finance Ministry
opined that the role of the RBI in the RBI will conduct four long-term variable rate repo
financial sector cannot be dis- operations, mechanism to increase cash. "As the
counted and that the RBI presence liquidity demand in the system increases in March
every year due to a variety of year-end factors, RBI
helps in bringing "overall economic
stands ready to inject adequate additional liquidity
view and valuable inputs to the Sebi
using a combination of appropriate instruments,
board".
the central bank said.
8 | 2019 | MARCH | BANKING FINANCE