Page 10 - BANKING FINANCE JANUARY 2016 ONLINE

RBI CORNER

RESERVE BANK

NEWS

RBI nod must for buying 5% or more stakes in pri- Base rate calculation
norms coming soon
vate banks
The RBI will shortly announce a
The Reserve Bank of India has made it The RBI's decision to accord or deny new methodology for determining
mandatory that its prior approval will permission will be binding on the appli- the base rate taking into account
be required for acquisition of shares or cant and the concerned bank. "In the the marginal cost of funds to ensure
voting rights up to 5 per cent or more event of the RBI according permission that banks pass on policy rate cuts
of the equity capital in a private bank. for a lower quantum of acquisition, the to borrowers.

The RBI would undertake a concerned bank Hike in pay of Central
due diligence on the appli- should register the employees will not up-
cant to assess his "fit and transfer or purchase of set the maths
proper" status to acquire such lower quantum of
the stake, it said. "It will be shares or lower quan- Rajan said the hike in pay of Central
open to the RBI to seek additional in- tum of compulsorily employees will not upset the fiscal
formation from the applicant or con- convertible debentures or bonds or maths as additional expenditure will
cerned bank, including but not limited lower percentage of voting rights," the be offset by either surplus revenues
to shareholder agreements and make RBI said. or cut in spending.
such enquiries with regulators, revenue
authorities, investigation agencies and While assessing the "fit and proper" Inclusion of yuan could
credit rating agencies as considered status, the RBI will consider the lead to devaluation of
appropriate," it said in a notification. applicant's integrity, reputation and Chinese currency
track record in financial matters.
The inclusion of the yuan in the In-
Urjit Patel likely to get extension as RBI deputy ternational Monetary Fund's special
governor drawing rights basket could lead to
more devaluation of the Chinese
Urjit Patel is likely to be granted extension as the Reserve currency, Rajan said. India does not
Bank (RBI) deputy governor, government sources say. Patel intend to "manipulate" the ex-
was appointed in January 2013 for a period of three years. change rate for the rupee to
achieve macroeconomic objectives,
Two RBI EDs are said to have applied for the job besides he added.
Patel. Several economists such as Jahangir Aziz, Kalpana
Kochhar and Errol D-Souza too were interviewed.

Among the many feathers on his cap, Patel has also chaired
an expert committee to revise and strengthen the monetary policy framework.

10 | 2016 | JANUARY | BANKING FINANCE

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