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RBI CORNER
The latest CSI reading, however, RBI, DBS want merger normalisation of activity" in the second
showed a marginal improvement over quarter. "The Indian economy has
the all-time low of 49.9 recorded in matters transferred to one exhibited stronger than expected pick-up
the previous (September 2020) round. location in the momentum of recovery.
Households remain optimistic of the The Reserve Bank of India and DBS The global economy has also witnessed
situation one year ahead, with the Bank are planning to move the a stronger than expected rebound in
Future Expectations Index (FEI) Supreme Court seeking for a transfer activity in Q3. The IMF has accordingly
remaining in growth terrain at 115.9, of all the matters related to merger of revised its assessment for global
against 114.5 in the November 2019 Lakshmi Vilas Bank with DBS Bank growth in 2020 to a less severe
round. India to one location. Currently, contraction than what was assessed in
petitions challenging the merger were June 2020," said Das.
The latest FEI reading is flat vis-a-vis filed in four different high courts.
the previous (September 2020) round. Central Govt may ease
Respondents reported higher essential Indian Economy exhibits inflation target for RBI
and overall spending, though The government is considering
discretionary expenditure contracted; strong growth outlook recommending a looser inflation target
non-essential spending is expected to Reserve Bank of India governor for the central bank, allowing it to
contract further in the coming year. Shaktikanta Das said that the Indian focus more on economic growth
economy has exhibited stronger than despite price pressures, according to
RBI appoints three expected pick-up and the growth people familiar with the matter.
outlook has improved but cautioned
executive directors over the need to be watchful over A consumer-price inflation band
The Reserve Bank has appointed R downside risks of a fresh surge in tracked by the RBI may be relaxed
Subramanian, RS Ratho and Rohit Jain infections, the sustainability of demand further from the 2-6% range, said the
people, who asked not to be identified
as executive directors. after festivals and a possible
reassessment by markets around citing rules. The government still needs
In the new role, Subramanian will look vaccine expectations. to hold consultations with the central
after foreign exchange department, bank before finalising a new framework
The governor's statement comes at a
financial markets regulation sometime next year.
time when forecasters are revising the
department, internal debt management The current mandate, set in 2016,
and international department, a GDP decline numbers for the second requires the RBI to keep headline
quarter, given the rebound in
statement from RBI said. Prior to being inflation at the 4% midpoint of its
economic activity. SBI group chief
promoted as executive director, he target range. The band - a broad range
economist Soumya Kanti Ghosh said in
was Chief General Manager-in-Charge, a report that he now expects the of 400 basis points (100bps =
Enforcement Department. 1percentage point) within which the
economy to shrink by 10.7% in the
RBI said Ratho will look after financial September quarter, against the earlier central bank has sanction to operate -
markets operations department, forecast of 12.5%. RBI had estimated is the widest in Asia, and only matched
by Turkey and surpassed by Argentina.
department of external investments an 8.6% contraction in the second Sovereign bonds advanced for the first
and operations, legal department and quarter, which will mean that India
time in three days.
secretary's department. Before this slipped into technical recession due to
promotion, Ratho was Chief General two consecutive quarters of a fall in The finance ministry is of the view that
Manager, Financial Markets economic activity. the RBI can't be saddled with a rigid
inflation targeting framework,
Operations Department. The government is due to release especially in situations when growth
Jain will look after Department of second quarter GDP numbers. needs to be pushed, the people said.
Supervision (Risk, Analytics and At a Foreign Exchange Dealers A finance ministry spokesperson
Vulnerability Assessment). Earlier, he Association of India event, Das said that declined to comment, while the RBI
was Chief General Manager-in-Charge after a sharp contraction of 23.9% during didn't immediately respond to an email
of the supervision department. the June-quarter, there was "multispeed seeking comment. T
10 | 2021 | JANUARY | BANKING FINANCE