Page 8 - Banking Finance October 2022

RBI CORNER

Reserve Bank

RBI may increase repo rate tonne, in the fifth fortnightly review of In July, the Reserve Bank of India (RBI)
the one-off tax on oil companies, tak- had asked banks to put in place addi-
India was expected to stand out from
ing into consideration the cooling of tional arrangements for export and
the rest of the developed world in lim-
global crude prices. It also cut the spe- import transactions in Indian rupees in
iting the pace of increases in its bor-
cial levy on export of diesel by 37% to view of increasing interest of the glo-
rowing costs, but a spike in consumer
Rs 8.5/litre and rimmed the tax on jet bal trading community in the domes-
prices last month will make it difficult
fuel shipments by a steeper 44% to Rs tic currency.
for the central bank to immediately
5/litre, as refining margins moderated
break ranks with its peers on either To align the Foreign Trade Policy (FTP)
from last revision.
side of the Atlantic. with this decision of the RBI, the Direc-
The move will benefit state-run ONGC torate General of Foreign Trade (DGFT)
The Eurozone central bank raised rates
& OIL and private refiner Reliance In-
by an unprecedented three-quarters of added a new paragraph in the FTP.
dustries, which is the principal exporter
a percentage point recently to anchor DGFT is an arm of the ministry which
of petroleum products.
inflationary expectations, while the US deals with export and import related
Federal Reserve has indicated it is not The imposts were introduced on July 1, matters.
done with rate tightening just yet de- to ensure that the exchequer benefits
"Para 2.52 (d) is notified to permit in-
spite the very real threat of protracted from the windfall gains of oil companies
voicing, payment and settlement of
economic contraction. due to elevated crude prices and refin-
exports and imports in INR (Indian ru-
ing margins. These levies have since
Against this backdrop, India seemed an pee) in sync with RBI's ...circular dated
been reviewed on a fortnightly basis.
island of tranquility where growth was
July 11, 2022. This shall come into force
back on the front burner amid a visible The Indian basket of crude has moder-
with immediate effect," DGFT said in
softening in prices since April. ated to $92.68/barrel on average in the
a notification.
first 15-days of September compared
But August has changed that, and ana-
with the August average of $97.4/bbl.
lysts now believe the Reserve Bank of
India's foreign exchange
India (RBI) may have to press ahead
Govt permits invoicing, reserves down $2.23 bil-
with another half-a-percentage-point
increase in repo rate at the end of the payment and settlement lion to $550.87 billion
month.
of trade in rupee The country's foreign exchange re-
serves declined by USD 2.234 billion to
The commerce ministry allowed invoic-
Windfall tax on domestic stand at USD 550.871 billion for the
ing, payment and settlement of ex-
crude cut ports and imports in Indian rupee, a week ended September 9, the Reserve
Bank of India (RBI) said.
The Centre slashed the windfall tax on move aimed at facilitating trade in the
domestic crude by 21% to Rs 10,500/ domestic currency. In the previous reporting week, the
8 | 2022 | OCTOBER | BANKING FINANCE