Page 9 - Banking Finance October 2022

RBI CORNER

reserves had dropped by USD 7.941 RBI Governor Shaktikanta Das has as- good, an article in the RBI bulletin said
billion to USD 553.105 billion. sured the markets several times that and backed a more nuanced approach.
the current account gap will be sus-
The fall in the reserves during the re-
tainable and the central bank can fi-
porting week was on account of a dip RBI lifts ban on American
nance it comfortably. Deputy Governor
in the foreign currency assets (FCAs), Express
Michael Patra in an August speech
a major component of the overall re-
pegged a range of 2.5%-3% of CAD as The Reserve Bank of India has lifted
serves, according to the Weekly Statis-
sustainable. the ban on new customer acquisition
tical Supplement released by the RBI.
by American Express which was im-
RBI's take on the CAD -- the widest
The FCAs decreased by USD 2.519 bil- posed with effect from May 2021 due
measure of external finances -- as-
lion to USD 489.598 billion in the re- to non-compliance with local data stor-
sumes importance as economists from
porting week. age norms.
Citigroup Inc. and Standard Chartered
Expressed in dollar terms, the foreign "In view of the satisfactory compliance
Plc. peg the deficit at near 4%, term-
currency assets include the effect of demonstrated by American Express
ing the record trade deficit in the last
appreciation or depreciation of non-US two months as 'unsustainable'. Banking Corp. with the Reserve Bank
units like the euro, pound and yen held of India (RBI) circular dated April 6,
in the foreign exchange reserves. 2018, on Storage of Payment System
RBI supports govt's
Data, the restrictions imposed, vide
The value of the gold reserves in-
gradual privatisation of order dated April 23, 2021, on
creased by USD 340 million to USD
PSU banks onboarding of new domestic custom-
38.644 billion, the data showed.
ers have been lifted with immediate
The RBI clarified that researchers at
The Special Drawing Rights (SDRs) effect," RBI said.
the central bank were of the view that
dropped by USD 63 million to USD
instead of a bigbang approach to pub- Similar bans were imposed on Diners
17.719 billion.
lic sector bank privatisation, a gradual Club International and Mastercard pre-
The country's reserve position with the approach - as announced by the gov- viously. The ban on Diners Club was
IMF was up by USD 8 million to USD ernment - would result in better out- lifted in November last year, while the
4.91 billion in the reporting week, as comes. restrictions on Mastercard was re-
per the data. moved in June this year.
The central bank was reacting to re-
ports based on the article 'Privatisation
RBI sees India's current-ac- of Public Sector Banks: An Alternate RBI digitising Kisan cards
count deficit staying Perspective' published in the August for rural thrust
2022 issue of RBI Bulletin. It was
within 3% of GDP RBI has started an initiative for
viewed by some as RBI being opposed
digitisation of rural finance, beginning
India's central bank expects the to privatisation of PSU banks. "As
with Kisan credit cards.
country's current account deficit to clearly stated in the article itself, the
stay within a limit it considers sustain- views expressed are those of the au- This month, the regulator is launching
able amid softening global fuel, food thors and do not represent the views a pilot in select districts of MP and Tamil
and fertilizer prices while portfolio of the RBI," according to an RBI state- Nadu aimed at automation of various
flows and exports pick up. ment. "The press release relating to processes within banks and integration
the August Bulletin highlights that "the of their systems with the service pro-
"Overall, the current account deficit is
gradual approach to privatisation viders. The project along with Union
expected to be within 3% of gross do-
adopted by the government can en- Bank and Federal Bank aims to make
mestic product," the Reserve Bank of
sure that avoid is not created in fulfill- it more efficient and cut costs and the
India said in its September Bulletin.
ing the social objective of financial in- turnaround time significantly.
"With portfolio flows returning and
clusion," the statement said.
foreign direct investment remaining "Rural finance encompasses a range of
strong, this order of deficit is eminently A big-bang approach of privatisation of financial services offered to rural cus-
financeable." PSU banks may do more harm than tomers, including farmers, at all in-
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